Thank you very much for waiting. We would now like to start the financial results briefing of KDDI Corporation for the first quarter of the fiscal year ending March 2021. Thank you very much for taking time out of your busy schedule to attend the meeting via the internet. I am Hongou from the IR department, and I will serve as the moderator today. This meeting will be a live internet streaming with Japanese-English simultaneous interpretation to prevent the spread of COVID-19. It will also be distributed on-demand on our IR website later. I ask you for your understanding. Let me introduce the participants today. To your left, first row from the center, Shinichi Muramoto, Executive Vice President and Executive Director of Corporate Sector. Takashi Shoji, Executive Vice President and Executive Director of Personal Business Sector.
To your right, first row from the center, Keiichi Mori, Senior Managing Executive Officer and Executive Director of Solutions Business Sector. Kazuyuki Yoshimura, Executive Officer and Executive Director of Technology Sector. Lastly, to your left, second row, Nanae Saishoji, Executive Officer and General Manager of Corporate Management Division. Three financial results-related materials, presentation, tanshin, and detailed materials, and one TCFD disclosure material are posted on our IR website. Please refer to the disclaimer in the materials regarding statements made in the documents, performance, and subscriber targets explained in the Q&A session today. First, Muramoto will first explain the financial results, followed by Q&A. Mr. Muramoto, please.
Thank you very much for joining us in the KDDI business results meeting held via web as scheduled. Let me share with you the first quarter results for the fiscal year ending in March 2021. I would like to express my heartfelt sympathies to those who have been affected and their families by the torrential rain in July. KDDI Group continue to exert all out efforts for the reconstruction of the affected areas. On entering the era of new normal, let me explain about our approach towards the era with COVID-19 and beyond. Please look at the left. With the spread of COVID-19, a new normal living style is promoted. Digitalization of real events and expansion of the interactive e-commerce, the workplace diversification, higher needs for remote monitoring technology, and other major changes are likely in the business environment surrounding our company.
The right shows that in order to simultaneously achieve the prevention of the spread of infection and the sustainable economic activities, it's indispensable to build a resilient social infrastructure. Towards the era of new normal, we are utilizing 5G, IoT, and AI to further promote the Digital Transformation. To enhance the resilience of companies, the high level of autonomy and growth of employees and an organization is indispensable. We have been advocating human resources first in the management, based on which we communicated internally that we'd like our employees to be highly self-driven and continuing to grow. Now, we have made the declaration of New Work Styles, realizing work styles that achieve results not tied to any particular times and places. To support this, we'll promote our Personnel System Reform and the internal Digital Transformation as well.
In the era of new normal, we are accelerating the reform to be a human resources first company and moving towards a management base that can adapt to drastically changing environments. Under the state of emergency declaration, about 90% of employees utilized teleworking. Analysis has been made on the teleworking effectiveness and issues by an employee survey. Going forward, we intend to make a new hybrid work style enrooted using teleworking to further enhance the operation efficiency. Specifically, based on the declaration of new work styles, to further improve its effectiveness, work styles and roles have been categorized into four model cases. As a company, we do and will support each employee in finding and realizing the optimum work style solution, depending on the model case or the living environment. Look at the left, please. We are introducing the KDDI version job style under the new personnel system.
By clarifying the job boundaries and evaluation and reward based on performance, ambition, and capabilities, we make the most of the job style and provide diverse growth opportunities in the KDDI Group's business fields and support self-driven career development. The right shows in-house DX. To realize the hybrid work style of teleworking and commuting to office, we are upgrading the office and IT environment. We are accelerating organizational permeation and environmental upgrade for the new work style. In May, we announced the basic policy towards COVID-19, based on which various measures have been taken. Through our businesses, we continue to contribute to the stability of society and living. I'd like to introduce you to some of our efforts from the next page. The left shows startup support by KDDI Mugen Labo. Mugen Labo support program 2020 has been started, where 46 partner companies offer each asset.
Going forward, we'll be using startup companies' technology, among others, to prevent the spread of the infection. Going to the right, by collaborating with CAMPFIRE, an investee by the KDDI Open Innovation Fund, we supported waiving fees with crowdfunding for those businesses experiencing major difficulties in management. We are encouraging solutions to social issues by supporting startups and operators. Next, concerns our undertaking at AEON. We are supporting young children and students who cannot attend classes due to school shutdown for the prevention of the spread of infection. We provide English conversation lessons for free to 10,000 high school students. For elementary school pupils whose English language learning is changing due to new learning guidelines, we are distributing English conversation video content free of charge. We are supporting DX of education environments. Next, in entertainment and sports. We are exploring means to live with COVID-19.
The left, Sound VR x au 5G, shows an interactive audio and video technology that allows you to freely focus on what you want to see and listen to in a 360-degree video. We provide a new platform that connects artists to fans. The right shows supporting TEAM au, comprising top-notch climbers in the world. Tokyo Olympics are delayed for a year, affecting athletes' practice environments. We are building a climbing wall using the cutting-edge technology of AI and IoT to continue to support athletes. Let me share with you the consolidated results for the first quarter of the fiscal year 2021 ending in March. Highlights of the consolidated results for the first quarter. The consolidated operating revenue was JPY 1 trillion 242.7 billion. The full-year progress was 23.7%. In the middle, the operating income was JPY 290.7 billion. The full-year progress was 28.2%.
On the bottom, the profit for the period attributable to owners for the parent was JPY 182.3 billion. The full-year progress was 28.5%. We're carefully analyzing the impact on operating results from the second quarter onwards and maintaining the full-year forecast unchanged. Next, let me focus on the factors for change of the operating income. From the left, Life Design Domain and Business Services segment, which are growth fields, total and JPY 20.6 billion increase in the income with steady progress. On the other hand, due to COVID-19, the sales volume of mobile handsets decreased significantly, which led to a sales cost reduction, resulting in an increase of the operating income by JPY 24.1 billion. A decrease in the gross margin of mobile handset sales and others contributed to a JPY 9.8 billion decline in the income.
The first quarter operating income saw the increase partly because of the poor results in the first quarter last year. Handset sales decreased 450,000 units year-on-year. Migration from 4G to 5G is not on track compared with our plan. On the increase of the operating income, we are not pleased. We are feeling rather anxious. We intend to continue to work on the early deployment of 5G.
This slide summarizes the performance impact of COVID-19. In the first quarter, we enjoyed the temporary increase in income due to a decrease in cost of mobile handset sales in Personal Services segment and an increase in demand of teleworking in Business Services segment. From second quarter onward, we are thoroughly examining the impact on our performance, promoting businesses, and using costs in growth areas to achieve the initial plan. Next is business strategy. As we explained in our full year results briefing in May, in order to maximize group ID, times engagement, times total ARPU, we place engagement at the core, prioritize the trusting relationship with our customers, and promote business strategies across the entire group. Let me explain them from the next page. First is double brand strategy.
To your left, to cater to our customers who want to use large data volume comfortably, we started offering Data MAX 5G ALL STAR Pack from June 25th. To your right, for the customers preferring middle volume, UQ mobile started offering SUMAHO Plan R on June 1st. au and UQ mobile together will provide services chosen by wide range of customers. Next is group ID status. The number of group IDs is led by UQ mobile and is growing steadily to 27.2 million as of the end of June. On the right side, UQ mobile number of net increase grew by 1.5x year-on-year in first quarter, and by 2.4x year-on-year in the single month of June, when the SUMAHO Plan R started. It has gained strong popularity. Next is au PAY that is positioned in the center of higher engagement.
Left side. au PAY, a QR code payment that started in April last year is growing steadily in number of payments. As a result of a campaign in February and March this year, many non-new customers used it. The awareness and the number of payments increased significantly. The growth is continuing even after the campaign. Right side. We started Ponta Points, the long-awaited common point from May 21st. Lawson launched a campaign to increase points return, and we aim to enhance the engagement by encouraging the youth further. Next, growth driver of au Total ARPA. Left side. First quarter au Total ARPA was JPY 7,790, up 4.6% year-on-year. The growth of au Denki ARPA was especially prominent with the steady increase of the number of au Denki subscribers and the extended time at home due to the spread of COVID-19.
au Denki ARPA was JPY 640 in the first quarter, up 31% year-on-year. Right side. Number of au Smart Pass premium members is growing favorably and exceeded the 10 million mark. The number of life design service users is increasing steadily. Next is Business Services segment regarding the increasing demand for telework. Left side, the number of KDDI service applications increased. Cloud applications by five times, remote access by four times, and video conference by eight times. Right side. KDDI Matomete Office that offers one-stop solution to companies, also increased in April during the state of emergency declaration. The number of net contracts for smartphones increased by 1.6 times, tablets by 1.8 times, and mobile routers by 1.9 times. Measures to prevent the spread of infection triggered the expansion of the contactless methods and digitalization, including teleworking, from big companies to small and medium-sized companies.
Next is DX that supports a new way of working, including teleworking. Left side. We started offering a new highly secure security system based on Zero Trust concept. We will propose optimal solutions for our customers work styles and system configurations. Right side. Our corporate division will be relocated to a new office in Toranomon. The number of seats will be 40% less than the number of staffs. Web conference tools will be enhanced, and internal, external networks and multiple cloud services will be utilized. We will practice DX for way of working by ourselves. Next is 5G for corporate customers. Left side. Soracom will launch MVNO business adapted to au 5G network by the end of this fiscal year. Furthermore, in order to create use cases leveraging 5G together, we began pilot test, demonstration test of ultra-low latency application environment using AWS Wavelength from July 2020.
Right side shows office solution offerings utilizing 5G to resolve issues at office buildings and support work style reforms. We will promote the DX leveraging the characteristics of 5G through partnership with Mitsui Fudosan. Next is au 5G infrastructure layer. We plan to deploy approximately 10,000 base stations by the end of March 2021, and approximately 50,000 by the end of March 2022.
We will accelerate an early 5G nationwide expansion and promote 5G consumer use and IoT market penetration in each industry. My last slide is a summary for today. Based on our basic policy toward COVID-19, we aim to expand our role in the society across a wide range of fields surrounding telecommunications. As we enter the era of new normal, we will accelerate DX to help build resilient social infrastructure and move toward a management base that can adapt to drastically changing environments by promoting new work style. Regarding our financial results and business strategies, in the first quarter, the impact of COVID-19 has become apparent. We will carefully analyze the impact on our operating results from second quarter onward and aim to achieve the initial plan. The growth fields, namely, Life Design Domain and Business Services segments, are both progressing steadily.
We will keep promoting initiatives for social stability and solid management. Thank you very much for your attention.
Now we would like to entertain your questions. We would like to ask as many of you as possible to raise questions, so we would like to limit the questions to two questions per person. If you have two questions, please wait for the answer to your first question and then ask your second question. We would like questions from those of you who have been registered in advance and connected, as you have already been informed of. Let me explain about how to ask a question. If you have a question, please press asterisk seven keys of your phone. Please press asterisk seven keys if you have a question. When you are called upon, the moderator announces the names of you and your company, followed by a guidance saying, "You are unmuted." When the guidance is finished, please state your question.
We would like to take your questions until the scheduled time to end the meeting.
The first question. Nomura Securities, Mr. Masuno. After the guidance, please state your question. The floor is yours.
Masuno from Nomura Securities. Can you hear me?
Yes, we can hear you, sir.
I have two questions. First question. From June, the operation has resumed, from July to September, regarding sales promotion, as was usual, or I think you are planning to boost it, there is some effect by the current state of infection. UQ mobile new prices, I understand that you have enjoyed the increase. I think you can sell even more. About the au. 4G and No Limit Plan, the shift to high volume I think is very important. The UQ growth and au, a promotion of the high volume plan.
In the second quarter, July to September, what is your outlook for the second quarter?
Thank you for your question. From July to September, sales promotion. How are we planning to grow UQ and on the au side, a shift to high volume plan promotion of that? I think those are the questions. I would like to ask Shoji to respond to your question.
This is Shoji speaking. Allow me to address your question. First of all, as we explained to you, with the COVID-19 effect in the months of April and May, sales volume decreased significantly. From June, there has been some recovery, and as for the month of July, it's actually higher than the internal plan. Using this as a kind of a spring for second quarter and onwards, we need to keep making efforts. That's a given. That's a kind of a prerequisite. Against this backdrop, about 5G, as we already announced in March, because of the COVID-19, our start was affected, as Muramoto said in his presentation. We have a huge sense of crisis here about au 5G. For the sake of the entire Japan, we have to make sure that 5G will be penetrated in the society. We want to boost 5G.
About unlimited plan, about this Data MAX centering on 5G, for the time being, it will be Android. Centering on Data MAX, we will be aggressive in selling this. As for the UQ, as you pointed out, Plan R has been doing very well. Plan R, we want to, again, promote Plan R. With the double brand strategy, the formula, it starts on the month of October. With double brand strategy, rich content can be used with no limits, even with a little slightly higher price for such customers, au 5G. For those customers who are really conscious about the price, then we would like to promote UQ. We would like to do a good job in promoting both of them in terms of sales promotion. There are no changes to those strategies.
Just to clarify, higher than July, I think you were mentioning the sales of the handset, the net addition of contract. I think that actually contributes to the result for the UQ. Are you really focusing on net addition? As for the 4G, I think there is a data No Limit plan. What about the promotion of those?
So much for my first question. au and UQ, au MVNO, of course, we would like to acquire net addition, no mistakes about that. Data MAX, as you pointed out, with 4G, people can use it even with 4G, depending on the customers, Data MAX with 4G. There are many such customers. Again, we would like to promote sales. Android sales ratio, totally, we need to enhance the 5G more. There was a rather slow start in April, but then in May, it was better.
In June and July, the ratio of Android 5G is increasing. We would like to do more of this.
Thank you. Regarding the second question about 5G, March 2020 fiscal year, the 50,000 stations, I think you will have better results. MEC, with the low latency, you can do this for power plants and industry. They would like people to use this. Again, this can be used by consumers. In terms of speed for consumers, how fast it will be, we don't know for sure. For consumers, how are you planning to utilize them? Would you like to elaborate on that, please?
It's more or less related area. Yoshimura, who is overseeing technology. Yoshimura.
Allow me to answer your question.
As you have read hard, 4G LTE network, making it more sophisticated compared with the frequencies dedicated for 5G in terms of speed, it's slightly lower in terms of speed. As you read hard in the presentation and also Shoji mentioned, with regard to 5G network, we would like to deploy them early, and we would like to deploy them in the area, not just in dots. That's important. Prices, measures, handsets, we would like to have a good lineup. We also would like to have a good lineup of services. For consumers, 5G smartphone consumers, we would like to offer them broadly. We believe that's important. Making it NR, and we would like for doing that as well, making it NR. About 5G sets, within this fiscal year, more than 2 million units. That's our plan for consumers.
We would like to deploy the area, and we also would like to focus on sales. Did we answer your question? Thank you.
Next question. Daiwa Securities, Mr. Ando, please. Please ask the question after the voice guidance. Please.
This is Ando from Daiwa Securities. Can you hear me?
Yes.
I have two questions, too. Page 12, presentation material. This is the higher performance in the business area. First question, Life Design Domain will be up JPY 12 billion in profit. From what you said previously, the area that is impacted by COVID-19, like the ones that have to shut down, we were seeing how the impact will turn out. If you have a breakdown of the higher income, what does it look like? What led to this higher profit? What are the components? In terms of revenue, you're higher than first quarter last year, but lower than second, third, and fourth quarter. How can I interpret this?
If you could break this down into the factors, components, please.
Thank you. Let me answer that question. Life Design, as you correctly mentioned, YOY increase was JPY 12 billion. The biggest driver was energy business. Energy business was the biggest driver, accounted for the largest portion. In the first quarter of this year, the stay-at-home
Led to higher electricity consumptions at home. In terms of procurement, the procurement price was lower than our plan. From those two aspects, we had higher profit. This contributed to the higher profit. The next big component was the Smart Pass, the paid members, Smart Pass, we were able to increase profit there. Revenue. We have not looked into this detailed fashion, but from the first quarter, on the accounting term, ENERES sales accounting treatment changed. Until then, things that were posted as sales is now netted and is now posted on the profit side. Saishoji San, could you explain?
What was recognized in sales previously is now minus of cost. The revenue goes down, the profit remains unchanged, but revenue goes down.
Yes. Thank you. Second is also the growth area. Business Services segment is JPY 8.6 billion.
Looking at this Business Services segment, this quarter's highlight is teleworking. I think that is the big factor. This increase of JPY 8.6 billion, was teleworking cost big? In what kind of form did that contribute to higher profit? This teleworking, sustainable? It's a promising business that can be expanded going forward? What kind of route will it go through, to become a promising business? Please.
Mori will answer that question.
This Business Services segment increase in profit. The point that you mentioned is the impact of teleworking due to COVID-19. Of course, that is included here. However, our original growth area, the IoT that we've had pre-COVID-19 and the growth that we've realized through various measures is bigger. It's a bigger contributor. Teleworking portion was added on to that. The contribution of teleworking, the biggest part is mobile. The handsets, mobile routers.
Number of IDs increased, exceeded our plan. When the state of emergency was declared, the impact was largest, then the upside became smaller. Overall, this number of ID pushed up the numbers. The data usage and cloud type application usage are increasing. If you multiply all these factors, we see this increase. In mobile handset and PCs are taken outside, to join, go into the company's network. The remote access is increasing. That's also a positive factor. Another question was how we will trend going forward. The company network, until now, was connection between office and office, or the network in the offices, those were the mainstream. Now, as I mentioned earlier, there are more usage going outside and use from outside. We will focus on that to grow this business in a sustainable fashion. That's all. Thank you.
Just one point of clarification. Other than teleworking, you said that the IoT and others had a bigger contribution on the higher profit this first quarter. What were they?
One is mobile handset net addition.
Cloud applications, we are expanding the sales of cloud applications to be used on that. The associated sales is also increasing. IoT number of lines is growing as a net addition. That's another contributor. Other than that, in Japan, our domestic group companies are helping the shift to IT of the SMEs. This is now progressing, and this telework is added onto that. We also do call center business. Customers' inquiry to the call centers or sales matters are handled at call centers. That's another positive factor. Thank you very much.
Next question, please. UBS Securities, Takahashi-san. After the guidance, please state your question. The floor is yours.
UBS, my name is Takahashi. Two questions. First of all, about the effect of COVID-19 versus communications revenues. What was the actual impact on the service?
For instance, the increase on the voice, and by the data, the decrease. Could you give us some breakdown about the communication service?
Right. You actually answered your question, sir. Regarding the effect on the ARPU, as you rightly said, voice ARPU increased. Data, with the Wi-Fi offloading, it decreased. That's about the mobile communications. It's almost the plus-minus zero, about, in terms of the effect. As for the rest, as was already mentioned, sales of handsets decreased significantly in terms of the sales volume. About the business, the teleworking increased. On the negative factors, overseas economic activities decreased, and because of that, there are some negative effects.
About the voice and the data trend from April to June on a monthly basis, what about the trend on the monthly basis?
I would like to ask Shoji to respond.
This is Shoji speaking.
As you rightly said, the state of emergency was declared, and movement of people. I think there was close link to the movement of people. You could understand it this way. As people stay at home, then the voice had the upside, and the data traffic had the downside, as you already heard. In May, when there was a lifting of the emergency state declaration, gradually it's coming back. The voice decreased, data is recovering. That's the situation. What was symbolic is this, the fixed-line network, the telephone or internet fixed-line networks. I think it's the same for both the individuals and corporates. For the fixed line, our acquisition was pretty good because the people used them more. Did I answer your question, sir?
Thank you. My second question. Page 13, please. Second quarter and onwards, on the growth areas, you are planning to spend more cost.
Here, it's promotion of the cashless settlement or payments, making education online, promotion of the DX. There are several items listed here. In terms of total amount, how much are you planning to spend? What about the breakdown of the cost that you will be spending on these? What's the allocation that you have in your mind? That's my question.
About the detailed numbers, I'm afraid I may not be able to share those with you. In terms of our policy and approach, Shoji-san.
On this, consumers' personal handsets. First, about those handsets. In a way, it's legacy, but on the other hand, it's a growth area, 5G. As I said at the outset, in the first quarter, our start was rather spoiled, we need to recover this. On this, the necessary promotion cost is something we have in mind.
We would like to be aggressive here. The encompassing 3G users, because of the COVID-19. Including our internal plan, we were not able to clear the internal plan. We again need to do better than this. From July, about this 3G encompassing, yes, we have been strengthening our promotional activities, so we need to spend cost on this as well. The cashless businesses, again, as you already know, Ponta Points already started. Ponta Points. Yes, we do feel that au PAY is working, but with au PAY, on that, we would like to again spend necessary cost on this. Personal and the sales area. This is what I wanted to share with you. The COVID-19 educational measures and others, again, I would like to pass the microphone to Muramoto-san.
In the presentation material, we mentioned this, page 13, as you can see.
Not on page 13, contribution to the society. Obviously, we need to do our mission. As I already said, with AEON, we have some programs. Other than that, the society is suffering from COVID-19. We would like to use our capacity to support the society. I hope I answered your question.
Thank you for clarification. About 5G, in terms of the utilities law, that's JPY 20,000 per unit. Other than such discount, are you planning to spend cost on those other than that?
About the business law, telecommunications business law dictates certain commission and others. Of course, we have to comply with what's stated by the law. In the months of April and May, I'm so sorry to say this, but shops like au shops and GMS, they had to make sure that they would not attract the customers.
Promotional activities to attract customers was not possible at all. Sending direct mail, DM, or doing SNS promotional activities, those were not really done properly. That's the actual situation. Including those, we need to spend the cost that is necessary. July and onwards, about the Android, we're using Kaetoku Program. In a nutshell, this JPY 30,000 priced terminals, handsets, will become available. We would like to, again, promote sales, and we would like to see the increase of the sales of handsets. Thank you.
Next question, please. Merrill Lynch Securities, Mr. Kinoshita, please. Please ask your question after the voice guidance.
This is Kinoshita from Merrill Lynch. Thank you very much. I have two questions. First, 5G. au and SoftBank, until the end of August, if you sign up by the end of August, the price will be the same as 4G. You can enjoy 5G plan at the price of 4G. I think that campaign continues until the end of August. You said you are off to a slow start in 5G, but in order to raise the demand, do you plan on postponing this campaign or extending the campaign? Extending the campaign, but under the current circumstances, you may feel hesitant to get more. What is your idea on the campaign? That's my first question.
Shoji will respond to that.
Thank you for the question. This campaign, yes, you are right. If you apply by the end of August, JPY 3,460 is the lowest price, you can enjoy the 4G price for two years. What after this? iPhone that is launched in fall may be one factor. We don't know what will happen, so we are trying to think of various factors. As of today, I'm sorry, I cannot clearly say our plan.
Understood. The factors are the penetration, or the network coverage, and the handset iPhone. Those will be the important factors?
Yes, I would say so. Regarding network, as Yoshimura-san mentioned at the beginning of this fiscal year, we are building the network as we announced. It's not that the schedule is delayed. We are doing this as scheduled. As you correctly mentioned, between April and June, 5G lagged behind. I'm confident that we can recover, and we will think of what to do with the plan on a comprehensive manner.
As of today, we have nothing to clearly announce.
Thank you very much. Next is about your idea going forward in performance. You said you will scrutinize and aim to achieve the target that you had at the beginning of the year. JPY 5 billion increase in operating profit in the first half. You already exceeded that. Will your profit decline somewhere because you will pay cost, you will use cost? What I would like to know is, in the Business Services segment, going forward, this higher profit exceeding the plan, can we expect that you will exceed the plan or will you use the excess to invest in the medium to long-term growth in the Personal segment? Is that your thinking?
It's a difficult question to answer. Two and a half months ago, we announced the forecast for this fiscal year. It's been two and a half months, it is still too early to say something in a determinate factor. From the first quarter result, yes, it seems like we have some leeway, headroom, if you will. Last year was very bad. Now the profit is the same level as two years ago in the first quarter. We could not use the cost we wanted to. In each segment, we will start using cost as we planned at the beginning of the fiscal year. There are gaps from our plan. This allocation will be studied from the second quarter onward. I would like to refrain from saying anything clear today.
Understood. It's not just Personal Services segment, but also in Business Services segment, you may use cost aggressively. That's a possibility?
Yes. Not just short term. We are aiming for mid to long-term growth, we will take measures accordingly. Please understand as such. Thank you.
We don't have much time left, next will be the last question. Next question, please. SMBC Nikko Securities, Mr. Kikuchi. After the guidance, please state your question. The floor is yours, sir.
Kikuchi speaking. I have two questions. First question, about the double brand strategy. How are you planning to deploy this double brand strategy? The similar strategy has been taken by SoftBank. Using SoftBank as an example, how are you planning to actually deploy this? This is my question. What are your focal points? Now about SoftBank, number of cases, past two years or so, they have been focusing on this.
As a background, the monthly discount, that actually decreased, the communication revenue would be okay even if the number of contract decreases. Again, they are now hitting the limitations, that's the real issue. The monthly discount effect is disappearing in your case. You are focusing on double brand strategy. Are you really focused on the number of contracts? About communication revenues, would you like to keep them? As for the communication revenues, you are not really focusing on this. Are you planning to grow total ARPA? Are you going to focus on the number of subscribers contracts? I think many people in the industry are really paying a lot of attention. They might really feel threatened by what you might do. What are your focal points? What's your focus? That's my question. My first question.
Shoji-san.
This is Shoji speaking.
About the double brand strategy, in the previous question, I touched upon this. Speaking of customers, there is the polarization about the customers. Want to use various services or want to pursue higher quality, want to have the higher volume of data, the Data MAX, the 5G Data MAX, is something that they can use. In terms of prices, there are some who want the cheaper prices but still want to have good quality. Such customers could use UQ. That is our basic stance. About SoftBank, this is about the different companies, so I don't really know. I think you mentioned the IDs. IT is important or ARPU is important. Naturally, both are important. Both are important. About the IDs, how are we going to go about the IDs? At the moment, the market has such a low fluidity.
Against this low fluid market, we wanted to increase it, even by a little, and stem the flow of outflow. With the double brand strategy, prepare a lineup of plans so that customers will remain in the KDDI Group. That's most important. From au to UQ type R, because it's relatively cheaper. As the data usage becomes higher, then coming back to au Data MAX, that's the likely scenario. With the double brand strategy, this is going to be just an upgrade of the handset. Very easy procedure, very easy clerical procedure, with little impact on us as well. Within the KDDI Group, we would like to keep the number of IDs and about the communication offer, how best we can keep them, keep it appropriately. Also, we've been doing this business for such customers, total offer is what I'm talking about.
Life design, goods and services. We would like to offer them various customer experiences so that they can find our services convenient. I hope I answered your question. Thank you.
This is how I understood. Looking at the past years of your strategy, the number of IDs, that is very important with 5G going forward. You have au Denki electricity service. In the long term, you need to then ensure the revenue. In keeping the number of IDs in the next one or two years, that will be very important for you. That's how I understood your comment.
Sorry. Excuse me. To maintain the number of IDs, anything will go. That's not what I mentioned. We need to strike a good balance, because with au, with regard to the number of aus, we would like to have the net addition. We would like to keep it.
That's what we feel. Having said that, because of what customer wants, they may go to UQ, but they may come back to au in the future. Here, 5G Data MAX included, we need to combine various strategies. For the customers, the best thing, we really want to offer what's best for customers. You mentioned this, not just on communications, but electricity. If the customer use the au Denki, then the customer's cost will go down by 1%-5%. In the total aspects, they can use au services and products.
Thank you for your answer. Second, the commission paid to the agents or agencies, I think there has been a decrease or so. On the carriers, selection of agents or agencies, I see some differences among the carriers. About the fee paid to agencies, are you planning to review them in the second quarter?
About the au Shop, including your policies towards au Shop, would you like to explain about them, please?
Again, allow me to address your second question. I couldn't really understand what you asked about the agents or about the policies. This is about other companies. I don't really know. What are the differences? I couldn't really understand what you asked. The management support for the agents or agencies for a fixed cost, for instance. Was your support actually lower compared with what others did, or do you think the other companies did too much? I don't really know what other companies are doing. Not everything has been disclosed.
No, if you are not doing anything extraordinary, that's okay.
First, if you are talking about the support under the COVID-19, I can't disclose detailed numbers. As necessary, because agencies suffered so much, so we are extending necessary support. Second quarter and onwards to agents and agencies about policies on fees, we do not have a plan to change them drastically from the second quarter. I'm sorry about the other companies. I don't really know. That's all. Thank you.
Now time has come, so we would like to end KDDI-