Thank you very much for waiting. We would now like to start the financial results briefing of KDDI Corporation for the Q1 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 Hongo 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-nineteen.
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, 1st 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, 1st 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, 2nd row, Nanae Saishoji, Executive Officer and General Manager of Corporate Management Division. 3 financial results related materials presentation, Tanshin and detailed materials and one TSE 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 and A session today.
First,
Muramoto will first explain the financial results followed by Q and A. Mr. Muramoto, please.
Thank you very much for joining us in the KDDI Business Results Meeting, Altaviya very busy schedules. Let me share with you the Q1 results for the fiscal year ending in March 2021. First of all, 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. First, on entering the era of new normal, let me explain about our approach towards the era with COVID-nineteen and beyond.
Please look at the left. With the spread of COVID-nineteen, 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 5 gs, IoT and AI to further promote the digital transformation.
To enhance the resilience of companies, the high level 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 will 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 analysis by an employee survey. Going forward, we intend to make a new hybrid work style enrouted 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 4 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 field and support self driven career development. The right shows in house DEX. 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-nineteen based on which various measures have been taken. Through our businesses, we continue to contribute to the stability of society and living. Now I'd like to introduce you to some of our efforts from the next page. The left shows start up 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 and Investee by the KTDA 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 start ups and operators. Next concerns our undertaking at E.
ON. 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 2 builds whose English language learning is changing due to new learning guidelines, we are distributing English conversation video content free of charge. We are supporting DEX of Education Environments. Next, in Entertainment and Sports, we are exploring means to live with COVID-nineteen.
The left, SoundVR times AU 5 gs, shows an interactive audio and video technology that allows you to freely focus on what you want to see and listen to in a 3 60 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 Q1 of the fiscal year 2021 ending in March. Highlights of the consolidated results for the Q1. The consolidated operating revenue was 1,240,000,000,000 yen The full year progress was 20 2,700,000,000. The full year progress was 23.7 percent. In the middle, the operating income was JPY 290,700,000,000.
The full year progress was 28.2%. On the bottom, the profit for the period attributable to owners for the parent was 182,300,000,000 yen The full year progress was 28.5%. We're carefully analyzing the impact on operating results from the 2nd 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, totaled a €20,600,000,000 increase in the income with steady progress.
On the other hand, due to COVID-nineteen, the sales volume of mobile handsets decreased significantly, which led to a sales cost reduction, resulting in an increase of the operating income by 24,100,000,000 yen Further, a decrease in the gross margin of mobile handset sales and others contributed to a 9,800,000,000 yen decline in the income. The Q1 operating income saw the increase partly because of the poor results in the Q1 last year. Handset sales decreased 450,000 units year on year. Migration from 4 gs to 5 gs 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 5 gs.
This slide summarizes the performance impact of COVID-nineteen. In the Q1, 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 Q2 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 IDxengagementxtotal 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 DataMax 5 gs All Star Pack from June 25. On the other hand, to your right, for the customers preferring middle volume, UQ Mobile started offering Sumaho Plan R on June 1. 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 27,200,000 as of the end of June. On the right side, UQ Mobile number of net increase grew by 1.5 times year on year in Q1 and by 2.4 times 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 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 PuntaPoint, the long awaited common point from May 21. 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, 1st quarter au total ARPA was 7,790 yen, up 4.6% year on year. The growth of au denki ARPA was especially prominent With the steady increase of the number of au Dinky subscribers and the extended time at home due to the spread of COVID-nineteen, au Dinky ARPA was 640 yen in the Q1, up 31% year on year. Right side, number of au Smartpass premium members is growing favorably and exceeded the 10,000,000 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 5x, remote access by 4x and videoconference by 8x. Right side, KDDI Matomite 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 1.6x, tablets by 1.8x and mobile routers by 1.9x. 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 0 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 5 gs for corporate customers. Left side, Soracom will launch MVNO Business adapted to AU 5 gs network by the end of this fiscal year. Furthermore, in order to create use cases leveraging 5 gs together, we began pilot test demonstration test of ultra low latency application environment using AWS Wavelength from July 2020.
Right side shows office solution offering utilizing 5 gs to resolve issues at office buildings and support work style reforms. We will promote the DX, leveraging the characteristics of 5 gs through partnership with Mitsui Fudosan. Next is AU 5 gs 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 5 gs nationwide expansion and promote 5 gs consumer use and IoT market penetration in each industry.
My last slide is a summary for today. Based on our basic policy toward COVID-nineteen, 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 Q1, the impact of COVID-nineteen has become apparent. We will carefully analyze the impact on the on our operating results from Q2 onward and aim to achieve the initial plan.
The growth yields, 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 2 questions per person. If you have 2 questions, please wait for the answer to your first question and then ask your second question. We would like to take 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 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.
And from July to September, regarding sales promotion, as was usual or I think you are planning to boost it, but there is some effect by the current state of infection. But YUKU Mobile new prices, I understand that you have been increasing enjoyed the increase. I think you can sell even more. Now about the au, 4 gs and non limit plan, the shift to high volume, I think, is very important. But the UQ growth and AU, a promotion of the high volume plan.
And the Q2, July to September, what is your outlook for the Q2? Thank you for your question. From July to September, sales promotion, how are we planning to grow YUGU? And on the au side, shift to high volume 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-nineteen effect in the months of April May, sales volume decreased significantly. But from June, there has been some recovery.
And as for the month of July, it's actually the higher than the internal plan. So using this as a kind of a spring for Q2 and onwards, we need to keep making efforts. That's a given. That's a kind of a prerequisite. Now against the backdrop about 5 gs, as we already announced in March, because of the COVID-nineteen start was affected, as Muramoto said in his presentation.
We have a huge sense of crisis here about au 5 gs. For the sake of the entire Japan, we have to make sure that 5 gs will be penetrated in the society. We want to boost 5 gs. About unlimited plan, about this datamax centering on 5 gs, for the time being, it will be Android. But centering on a datamax, we will be aggressive in selling this.
As for the U. K. 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 format starts on the month of October, but with double brand strategy, rich content can be used with no limits even with a little slightly high price for such customers, au 5 gs.
But for those customers who are really conscious about the price, then we would like to promote EQ. 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 results for the UQ.
Are you really focusing on net addition? As for the 4 gs, I think there is a no data, no limit plan. What about the promotion of those? So much for my first question. Au and Yuugao, au MVNO, of course, we would like to acquire Net Edition.
No mistakes about that. Datamax, as you pointed out, with 4 gs, people can use it even with 4 gs, depending on the customers. With Datamax, with 4 gs, there are many such customers. So again, we would like to promote sales. Android sales ratio.
Totally, we need to enhance the 5 gs more. So there was a rather slow start in April, then in May, it was better. In July June July, the ratio of Android 5 gs is increasing, and we would like to do more of this. Thank you. Regarding the second question about 5 gs, March 2020 fiscal year, the 50,000 stations, I think you will have better results.
But Mick, with the low latency, you can do this for pop up. Plants and industry, they would like people to use this. But again, this can be used by consumers. But 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 are breathing hard, 4 gs LTE network, making it more sophisticated for the compared with the frequencies dedicated for 5 gs in terms of speed, it's slightly lower in terms of speed.
But as you really heard in the presentation and also Shoji mentioned, with regard to 5 gs 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. So prices, measures, handsets, we would like to have a good lineup. We also had a we'd like to have a good lineup of services. So for consumers, 5 gs smartphone consumers, we would like to offer them broadly.
We believe that's important and making it NRR and we would like to be doing that as well, making it NRR. About 5 gs, 5 sets, within this fiscal year, more than 2,000,000 units. That's our plan for consumers. So we would like to deploy the area and we also would like to focus on sales. Did we answer your question?
Thank you.
So next question. Daiwa Securities, Mr. Andou, please ask the question after the voice guidance. Please. This is Andou from Daiwa Securities.
Can you hear me? Yes. I have two questions too. Page 12, presentation material. So this is the higher performance in the area the business area.
First question, life design domain will be up JPY 12,000,000,000 in profit. From what you said previously, the area that is impacted by COVID like the ones that have to shut down, We were seeing how the impact will turn out. But if you have a breakdown of the higher income, what does it look like? What led to this higher profit? What are the components?
And in terms of revenue, you're higher than Q1 last year, but lower than second, 3rd and 4th quarter. So how can I interpret this? So if you could break this down into the factors components, please? Thank you. So let me answer that question.
Life Design, as you correctly mentioned, Y o Y increase was 12,000,000,000. The biggest driver was energy business. Energy business was the biggest driver accounted for the largest portion. And in the Q1 of this year, the stay at home led to higher electricity consumptions at home. And in terms of procurement, the procurement price was lower than our plan.
So from those two aspects, we had higher profit. This contributed to the higher profit. And the next big component was the Smart Pass, the paid members, Smart Pass, we were able to increase profit there. Now revenue, We have not looked at the into this detailed fashion, but from the Q1, on the accounting term, Enere's 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? So what was recognized in sales previously is now minus of cost. And so the revenue goes down, profit remains unchanged, revenue goes down. Yes. Thank you.
And second is also the growth area. So business services segment is 8,600,000,000. So looking at this business services segment, this quarter's highlight is teleworking. I think that is the big factor. So this increase of JPY 8,600,000,000, was teleworking cost big?
And what kind of form did that contribute to higher profit? And this teleworking is sustainable. It's a promising business that can be expanded going forward. And what kind of route will it go through to become a promising business, please? So Mori will answer that question.
This business segment increase in profit, The point that you mentioned is the impact of teleworking due to COVID-nineteen. Of course, that is included here. However, our original growth area, the IoT that we've had pre COVID and the growth that we've realized through various measures is bigger. It's a bigger contributor. And teleworking portion was added on to that.
So the contribution of teleworking, the biggest part is mobile. The handsets, mobile routers, number of IDs increased, exceeded our plan. When the emergency state of emergency was declared, the impact was largest. And then, the upside became smaller. But overall, this number of ID pushed up the numbers.
And the data usage and cloud type application usage are increasing. So if you multiply all these factors, we see this increase. And in mobile, mobile handset and PC, PCs are taken outside to join go into the company's network. The remote access is increasing. So that's also a positive factor.
And another question was how we will trend going forward. The company network until now was connecting connection between office and office or the network in the offices that those were the mainstream. But now, as I mentioned earlier, there are more usage going outside and use from outside. So we will focus on that to grow this business in a sustainable fashion. That's all.
Thank you. Just one point of clarification. So other than teleworking, you said that the IoT and others had a bigger contribution on the higher profit this fiscal year this Q1. What were they? One is mobile handset net addition.
And cloud applications, we are expanding the sales of cloud applications to be used on that. So the associated sales is also increasing. And IoT number of lines is growing as a net addition, so that's another contributor. And 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 on to that. And we also do call center business. So customers' inquiry to the call centers or sales matters are handled at call centers. So 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 effective COVID-nineteen versus Communications revenues, what were the actual impact on the service? For instance, the increase on the voice and data, they decreased. Could you give us some breakdown about the communication service?
Right. You actually answered your question, sir. Regarding the effect on ARPU, as you rightly said, sound voice ARPU increased data, the Wi Fi offloading, it decreased. That's about the mobile communications. It's almost the plusminus0 in terms of defect.
As for the rest, as was already mentioned, sales of handsets decreased significantly in terms of the sales volume. About the business, teleworking increased. On the negative factors, overseas economic activities decreased. And because of that, there are some negative effects. About the voice and 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 in this way.
As people stay at home, then the voice had 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.
And 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 co 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. Q2 and onwards, on the growth areas, you are planning to spend more cost. Here, promotion of the cashless settlements or payments on making education online and promotion of the DEX, there are several items listed here. In terms of total amount, how much are you planning to spend?
And but what about the breakdown of the cost that you will be spending on this? 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. But in terms of our policy and approach, Shouji san.
On this, consumers' personal handsets first about those handsets. In a way, it's legacy, but on the other hand, it's of growth area, 5 gs. As I said at the outset, in the Q1, our start was rather spoiled. So we needed to recover this. So on this, the necessary promotional cost promotion cost is something we have in our mind.
We would like to be aggressive here. But the encompassing 3 gs users, because of the COVID-nineteen, including our internal plan, we were not able to clear the internal plan. So we again need to do better than this. From July, about this 3 gs encompassing, yes, we have been strengthening our promotional activities. So we need to spend cost on these as well.
But the cashless businesses, again, as you already know, minor points already started the minor points. Yes, we do feel that au payment is working. But with au payment 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. About the COVID-nineteen educational measures and others, again, I would like to pass the microphone to Manamoto san.
In the presentation material, we mentioned this Page 13, as you can see no, not on Page 13, but contribution to the society. Obviously, we need to do our mission. So as I already said, with E. ON, we have some programs. And other than that, those the society is suffering from COVID-nineteen.
We would like to use our capacity to support the society. I hope I answered your question. Well, thank for clarification. About 5 gs, in terms of the utilities load, that's 20,000 yen 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, but in the months of April May, I'm so sorry to say this, but about shops like AU Shops and GMS, they had to make sure that they would not attract customers. So promotional activities to attract customers was not possible at all. Sending direct mail DM or doing SMS promotional activities, those were not really done properly. That's the actual situation.
So including those, we need to spend the cost that is necessary. July and onwards, about the Android, using Kaitoku program, in a nutshell, this 30,000 yen priced terminals, handsets will become available. So 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, 5 gs, you and SoftBank until the end of August. If you sign up by the end of August, the price will be the same as 4 gs. You can enjoy 5 gs plan at the price of 4 gs.
So I think that campaign continues until the end of August. So you said you are off to a slow start in 5 gs. But in order to raise the demand, do you plan on postponing this campaign extending the campaign? But under the current circumstances, it may be you may feel hesitant to gain get more. But what is your idea on the campaign?
That's my first question. So Shoji will respond to that. So thank you for the question. This campaign, yes, you are right. If you apply until by the end of August, you can enjoy the 3460 is the lowest price.
You can enjoy the 4 gs price for 2 years. So what after this? Maybe many things may happen. 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. So as of today, I'm sorry I cannot clearly say our plan. Understood. So the factors are the penetration or the network coverage and the handset iPhone. So those will be the important factors.
Yes, I would say so. But regarding network, as Yoshimura san mentioned, at the beginning of this fiscal year, we said that we are building the network as we announced. And so it's not that this schedule is delayed. We are doing this as scheduled. But as you correctly mentioned, between April June, 5 gs lagged behind.
And I'm sure I'm confident that we can recover, but and we will think of what to do with the plan on a comprehensive manner. But 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.
So JPY 5,000,000,000 increase in operating profit in the first half or the first half? You already exceeded that. And will your profit decline somewhere because you will pay cost, you will use cost? So what I would like to know is in the business services segment, going forward, this higher profit exceeding the plan, can we expect you will exceed the plan? Or will you use the excess to invest in the medium to long term growth in the personnel segment?
Is that your thinking? It's a difficult question to answer, but 2.5 months ago, we announced the forecast for this fiscal year and it's been 2.5 months. So it is still too early to say something in a determinant factor. From the Q1 result, yes, it seems like we have some leeway headroom, if you will. Last year was very bad and so now the profit is the same level as 2 years ago in the Q1.
So and we could not use the cost we wanted to. So in each segment, we will start using cost as we planned at the beginning of the fiscal year. So there are gaps from our plan and this allocation will be studied from the Q2 onward. So I would like to refrain from saying anything clear today. Understood.
So it's not just personal 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, so we will take measures accordingly. So please understand as such.
Thank you.
We don't have much time left. So we would like 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 you're planning to deploy this double brand strategy? The similar strategy has been taken by SoftBank. So 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 2 years or so, they have been focusing on this. As a background, the monthly discount, that actually decreased. So the communication revenue would be okay even if the number of contract decreases. But again, they are now hitting the limitations. So 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? But as for the communication revenues, you are not really focusing on this?
Are you planning to grow total ARPA? So 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. But 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, then the data max, 5 gs data max is something that we can they can use. And in terms of prices, there are some who want the cheaper prices, but still want to have good quality. Such customers could use YUGU. That is a basic stance. About the SoftBank, this is about the different companies, I don't really know.
But the number I think you mentioned the IDs or ID is important or ARPU is important. Naturally, both are important. Both are important. But the IDs, how are we going to go about the IDs? At the moment, the market has such a low fluidity.
So against this low fluid market, we wanted to increase it even by a little and to 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 Yuqiu type R because it's relatively cheaper. But as the data usage becomes higher, then coming back to au datamax, 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 and with little impact on us as well. So within the KDDI Group, we would like to keep the number of IDs. And about the communication ARPU, how best we can keep them keep it appropriately. And also, we've been doing this business for such customers. Total ARPA is what I'm talking about, life design, goods and services.
We would like to offer them. 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. So this is how I understood.
Looking at the past years of your strategy, the number of IDs, that's very important with 5 gs going forward. You have a Yudenki electricity service. So in the long term, you need to then ensure the revenue. So in keeping the number of IDs in the next 1 or 2 years, that will be very important for you. That's how I understood your comment.
Sorry, I so excuse me, to maintain the number of IDs, anything will go. Anything will go. That's not what I mentioned. 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. But having said that, because of Cobalt customer wants, they may go to UQ, but they may come back to AU in the future. So here, 5 gs Datamax included, we need to combine various strategies. So 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 Yudenki, then the cost customers' cost will go down by 1% to 5%. So in total aspects, they can use au services and products. Thank you for your answer. 2nd, on the commission paid to 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 Q2? 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? Because I don't really know what other companies are doing. Not everything has been disclosed. No, no, we are not doing anything extraordinary.
That's okay. First, are you if you are talking about the support under the COVID-nineteen, I can't disclose detailed numbers as necessary because agencies suffered so much, so we are extending necessary support. And Q2 and onwards, to agents and agencies about policies on fees, we do not have a plan to change them drastically from the second quarter. And 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