We will now begin the financial results briefing of KDDI Corporation for the third quarter of fiscal year ending March 2025. I am Nakoji of Public Relations Department and will serve as the moderator today. This briefing will be held in two parts. In part one, we will give you the financial results, and from 4:45 P.M., we will start part two on HR matters. Today's briefing is held in this venue and also broadcast live on YouTube and other media. We will start the part one, financial results. Three financial results-related materials are posted on our IR website. For the attendees in the venue, please check your handout. Let me introduce the four participants for part one today. Makoto Takahashi, President, Representative Director, and CEO. Nanae Saishoji, Managing Executive Officer, Director, CFO, and Executive Director of Corporate Sector. Kenji Aketa, Executive Officer and Executive Director of Corporate Management Division.
Shigeru Ezoe, General Manager of Accounting Department. President Takahashi, please.
Thank you. Let me share with you the financial results for the third quarter of the fiscal year ending in March 2025. I will explain these four items today, as you can see. First, let me focus on the consolidated results. The third quarter cumulative consolidated results for the fiscal year ending in March 2025 enjoyed a good progress in line with the full year forecast. The left shows the operating revenue, which was JPY 4,364.2 billion, up 2.3% year-on-year. The progress ratio was 75.6% versus the full year forecast. The center shows the operating income, which was JPY 864.6 billion, up 2.0% year-on-year. The progress ratio was 77.9%. The right shows the net income with a progress ratio of 77.8%, excluding a temporary impact due to reorganization of subsidiaries and affiliates, it was +0.6% year-on-year. Next, let me explain factors for change in the consolidated operating income.
The consolidated operating income grew with the steady increases of the communications ARPU revenues and main businesses such as finance, energy, and DX, as well as brisk performance of Lawson. From the left group, MVNO and inbound roaming revenues were JPY -12.2 billion year-on-year. Multi-brand communications ARPU revenues were up JPY 3.5 billion. Financial business and energy business combined were JPY +12.6 billion. Lawson's equity method accounted income was up JPY 18.2 billion. DX and Business Services segment were JPY +12.3 billion. The income increased JPY 16.9 billion by absorbing technology costs and an increase in sales promotion and advertising costs. Next, on Personal Services segment. First, on total ARPU revenues, both communications and value-added ARPU revenues increased. The communications ARPU revenues up to the third quarter were JPY + 3.5 billion year-on-year. Value-added ARPU revenues was +JPY 27.9 billion year-on-year.
As for the outlook for the fourth quarter communications ARPU revenue, we are forecasting an increase in revenue with new plans in UQ mobile and au. Next, on smartphone subscriptions and churn rates. Please look at the left. The number of smartphone subscriptions, which is a growth foundation for ARPU revenues, has been steadily increasing. The right shows an increase to mobility due to intensifying competition. While the multi-brand churn rate has increased, au churn rate has been maintained low. Next is about momentum. Please look at the left. Last November and December, we introduced a competitive Komi-Komi Plan+ in UQ mobile and Money Activity Plan+ in au under new topping in povo, where virtually 30 GB can be used per month at the least expensive price in the industry.
Moving to the right, with these new plans, monthly net addition of the multi-brand ID has recovered the momentum since November. Concerning the total ARPU, we are maintaining an increasing trend for both communications and value-added ARPU. Please look at the right. Value-added ARPU increased mainly in finance and settlements, helped also by Money Activity Plan. As for communications ARPU by brand, it was +2.1% year-on-year in au, +3.3% in UQ mobile. Both are growing. The migration from UQ mobile to au, were the steady increase of 1.5 x year-on-year. To expand total ARPU, we will be exercising synergy of communications times finance. Please look at the left. We have updated well-accepted Money Activity Plan to be more attractive, making it easier to accumulate Ponta points. We aim to increase the ratio of unlimited plan and to foster utilization of value-added services, while increasing the number of subscriptions.
Please look at the right. We know from the track record that compared with other unlimited plans, au Money Activity Plan is effective in increasing the frequency of each financial service usage. With more attractive au Money Activity Plan+, we intend to further expand our customer base, accelerating the growth of au Financial Group. Our collaborative initiatives with Lawson are also progressing. The left shows Ponta Pass, which has been well-received since the launch in October. New acquisitions increased about 20% quarter-on-quarter. Customers using other carriers increasingly enrolled as Ponta Pass members. Povo Data Oasis has also been well-received. A total of 100,000 people are using it at more than 90% of Lawson stores. We are planning to start eSIM sales at all Lawson stores soon. Please look at the right.
These initiatives are working and the number of visitors to Lawson has been rising, contributing to the expansion of Lawson daily sales, which is +3.4% year-on-year. Lawson has a target of 30% reduction of store operations by 2030. It has started thinking about a target for daily sales increase as well. We continue to strengthen collaborative initiatives for communications times convenience stores, realizing the growth of the two companies. We will continue to strengthen the networks. Last year, we achieved number one in experiential quality in user experience evaluation by Opensignal. Please look at the left. To further increase the communication quality, we started offering 5G SA service in all the Sub6 base station areas, utilizing the highest number of Sub6 base stations in Japan.
As you can see in the right, we obtained a commercial license approval for direct-to-cell service, D2C, with a satellite, completing preparation for service launch. From this spring, there will be more compatible devices. We aim to offer the service to about 2 million customers.
Next is on financial business. Left side. The customer base for our financial business is expanding steadily. Au PAY Card exceeded 10 million members, and au Jibun Bank's mortgage loan is also doing well, with cumulative loan amount exceeding JPY 5 trillion, the fastest of any online bank. We are also working with Mitsubishi UFJ Financial Group to promote initiatives to utilize AI, as you see on the right side. Developing finance-specialized LLM and using it to propose financial services to customers, we will build a next-generation remote customer service platform that utilizes convenience stores and other facilities to expand customer touchpoints for financial services and promote service reform. Next is on Business Services segment. Business Services segment is expanding steadily, driven by growth area, left side.
Year-to-date consolidated operating revenue for FY March 2025 reached JPY 1,012 billion, driven by 19.9% year-on-year growth in the growth area. IoT-related services are showing particularly strong growth in the growth area. Right side. Operating revenue was JPY 122 billion, up 20.8% year-on-year, and the cumulative IoT connections were up 22.2% year-on-year, showing steady growth. Let me explain WAKONX, a business platform for the AI era. At WAKONX, we are refining our strength by adding operational and security values on our communication and AI infrastructure. We will leverage these strengths to promote scaling of industrial DX solutions and AI utilization. Enhancing strength of WAKONX. As shown on the left, we deployed ConnectIN on a full scale in January 2025.
By integrating communications into all products and services with our partners, we will expand WAKONX communications infrastructure and contribute to creating added value for our customers with our operational strengths. Right side. Security becomes even more important in the era where communication and AI are integrated into all products and services. In order to strengthen our security business, we made LAC a wholly owned subsidiary to integrate communication and security. We will support our customers' digitalization through these initiatives. Industry solution use cases are also increasing. Left side. In facility solutions aimed at digitalizing offices, we provide comprehensive services from interior to ICT infrastructure with group cooperation and partnering. There is a strong demand for integrated solutions with communications and with inquiries from major e-commerce companies. Our operating revenue for FY 2025 is growing steadily, up over 50% year-on-year.
In order to achieve further growth, we will use the opening of Takanawa Gateway City, where our new headquarters will be relocated, as an opportunity to expand digitalization beyond our office to include buildings and entire towns using our own initiatives as a model case. Next is on AI utilization. Tama data center, on the left, began operating GPUs, and preparations to provide AI services are progressing steadily. In addition, to meet the growing demand for GPUs, we decided to introduce NVIDIA's latest GPU, which offers significantly higher performance than conventional GPUs at former Sakai plant site, which is scheduled to begin full-scale operation next fiscal year. We will make full use of this AI platform to accelerate our customers' digitalization through WAKONX. Next is on enhancing the power to connect.
We are committed to developing future talent towards a society in which anyone can make their dreams a reality, which is our goal in KDDI VISION 2030. Specifically, we have held online instructions by professional soccer players, face-to-face interactions, and cashless school festivals at 100 schools to provide financial education to students. Furthermore, at the Osaka, Kansai Expo, which will be held from April this year, Future City Pavilion will be providing visitors with experience of creating the future. Next is on MWC Barcelona 2025. Following on from last year, KDDI will exhibit from March 3rd to 6. In addition to introducing our initiatives in communications and AI, retail tech and mobility, we will also give a keynote speech on the first day of MWC. Please look forward to it.
Toward KDDI VISION 2030, we have many initiatives coming up this year, including our new HQ relocation, next generation convenience stores, and direct-to-cell service. We will further enhance the power to connect with AI to deliver exciting future vision. To realize the future society I've described so far, we need a high value-added economic circulation. As you know, thanks to various policies, pricing in Japan is considered to be among the lowest among the developed countries globally. In addition, telecom carriers are striving to create an environment with high connectivity quality through friendly competition. As the use of AI becomes commonplace in the future, the ICT industry will support it by responding to further traffic increases, disasters, and security measures. On the other hand, outsourcing costs to partners who build facilities and operation-related costs are rising, and we are being asked to negotiate fair transaction prices and pricing pass-through.
We believe it is necessary to promote a virtuous economic cycle where we provide valuable services, including value-added services to customers, receive payment in accordance with that value, and use it to further invest. We want to contribute to a virtuous cycle of economy supported by co-creation with such partners and the realization of sustainable future society. Lastly, today's summary. Consolidated results for the three quarters of FY March 2025 are progressing in line with the full-year forecasts. In addition to steady growth in major businesses, Lawson performs strongly. In Personal Services segment, total ARPU revenues increased steadily. New pricing plans are introduced for multi-brand, and both communications and value-added ARPU revenues are expected to grow. We will promote initiatives of communications and value-added services such as financial services and Lawson to generate synergy. In Business Services segment, growth area is expanding steadily, driving growth.
In addition, we will strengthen communications, AI infrastructure, operations, and security, which support WAKONX. We will strengthen our initiatives for the future to achieve sustainable growth and enhance the power to connect with our partners in order to realize a sustainable society. Thank you very much for your attention.
We now would like to entertain your questions. We will be accepting questions both from the venue and from Zoom webinar. When you ask a question, please identify yourself by your name and affiliation. Please limit questions to two questions per person. If you have two questions, please wait for the answer to your first question, then give us the second question. If you have a question, please raise your hand. Those of you participating via Zoom webinar, please push the Raise Hand button. At the venue, B, fourth from the stage, please.
[Nikkei xTECH, Nonomura]. Regarding the first question, Starlink launch. When are you going to launch this? Last year, 2024, from the beginning of December, you would like to launch it, that was mentioned. But now, the timing has been changed from this spring. What are the reasons behind that?
Thank you for your question. About the Starlink DTC, direct-to-cell, by the end of the year, getting the approval, and now we are prepared to launch the service. Regarding this approval for licensing, this is about using the wave from the satellite and also doing so from the devices, we were able to get the approval. So we are prepared to launch the service. Having said that, we are still doing a test. At the time of the launch, we would like to create an environment to serve a certain number of customers, about 2 million devices. We are confident that we could expand the scope to 2 million. In addition to Android, iPhones, obviously, we are studying that, iPhones as well, and would like to have a thorough preparation. Then with a certain level of volume, in the spring, we would like to start with 2 million devices.
Regarding the service content, DTC on messages, as we studied, Gemini can be used. We have already learned that, s o AI service collaboration is also being studied because Gemini can be used. So, in areas where the wave is not available on the extension of messaging service, people will be able to use Gemini. That is the kind of service we have and imaged, but as details become clearer, we would like to get back to you and make an announcement.
Second question, please. It is about other company, SoftBank and OpenAI, there was an announcement. WAKONX is promoted by KDDI. So, how do you look at what they are doing? What is your take?
That was a sudden news. With Mr. [Son], well, about Mr. [Son]'s press conference, I watched it, but it was still difficult for me to really get a specific image, difficult for me to make a comment t hat Cristal, they are developing that. An d from LLM, the AI has become from LM to agent, t hat shift is clear. Selling that agent to corporations, I think people are saying that's their main aim. I thought that was moving to that direction. From corporates, there will be data, and by linking the data, trying to make a contribution to the future industries, I thought that was the idea, and I could fully understand where they were coming from. [ Subsidiary FLYWHEEL], as we receive data from corporations using LLM and connecting that further to the industry, that's already being done. In terms of the direction, I could see where they are coming from. To be honest with you, the world of LLM is moving so quickly.
Can we just stick to the OpenAI? That was the question. It's just a personal opinion, but I had a question. With the OpenAI, OpenAI is great, obviously, but then Google's Gemini, AWS.
Rapidly, the LLM has been prepared. If you look at the DeepSeek of China, there are both pros and cons, but the world is changing so rapidly. You are adhering to the 450 billion and 1,000 people, would it be all right to adhere to that, that much. Having said that, this is what Mr. Son is doing, so I'm pretty sure he has certain concepts, ideas. We would just like to monitor this carefully. That's all from me.
Please raise your hand if you have the next question. Line C, s econd from the front, please, c loser to the door.
Asahi Newspaper, [Kuroda] is my name. I have one question. Fuji Television Network had some issues, I have a question on that. You stopped your TV commercial. If you have a take on this incident, could you share with us? Now, what are the conditions to resume the TV commercial, d epends on the third-party committee and the governance improvement to be announced by Fuji Television Network side. What are the conditions for you to resume TV commercials? Thank you.
We have the same stance as other companies. We will take a comprehensive view and decided to suspend the TV commercial until end of March. We have suspended our TV commercial on Fuji TV. I think different decisions will be made by each company. We will look at the progress of the third-party committee, which other companies are also doing. We will look at that and make the right decision.
Please raise your hand if you have a question. B, front line in the center, please.
Freelance, [Ishikawa] is my name. December end, the guideline was changed. Any impact about the change of the guideline?
About the guideline impact, December 26th, I think it was revised, and this program has been strengthened. It was at the last minute, identifying the last-minute demand is difficult.
To be honest with you, I don't really think the impact was that significant. About the trial discount issue, there were some issues, but regarding each carrier, not much was done. We will continue to monitor what peers are doing and would like to be careful, but broadly speaking, no significant impact has been felt.
About Starlink, you can do messaging, and Gemini can be also used. You mentioned that. You are planning to roll out those services, is that right?
About messaging, we have RCS. We are preparing concerning RCS. Starlink, D2C messaging will be the main one, we'll be responding to that with RCS when you do the exchanges. On the extension, since there's a Gemini, in the exchanges using Gemini, doing those exchanges, that would also be possible.
By this spring, we would like to complete the preparation so that we can roll out the service to users. RCS alone is not really that interesting, we would like to have something fun. We believe that the preparation is ongoing by the spring.
Next questioner, please. In the room, center, line C, first person, c loser to me. Thank you.
Keitai Watch. [Sekiguchi] is my name. In your presentation, you touched on povo, Lawson. Povo eSIM will be deployed soon, you said. At the launch timing, you mentioned early part of 2025, but as you said, it will be within by the end of FY 2024. Is this a delay? Is there a delay, or p ovo eSIM deploying to all stores, right?
Yes. Earlier I said —which year did I say? FY 2024, so i t is in line with the plan.
You mentioned early part, I thought maybe around January.
Maybe there is a one-month difference, but not a big difference.
Nothing has happened?
No.
Povo Data Oasis usage status. How is it going?
About 100,000 are using. I think we are off to a good start. Already 90% of the stores is available. With that GPS, you can get 100 mega, and I think that is attracting the users. Once eSIM can be sold in all stores, it will activate and gain momentum. I am having high expectations.
Thank you.
Due to the time constraint, next will be the final question. One question please. C, second row from the top, please.
Freelance. [ Ishino] is my name. Communication, finance, the synergy between the two, au Money Activity Plan. Track record, positive effects on finance, the Gold Card possession rate, and also the settlement unit price that was mentioned. I think that you are referring to the Money Activity Plan. Now with au Money Activity Plan+, the return method has been changed.
Do you think the trend will be changing? If it's the same, that's fine. What acceleration, if there's any accelerating trend, please let me know. From Money Activity Plan to au Money Activity Plan+, for customers, the frequency has increased 80% at the time of upgrade.
So, Money Activity Plan to Money Activity Plan+, yes, there is some acceleration. If you could understand it that way, that's fine.
Second question, povo Data Oasis. Total 100,000 people. What's your take?
I think there will be more users. It's free of charge, could have been the 1 million total number, in my opinion.
To stimulate the use, are there any measures?
Let's see. Already 100,000 are using it. It's pretty brisk. That's how the frontline people understand this. As I said, at all the stores, the povo Oasis rollout regarding that. Regarding the biggest effect, I think the promotion effect is the biggest, that all the stores, povo illustration will be shown and everybody, people, will be exposed to povo. With that, I can expect some acceleration. I have high expectations in that regard.
Thank you very much. I'm so sorry for those who are raising your hand now. If you could come to our public communications, public relations later. We will now bring this part one to a close. That is all for the financial results briefing part one. Thank you very much. The executives on the stage will exit for a moment. After this, we will start part two. We will change the layout, so please bear with us. If you could wait for a moment, we would appreciate it.
[Break]
Ladies and gentlemen, thank you so much for waiting. We would like to start the second part, KDDI's change in President and Representative Director, CEO, and Executive Officer. On this issue, TSE timely disclosure press release has just been made. It is also posted on the KDDI's website. Those of you who are at the venue, please refer to the handout. Let me introduce today's attendees. President, Representative Director, CEO, Takahashi Makoto. Director, Senior Managing Executive Officer, Matsuda Hiromichi. The two attendees, CEO, Mr. Takahashi, and Matsuda, will also express comments, then Q&A and photo session will take place. Regarding online distribution, it will cover up to Q&A session. Mr. Takahashi, the floor is yours.
Thank you. As you can see in the handout, today the board meeting was held, KDDI's board meeting was held, As of April 1st, the current Managing Executive Officer, Matsuda Hiromichi, will become the CEO and Representative Director as of April 1st. Regarding Matsuda, who will be the new President, as you can see, currently, he is Director and Managing Executive Officer. He is also General Manager of Advancing Business Technology Strategy Division and overseeing Business Exploration and Development Division, as well as Open Innovation Division. As you know, the environment surrounding the communications industry has been changing significantly. In the communications, 5G as a core, it showed development centering on smartphones. Going forward, we are now in the era of AI and DX. Communication is penetrating on everything. With that, it is now changing the environment with an exorbitant speed, if you look at the environment surrounding our lives.
It has been said that the President of a company has been changing as the communication generation changes. With the growth of 5G, I served as the President for seven years. If you look at the world beyond 5G, it is not 6G. It will be the era of AI. Along that line, regarding the person who will be driving the company, this person has to be extensive experience in technology and someone who was not feeling hesitant vis-à-vis global partners and has to be able to build business. Mr. Matsuda is well-versed in technology. He has also been very positive, active in cutting-edge technology. He also has deep connections with global partners, which is a requirement. He is 53 years old. He is 10 years younger than I am, I believe that he will be taking up boldly new business areas.
In the era of AI, I believe he is really the optimum person to lead the company. He is very suited to be the next President. Since I became President, about seven years have passed. I implemented two Mid-Term Management Strategies. Current Mid-Term Management Strategy, while there have been rapid changes in the environment, it has been extended by one year. The next year will be the final year for the current Mid-Term Management Strategy. Mr. Matsuda will be implementing steadily the final year of the current Mid-Term Management Strategy. Starting from FY 2026, the next Mid-Term Management Strategy will be devised by him. Regarding the development of the next Mid-Term Management Strategy, I believe it is important that it is done so under the new management. That is why at this timing, I will pass the baton.
I would like to thank you for your continued support for a long time. I hope that you will give us your kind support to the new management system. Thank you very much.
Next, t hank you very much. Mr. Matsuda, if you could.
I am Matsuda, appointed as the President as of April 1st. Thank you very much. I will receive the baton to manage the company from President Takahashi. I am humbled and motivated to take on this big responsibility. As shown in the introduction, I joined KDD in 1996, and have been engaged in the telecommunication business as an engineer. The company changed to KDDI in the year 2000. I built my career in the technology development of high-speed mobile internet and product development. Fortunately was involved in 3G, 4G, 5G system launch from network and product development standpoint. From 2021, under President Takahashi, I was in charge of new business and management strategy. I focused on understanding our portfolio, implementing Satellite Growth Strategy, explored and co-created business with our partners, r ealizing partnership with Apple, Google, Qualcomm, SpaceX gave me a big confidence.
As a promoter of cross-functional data-driven AI project, I worked on improving customers' CX. Along with our internal system modernization, this was also an impressive moment. With the integration of communication and Life Design and Satellite Growth Strategy promoted by President Takahashi, communication penetrated into the fundamentals of all industries. Initiative to add value and deliver them accelerated. The infrastructure for a virtual cycle that connects business, growth, and the resolution of social challenges was built. I will receive this baton and ensure sustainable growth. 5G is maturing. Era to fully leverage AI is starting. Our rare and proprietary digital data asset will be the driver to create new value with cutting-edge AI. Through such integration, we will upgrade our power to connect to a new level and crystallize it to our business.
That is my responsibility. Despite radical social changes, we will always be customer-oriented and deliver excitement that exceed expectation. Because we are in a volatile era, I will embrace KDDI philosophy and corporate philosophy as an unwavering value and keep progressing with challenger spirit. I ask you for your warm guidance and support. Thank you very much.
We'd like to entertain your questions. We will be accepting questions both from the venue and Zoom webinar. When you ask a question, please identify yourself by your name and affiliation. Please limit the number of questions to two questions per person. If you have two questions, please wait for the answer to your first question and then ask the second question. Those of you who have question at the venue, please raise your hand. On Zoom webinar, please push the Raise Hand button. At the venue, deck D, the front line, please.
Nikkan Kogyo. My name is [Mizushima]. Kind of a soft question. Mr. Matsuda, your personality. I have a question about your personality. Your strength, your weaknesses, how they are analyzed? Now, Mr. Takahashi, about Mr. Matsuda's personality, what are the things that you appreciate about him? Second question, Mr. Matsuda, any maxim slogan that you cherish or, sorry to say this, any hobbies that you enjoy?
Thank you for your questions. My personality. Since I joined the company, technology has been my core. I started as an engineer and then product planning, marketing. Around technology, I built my experience. I think that's something that can be described as my experiential value. My strength and weaknesses, the ones that I like, that I'm good at, including external partners with various partners, having a good conversation and explore win-win points and being tenacious in those activities. I think that has been appreciated. Regarding what I'm not really good at, well, as a new member of the top management team, I would like to really work on that.
Personality, h e's an engineer. He's pretty stoic in his efforts. I think that's one of his attitudes. He's an engineer, but when there's something new, he has pioneering spirit. Maybe it's not really about personality, but in terms of his attitudes, that's something that I could really see. As I said, having a global perspective and with global partners, you have to communicate with those global partners. I mean, as a company, that's something so important, and I could really see that in him, and that's why I've decided this, and m axim slogan.
Different people have different mottos, including this kind of a meeting, you have to be thoroughly prepared. Thoroughly prepared, meticulous, you have to be preemptive, then you can win. I love all those words. You have to be exhaustive in preparation because opportunities prefer people who are thoroughly prepared. You don't know what comes next, you will always be fully prepared, and then you can really enjoy opportunities. This is something that I like.
Thank you very much. Next question, please. Line C, front row, please, a t the center.
Free writer, [Asano] is my name. Thank you. I have two questions. Mr. Matsuda, there are new technologies. You've been engaging in new technologies. What is your most interesting technology? What is the area that you're most curious about? On the other hand, a fter 5G, it is AI, not 6G, but AI, as President Takahashi said. The communication is the core of the business, that's for sure. The market competition is severe, there are severe environments. What is your view on communication?
Thank you very much for the question. I've been working on communication as an engineer all along. And so, I have strong passion on telecommunication. On that basis, which field are we going to venture out to. Our strength, our characteristic is we go from basic research to applied research. We have this good cycle, positive cycle. What we have now, we had the green shoot three, five years ago. Identifying them, we have to look three to five years down the road in the research we are conducting now. The radar of the technology is honed. Some come out of our own research, but also from co-creation with startups. Those are what we look at in technology. Second point, related to the first one, technology, communication. Following 5G will be AI. It's important to combine with AI. How 5G can evolve with AI, that is our key theme. On the extension of that, it will evolve as a network.
Thank you. If you have a question, please raise your hand. At the venue, B, front line, c loser to the MC, please.
Freelance, [Koyama]. You mentioned communications, but as a recent business collaboration with the settlements with financial businesses, and you described yourself as an engineer about financial settlements payments. What is your take on this?
Thank you. Satellite Growth Strategy that we have, the center, communication, finance, energy, many things around that. We have to implant technology in everything. It can be our technology or technology from outside can be applied. Energy-related technology, finance-related technology, we have to closely monitor those. In that sense, more recently, in some cases, we were early, but blockchain, Web3, those technology, how they will be connected to fintech, we are closely monitoring that.
Next question, please. If you could raise your hand. Row B, at the very back, please.
[Diamond Murai] is my name. Earlier, President Takahashi said the reason of choosing Mr. Matsuda, about his skills and technology. In the next era of AI, the power to build relationship with partners, you've mentioned. If you could elaborate on that. In Matsuda-san's track record, what kind of track record does he have with the global partners like Apple and Google and SpaceX? What part did you appreciate? Apple and Google, I think it's after the smartphone era. In relationship building, do you have any particular event or thing you can share with us?
KDDI's global partner, as you said, Google and Apple, Qualcomm, Starlink. These discussions were mostly done by Matsuda-san. That is a good, strong track record. Recently, Starlink. The first, I did do some initial exploration, but he did most of the rest of the process. He is fluent in language, and talking with the AI people, they're all young. Sam Altman, he is 39 years old. I am 63, and I am studying hard on AI. Matsuda-san is a different animal or a different person. He is in a whole different world. To work with hyperscalers, you need to be young and have global skills and sense, and I think Matsuda-san is strong in that. I thought he was the most appropriate. My recent impression of him is Starlink. That was the big contribution, p lease.
Before entering the smartphone era, the international standardization was important. It's still important, the spectrum, frequency, where to compromise, the key point, focus of the negotiation was something I learned. Now, we enter the smartphone era. The most impressive point is iPhone 4S introduction and the LTE initial model. First LTE model, iPhone 5. We struggled with frequency, the negotiation with the counterpart, and internal work. We had to work as one team to follow through, and this is what I felt strongly as I negotiated with external partners and also collaborated with the internal members, internal team.
One more point. President is changing. People— person chooses person. I am asking a pretty deep question, but Matsuda-san. President Takahashi, when did you start thinking of and decided to choose Matsuda-san? And when did you convey the message to Matsuda-san? If you could give me some history.
When we thought of the succession plan as of last year, there were multiple candidates in my mind. Discussed with outside directors, and had a good thorough study for one year. Around fall, we narrowed down and went to the nomination committee, and at the end of the year, we made the rough decision and official decision today.
To Matsuda-san, it had to be finally decided in the Nomination Advisory Committee, but in November, I think, I told Matsuda-san that, "It will be you if the Nomination Advisory Committee approves."
Matsuda-san, how did you receive that message? What did you feel?
I remember very well. I was called into the President's office, the pending was AI data center progress. That was the pending issue. I thought that will be the question. That's what I thought entering the room, heard that I was going to be nominated to the Nomination Advisory Committee.
How did you feel?
Honestly, I was petrified. I could not react, really.
Thank you. If you have a question, please raise your hand. A, the second from the front, please.
Nikkei Business. [Sugiyama] is my name. First question, communication quality concerning the efforts beyond 5G. This is going to be era of AI, on the one hand, you have been working on communication quality, Opensignal. Other companies are trying to get better score, and regarding your confidence or thoroughly prepared, you have been so careful in all the preparation, what's your comment?
Thank you. Concerning the communication quality, Opensignal, that's one indicator that we look at as a kind of a yardstick or KPI. In principle, high-quality communication must be delivered to customers. That has been our essential attitude. Regarding our confidence, we have the spectrum frequency, ho w are we going to combine them and to use them.
A new technology for spectrum, including that, how are we going to use this. Just like this time what we're doing, how to use the satellite in an integrated manner, how to offer this service, that's very important. For spending a long time, we have been strategically developing them, and they are working out pretty well, as you heard. D2C is something we're going to see going forward, and we want to be preemptive. We want to be ahead of peers.
Not 6G, but next will be the era of AI. Maybe you are adhering to that, but we had a meeting amongst executive officers. In the past, download speed of communication, latency, those are the things we're concerned about. Going forward, assuming the AI utilization, then what's the latency. That's important.
Not just communication, beyond that, obviously, AI, LLM, and then the latency, including using all those services. You can't just focus on communication, including usage of AI. Comprehensive quality matters. In that sense, I meant to say that next will be the era of AI. Just would like to apologize if my explanation hasn't been really enough.
May I ask you the second question? AI data center was mentioned before. Matsuda-san, you have been engaged in the cutting-edge technology. Combination of AI and communication is something that you have talked about already. SoftBank, so sorry to talk about the different company. AI and base stations, integrating them, it's easy to see. As KDDI, communications times AI, regarding that integration, specifically, what are the things that you envisage? Data AI data centers, how are you going to utilize them?
Thank you. Communication AI integration, how to go about them. There are several ways to look at this. On our part, communication operation that we have been doing, enhancing it with AI, that's one thing. Teleco AI is something that we have to do thoroughly. Now, for AI, or when AI is inevitable, using resources, communication, and in other things, how we are going to apply them. In parallel, we are looking at this. Now, AI data center is another thing. Linking them to business is something that I said, because digital data, since we have digital data, generative AI can be fully utilized. To do that, AI data center is something that we want to have as a foundation.
Next question, please. Row D, second from the front, please.
Nikkei Newspaper. [Sakuragi] is my name. Thank you. I have two questions. First is question to Matsuda-san. From the beginning of KDDI, it's been 25 years. What kind of company do you want to make KDDI into, Mr. Matsuda?
Thank you for the question. As I said earlier, I joined the company in 1996 and became KDDI in year 2000, and it's been 25 years. Our vision is 2030, VISION 2030. Power to connect. We are connecting with many things. We want to focus on connecting. We want to enhance the power to connect, and so that anyone can realize their dreams. When I talk with the outside overseas counterpart, I feel that Japan is respected quite a bit. We talked about societal challenges.
We are the advanced country in social issues. Therefore, we have our KDDI-specific value creation and resolution and solutions. In the future, we want to use the use cases to contribute to the overseas side. We are the advanced nation of social challenges, we want to create value and solutions and contribute to the world going forward.
Thank you very much. My second question is also to Matsuda-san. You've been an engineer for a very long time. What was the trigger that led you to be interested in engineering? I often hear about the Expo. What did you see? What were you impressed?
Thank you. I think you remember me talking about this once. When I was in junior high school, Tsukuba Science Expo was held, I was in Yamaguchi.
I took the blue train and came all the way to Tsukuba, the view I saw there was, I went to the Japanese company's booth, I still remember, I had this at home, NEC C&C Pavilion, this model. I talked with Kyocera. They have this mysterious science kit, a marvelous science kit. It was this shape memory alloy. They delivered the samples, I got that's what led me to be interested in science and technology. This year, Osaka Kansai Expo is being held, we are working with Hitachi, we'll do an exhibition. I hope the children, the future talent, will come and become interested in science, from my own experience. Thank you.
Next question. If you have a question, please raise your hand. B, front line, around the center, please.
Freelance, [Ishikawa]. First, Takahashi-san, I have one question for you. Looking back seven years, anything that you really feel proud about yourself?
Seven years? I mean, just time flew. Many things have happened. Oh, many, many things have happened. When I became President— Hokkaido Iburi, there was that earthquake in Hokkaido last year and Noto earthquake. There are many disasters, we were hit by COVID-19. We experienced so many things. What impressed me most, let's see. That communication failure that lasted for quite a long time. We caused so much trouble. We feel sorry. With our group of engineers, we want to be number one in our network service. At Opensignal, we were able to achieve number one, the engineers have worked so hard.
That was really gratifying. 2030 VISION, as Matsuda-san mentioned, this evolution of the power to connect, that's something that we would like to continue. I was able to sort of create a base, which was good. In addition, Life Design, integration of Life Design with communication. We launched that. Population is decreasing. Communication will be penetrating everything with that assumption on various industries expanding the business. I believe that I was able to build that foundation. We need to enter into many industries. I contributed to creating that foundation.
Matsuda-san, another question. Looking back, Apple, Google events, as I'd interview them, you were standing right next to Mr. Takahashi, as I look back, in doing the work together with partners, how are you planning to present to KDDI? From Apple, there are four carriers in Japan, KDDI is one of them. To Apple, how to sort of ingratiate yourself with Apple in terms, h ow to build such good relations with partners?
Thank you. To a certain extent, it is case by case, but you just cited Apple as an example. In principle, we are standing on the same arena. It is like a beauty pageant. How can we present our contributions, but in areas where we are not really standing on the same field, here in Japan, we have assets. With new technology, what those partners have, how we can enhance them, how we can evolve them. In that area, they can acknowledge, appreciate our values. We can find win-win. There are two ways. Depending on the time axis, it will be different, but I would like to be mindful of that together with new partners. I would like to build relationships with them.
Thank you very much. Next questioner, please. Row C, second from the front, closer to the moderator.
Yes. Freelance, [Ishino] is my name. First question is to Matsuda-san. Now in the communication, the customer acquisition is now becoming more severe. Data volume is raised and price is reduced. How do you see this? What is your plan going forward? Are you focusing on additions, or are you broadening the competition framework, the arena?
Thank you very much. Of course, we need to first address the current competition and think of how I want to bring this going forward. Two perspectives. We should not just focus on ID, number of IDs, but it's important to have this being used by our customers. At the same time, we have the competition to raise the momentum. I need to think of this in two axes.
Second question is to Mr. Takahashi. You will become the Chairman. What is your plan as a Chairman?
Next fiscal year is the final year of the current MTMP, Medium-Term Plan. This will be in the hands of Mr. Matsuda and his team. I will support that. I will thoroughly support that. Fortunately, NTT law is now settling. The government and the business circle discussion is another area that I will keep being involved in, and we've been working on startups. I want to also be involved in that. I want to energize Japan, and so I hope I can support externally and internally.
Next, from online participants, we would like to entertain your questions. [Nishida-san], unmute yourself. Please express your question.
My name is [Nishida]. Can you hear me?
Yes.
First question to Matsuda-san. Being thoroughly prepared, do you like that expression? To be thoroughly prepared, any particular areas that you would like to look at? Of course, communication and AI, but areas that you must really work on, what are the areas you feel that you must address?
Thank you. That is a very difficult question. In terms of technology, we need to be discerning. For instance, amongst the technology we have, something like paradigm shift, IT devices, generalized ones are now available. That's the kind of era we find ourselves in. Regarding engineering resources or engineering skills, what kind of skills will actually work out looking at the next future. We need to really look at the tide, changing the tide in technology. Being thoroughly prepared, it's a package with being preemptive. You have to have foresight. Changes and disruption, how they will take place, we have to really be monitoring that. Thank you.
Second question, Takahashi-san. Since you are mindful of succession, what are the things that you regarded as issues? What are the things that you wanted to leave behind?
As I said before, let's see. 54 years old, who became the Chairman and I was 56, but now I wanted to make the next president much younger than those. Regarding the company itself, I would like to rejuvenate the company. Again, from your perspective, especially consumers, persons in charge of consumers, they have become younger. Based on that assumption, I came up with the succession planning. A Satellite Growth Strategy is something we have been working on. The strategy itself is a driver for sustainable growth of KDDI. As Matsuda-san mentioned, we have to be be insightful.
We need to have foresight so that we can take up new challenges. He and I have been talking about this all the while. With that, as something that I leave behind, I hope that he will make a contribution for sustainable growth of KDDI. I hope I answered your question.
Thank you. Time is coming up, we will take one more question from this venue. Please raise your hand if you have any questions. Row C, first person, please.
Keitai Watch, [Sekiguchi], in my name. Thank you. I have a question for you, President Takahashi. You did some look back. If you focus on 5G, you said that the communication failure, the outage, was impressive and this led to your current achievement in Opensignal. As KDDI, in terms of 5G, you handled this well, and you came this far. KDDI's perspective and the 5G status in Japan, if you look at these two in your term as President, what do you see? How do you summarize?
The telecom operators are all working very hard. As I said earlier, the pricing has been reduced. We are now around 50%, half of the U.S., and the other countries are now raising prices, and under such circumstances, we are trying to improve the facility efficiency and invest in 5G. We are competing harshly under Opensignal, SoftBank and DOCOMO and us. We are trying to look at the specification to improve 5G. We have a great, magnificent achievement in 5G. Some say that we do not have enough use cases in 5G. That is not the case at all. Traffic is growing at a rapid speed, even at the dangerous level. It's 10%-20% growth every year. Starting this April, centering on YouTube, we're seeing an enormous speed. Now a use case is becoming evident.
Latency and SA will become more important. In the AI era, we need to convey this to the AI. I think the 5G foundation is now well-built. This will be succeeded by Mr. Matsuda. I think friendly rivalry in this IT industry will lead to good results in 5G and 6G. I think this is something I can be proud of. We did well.
Thank you. Second question may be a difficult one, but to Mr. Matsuda. In your future business, especially in consumer business, what is your plan? We have the economic zone and 5G smartphone initiatives. I know it's a difficult question, but how will consumer and KDDI be involved with each other? How do you plan to grow this area going forward?
Thank you. Consumer Personal Services segment, I was there last year, so I understand the structure. Going forward, in our Mid-Term Management plan, we have a plan under our strategy. Following through with that will lead to the expansion of the economic zone and the enhancement of the communications. Beyond that, consumers, general consumers, we need to research and understand them. It's a very important element in our next Mid-Term plan . I would like to have another opportunity to talk about that soon.
At the beginning of April, he will do the inaugural speech, talk about his plan. Please look forward to that.
Okay, it ends. Since it's time, we would like to conclude the questions and answer session. Concerning the online and distribution, again, we would like to conclude the session. Mr. Takahashi, Mr. Matsuda, please stand up. Despite the last-minute change, thank you so much for joining us both virtually and physically. We appreciate your kind participation.