Thank you very much for waiting. We will now begin SoftBank Corporation earnings results presentation for the fiscal year ended March 31st, 2025. We would like to introduce today's attendees. President and CEO, Miyakawa. Representative Director and COO, Shimba. Board Director, Executive Vice President, and CFO Fujihara. Today's presentation will be broadcast via the internet. President and CEO, Miyakawa, will give an overview of SoftBank's consolidated financial results and business overview.
I am Miyakawa of SoftBank. Thank you so much for your attendance today. I will now explain our financial results for the last fiscal year. First, revenue was JPY 6,544.3 billion, up 8%. We achieved the goal of JPY 6.5 trillion, set in the mid-term management plan one year ahead of schedule. The breakdown by segment is as follows. All businesses reported an increase in revenues. Financial, Distribution, and Enterprise, all these businesses achieved double-digit growth. Operating income was JPY 989.0 billion, up 13%. The target of JPY 970 billion set in the mid-term plan was achieved one year ahead of schedule.
Operating income also increased in all businesses. In addition to double-digit gains in Media, Commerce, and Distribution, Financial returned to profitability, recording over JPY 30 billion for the full year. Net income was JPY 526.1 billion, up 8%. Since both revenue and operating income were on upward trend, we had expected to achieve net income one year ahead of schedule. Unfortunately, it will be carried over to FY 2025 due to a valuation loss on a portfolio company at the end of the fiscal year. The main source of dividends, which is primary free cash flow, was JPY 603.3 billion, which remained at a high level. The consolidated financial summary is as here.
Both revenue and income increased. The dividend was set at JPY 8.6 per share, as committed at the beginning of the fiscal year. From here, I will talk about the upward revision of the financial targets of the mid-term plan and our approach to the financial forecast for FY 2025. Since we already achieved our revenue target of JPY 6.5 trillion last fiscal year, we have decided to revise our forecast upward by JPY 200 billion. If the increase in revenues continues this year, it will mark the 10th consecutive fiscal year since the merger of the four telecommunications companies and will be a new record high. We are aiming to increase revenues in all segments this fiscal year as well.
One difficult thing to forecast is the sales of electricity in the Consumer business, which is affected by weather conditions. We are determined to increase revenues in all business segments without any excuses. Next, let me explain about operating income. As you can see, when we announced our mid-term plan in May 2023, we committed to achieve the target of JPY 970 billion in FY 2025. We were able to overcome the impact of price reductions and achieve an upswing for the second consecutive fiscal year. As a result, we achieved the goals of the mid-term plan one year ahead of schedule, while making growth investments in generative AI.
In the current fiscal year, while continuing to invest aggressively in AI, we intend to revise our financial targets upward to achieve JPY 1 trillion. The breakdown of the JPY 1 trillion is as shown here. Aiming for continuous profit growth in all segments. We are aiming for more than JPY 1 trillion, while strengthening upfront investments for growth in the next mid-term plan from next year onward. In the Consumer business, which is the backbone of our business, we aim to increase profit by approximately JPY 20 billion despite the severe competitive environment. In Enterprise business, we aim for double-digit growth.
Media, EC, and Financial are combined for the purpose of preparing for PayPay's IPO, but we are aiming for a 10% increase in both businesses altogether. We are now positioned to achieve an operating income of JPY 1.1 trillion from these businesses combined. With this, we are finally in position to generate R&D expenditures at the JPY 100 billion level per year, which was my goal when I became president. We would like to conduct R&D with an eye toward commercialization, not just basic research, and we would like to focus on the development of our own services.
This includes investments in AI, as in the past, which we hope will lead to growth in the next midterm management plan. Also, this is not all of it to be used. If it remains, it will be an addition to what is stated. We have also revised upward our net income target to JPY 540 billion. We will continue to achieve record-high profits. We expect to pay a dividend of JPY 8.6 per share in FY 2025. In this inflationary environment, isn't a flat dividend practically the same as a dividend cut? I am asking this to myself. But there are many opportunities to invest in rapidly growing AI, and we believe that aggressive investment now will lead to higher corporate value in the future. We are forecasting the same amount for the current fiscal year at JPY 8.6.
After making this kind of upfront investment, we would like to consider share buybacks and dividend increases. As for the roadmap for the realization of our long-term vision, we achieved our revenues and operating income targets one year ahead of schedule, and we are making better progress than initially expected. Towards the third phase, we will manage the company from a mid to long-term perspective. From here onwards, I will give an update by business segment. First, let's look at the Consumer business. In the midterm plan, we had originally announced that mobile sales would increase from FY 2024, but we achieved the plan one year ahead of schedule and will aim to increase revenues for three consecutive years, starting in FY 2023.
As for operating income, we would increase in FY 2023 as planned and aim to increase it for three consecutive years. In addition, our target for the number of smartphone subscribers was to maintain an annual net increase of more than 1 million, and we achieved a net increase of 1.04 million in FY 2024. We will strive to continue to expand our customer base. We've been making efforts in terms of both quantity and quality, and the balance of conversion to the SoftBank brand was positive in both the first and second half of the last fiscal year. In addition to expanding our customer base, we are also working to improve ARPU, aiming to increase mobile sales and profits. As it is the end of the fiscal year, we would like to summarize our efforts in mobile network.
The percentage of 5G-compatible handsets has increased to 76%. As you can see, 5G connectivity is now better than at any other companies. Mobile traffic, which has been doubling every year, increased by about 1.8 times last year. In spite of this, to ensure that quality does not deteriorate, we have continued to maintain throughput at the same level as last year by adding more base stations and expanding the bandwidth. We are also actively working on AI, but as a telecommunications company, we are focusing our efforts on telecommunications domain as well as our first and foremost priority.
In addition, we are rapidly expanding our 5G standalone area. The area in green is last year's expanded area. After expanding nationwide, we will introduce new services that take advantage of standalone slicing and low latency. Next, I will provide an update on our Enterprise business.
First, with regards to revenue, at the time of our midterm plan announcement, we stated our goal of achieving double-digit growth in solution sales. As of fiscal year 2024, we have achieved 27% year-on-year increase. Looking ahead to FY 2025, we expected to reach JPY 970 billion in total Enterprise-related revenue, and we are beginning to see a clear path toward JPY 1 trillion in revenue from the Enterprise business alone. As for operating profit, we also stated our goal of achieving double-digit growth annually. Over the past two years, we have averaged 12% growth, and we are projecting double-digit growth again this fiscal year.
Our key focus area for this year is to strengthen our foundation as an AIX integrator or AI transformation integrator. This means supporting companies in building their own AI by organizing their proprietary data and using it to train AI models tailored to their specific needs. As part of this initiative, in January, we launched X-Boost , a proprietary SaaS product that leverages generative AI to streamline customer support operations. As you can see, X-Boost is a corporate service that utilizes generative AI to respond to customer inquiries by referencing manuals, customer databases, and other resources to generate appropriate answers.
X-Boost acts as an entry point into AI services. As companies use it daily, it accumulates customer support-related data and enhances its response accuracy. This, in turn, enables the development of AI models specifically tuned for each company, leading to automation of call centers. Through such phased implementation, we aim to support companies in adopting AI. To summarize our Enterprise business growth strategy, we have grown through digital transformation so far. Moving forward, we will accelerate growth through AI transformation as well.
Next, let me provide an update on our Media and e-Commerce business and Finance business. We are presenting these together today because PayPay has initiated preparations for its IPO. To avoid any risk of pre-listing solicitation issues, we will consolidate the disclosures until the IPO. Afterward, if IPO is successful, we plan to resume disclosing each business separately for greater clarity. For FY 2025, we will disclose combined forecast for Media and e-Commerce and Finance. As shown here, we aim to achieve double-digit profit growth for the combined Media and EC and Finance segment. PayPay continues to perform well with gross merchandise value or GMV rising 23% to JPY 15.4 trillion.
Despite its scale, it continues to grow at over 20%. Its consolidated EBITDA reached JPY 45.6 billion, marking its second consecutive year of profitability. PayPay also achieved a full-year operating profit of over JPY 30 billion. As we mentioned in third quarter, we completed the restructuring of our financial businesses in April. PayPay Card, which became a subsidiary in 2022, has now been fully integrated into PayPay and is experiencing significant growth. Under PayPay's leader s hip, we will accelerate the growth of banking and securities service offerings.
Additionally, GMV for SB Payment Service is progressing steadily, with an aim of 15% growth annually. We will continue to target growth, particularly in our telecommunications segment. Next, I will update you on next generation social infrastructure efforts. The key areas of focus will be AI data centers, homegrown LLM, sovereign cloud, next generation memory technology, and Crystal Intelligence. First, as for the AI data center, on March 14th, we announced the successful completion of a contract to acquire the land and buildings of Sharp Sakai plant for JPY 100 billion. This data center will be used as an important operation base for AI agents.
Next, regarding the Sarashina, a homegrown AI, we recently completed a commercial model called Sarashina mini. After final confirmation through in-house trials starting in June, we will target commercial use of Sarashina mini by this autumn. The Sarashina mini was built using a data distillation technique with 70 billion parameters, and a large LLM with 460 billion parameters was built. Using this training data, we were able to create an optimized high-performance model called Sarashina mini. In the future, by combining multiple Sarashina mini models to create a large-scale model, and continuously training it through a method called dense upcycling, we will build an even higher performance LLM in a short period of time.
I want to show you some demonstrations today. Here is a comparison of the Sarashina mini's performance with the GPT-4o and GPT-4o mini. GPT-4o is said to have 200 billion parameters, and GPT-4o mini has 8 billion parameters. The Sarashina mini falls between these two. I would like to compare this with the 70 billion parameters of the Sarashina mini, how they answer to a single question.
I have prepared three questions. The first one, according to Japan's Road Traffic Act, are helmets required for sidecars, specified two-wheeled vehicles, and three-wheeled vehicles? Please pay attention to the screen in front of you. As you can see, it is quite speedy, and the Sarashina mini is showing the answer. I just put each answer in summary. Sarashina mini has a good understanding of the Japanese legal system and correctly responded by distinguishing between a tricycle classified as a car, which does not require a helmet, and a motorcycle classified as a two-wheeled, which does require a helmet. It also correctly states that helmets are mandatory for passengers in sidecars.
On the other hand, GPT-4o gave incorrect answers in some cases. I have two more questions to show you. The next one, let's say, "I moved to a new house. What are some things to keep in mind when introducing yourself to neighbors?" As you can see how each one provides you answers. GPT-4o mini has just completed answering. Sarashina mini, who understands Japanese culture and customs very well, advises us to bring a sort of gift like snacks and towels, and also even advises us to bring our own local trash bags and w hat to do when our neighbors are absent.
GPT-4 also advises taking snacks and towels with you, but this does not cover the customary Japanese practices. No advice was given on what to do in the event of an absence of the neighbor either. The third one, here is the answer to the question, "Could you tell me the background behind the implementation of the New Freelance Law ?" It's really fast. How it provides answers is very specific to Japanese language. Sarashina mini correctly answered everything from the official name of the New Freelance Law, to when it would take effect, to how large the freelance population is. GPT-4 only provides general background information. As you have just seen, Sarashina will be updated daily and differentiated by a model that understands regional characteristics and cultures. We hope to create industry-specific models that can be used to advance all industries.
Eventually, it will become an AI that can be used in the physical world, like robot, automobile, and all these in the physical world. Let me touch on our cloud business. Our vision for the cloud business emphasizes sovereignty in both cloud and AI, meaning control over data, technology, and operations. Within our AI data centers, we are installing GPUs, CPUs, and storage, and developing the necessary software, applications, and SaaS solutions in-house. Our platform will also feature Sarashina, a homegrown generative AI model, as part of our sovereign AI strategy. This architecture will become the foundation for our next major growth strategy.
Next, let me talk about next-generation memory development, which I have not talked about publicly in the past. As AI shifts toward inference rather than training, our AI data centers need to maximize GPU performance and handle larger volume of data. This increases the importance of high-performance memory capable of transferring massive data to GPUs. However, current high-bandwidth memory, or HBM, has challenges. It consumes significant power and has processing limitations.
Together with our partners, we aim to develop a core memory sample within two years and assess its feasibility. Our budget will approximately JPY 3 billion for this initiative. Details on our partners and technologies will be announced in due course. This new memory will differ structurally from 3D-stacked HBM and expected to enable ultra-fast processing. We are committed to developing it with high hopes that it will support next-generation infrastructure. Now let me update on our Crystal Intelligence. We are continuing discussions with OpenAI, and our aim is not merely to improve operational efficiency, but to create transformative products that can reshape corporate management.
Let me elaborate on that. Current AI adoption focuses on optimizing individual tasks without impacting company-wide operations, in my opinion. However, Crystal Intelligence seeks to interconnect AI systems across departments to optimize and transform entire corporate management. We will begin by implementing it internally at SoftBank as a first step toward defining what a next-generation company should look like. To drive this strategy, we have established two new divisions directly under my leadership, the Next Generation Strategy Division and the Next-Generation Technology Development Division. These teams will accelerate our efforts toward long-term growth.
We envision a future of coexistence with AI and aim to build the necessary infrastructure for that society, develop the essential software, and connect everything through AI agents, positioning ourself as an indispensable company for the future. Now, let's shift gear to a different subject. First, let me provide a brief update on our individual shareholders. In October last year, we conducted 10 :1 stock split. Since then, the number of individual shareholders has increased significantly, rising by 500,000 from 860,000 to 1.36 million as of the end of March. Notably, the number of shareholders aged 40 or younger, those who think about business on a 10- 20 year time horizon, has increased by 2.4 times, and their proportion rose from 27% to 41%.
This is a clear indication that we are beginning to see the results we aimed for. We believe that cultivating this kind of shareholder base will enhance long-term corporate value. Last but not the least, an update on our ESG initiatives. First, governance. We are nominating two new outside directors. If approved at the shareholders' meeting, our female board representation will rise from 27% to 36%. We will continue to maintain a structure where more than half of our directors are external in order to fulfill our responsibilities to society, including protection of minority shareholders' interest.
On renewable energy, our mid-term goal is to increase our effective renewable energy usage ratio to 50% by FY 2025, and 100% by FY 2030. For FY 2024, we are projecting 54%, meaning we will reach our FY 2025 goal one year ahead of schedule. Accordingly, we have revised our FY 2025 target upwards to 60% and will continue working toward the 2030 goal. To summarize today's presentation, all business segments posted revenue and profit growth in FY 2024, achieving the targets of our mid-term plan one year ahead of schedule. We have revised our financial targets upward to over JPY 1 trillion, while keep investing for the future to support next mid-term business plan. PayPay has commenced IPO preparation. Lastly, we shared update on our progress in building next generation infrastructure. We remain firmly committed to our vision of information revolution, happiness for everyone. Thank you very much.
Now, we will open it up to a Q&A session. First, we will take questions from the floor, then from the Zoom media, followed by Zoom analysts, institutional investors. If you wish to ask a question via Zoom, please access Zoom by the previously announced procedure, and wait once you press the raise your hand button. Please also turn off the live webcast to prevent howling. We would like to receive as many questions as possible from as many people as possible, so please limit your questions to two per person. Once you are designated, please state your company name and your name first. Please raise your hand from the floor.
Yomiuri Newspapers, [Moto]. I have two questions. One, regarding the next generation memory development, I think it's a big dream. Who's going to actually make and how it's going to be sold, and who's going to hold the inventory and so on? Among the semiconductors, I'm sure that you'll be sharing some roles with your partners, but how are you going to allocate the roles of handling that? How much you think you can make this into business? If you could share that as much as possible, it'd be appreciated. The second one is about other companies. NTT announced that to make NTT DATA a wholly owned subsidiary. How this reorganization of NTT would impact the entire industry, you were concerned about that from before. What is your opinion about this announcement of subsidiaries?
First, regarding the next generation memory, it must have been a surprise to you. Now memory in Japan, there is a great patent held by a university in Japan, and if we were to realize this, I believe that this memory structure is as competent as what is available now as GPU. I have been discussing with notable experts that you may be aware of the names of, but if we were to establish the memory of factory, then it would cost a lot. As for SoftBank, I had thought that it's not an area that we should be investing, but as we develop AI, speaking of other companies like Deep Research kind of structure, what we call Sarashina search, and we are trying to providing new answers.
That requires speed, and HBM needs to evolve more and more, otherwise, the research functionality would not be useful in the future. Therefore, we started thinking about trying the memory area. We have been actually working on drawing the design, but in two years, the core samples should be completed and among some JPY 1 billion, and we would just invest JPY 3 billion or so. As SoftBank, whether this is going to be our, one of the core businesses, but for now, I'm thinking about just making it to like on IP side. As far as we could use that, it would be great. That's my expectation. Therefore, it is not that we are going to step into this memory industry.
Number two, about NTT DATA. I had expected that this question would be raised, but once I start talking about it, I would get too excited. Since we are the first right after this announcement, let me give you a comment briefly. Looking back the past, DOCOMO, NTT DATA, in order to remain the fair competition, they separated, but now they would like to become one. I wonder, there must be someone who want to make a giant NTT once again. Also, if NTT wants to make overseas expansion of their business, and if so, that is understandable.
But making NTT DATA a wholly owned subsidiary, if that is the best thing to do or not, when I look at the NTT, I do not think that would be the best way to do so, because I know of President Sasaki very well, and if this would happen, then the great part of President Sasaki would be just halved. So I am a bit concerned. So if the transmission lines and those base stations are used only for NTT groups, then it is not going to be a fair competition. Therefore, I believe that NTT law did not, NTT Act was not repealed. So that is my opinion. Thank you.
Next question from the floor, please.
Yamashita from Fuji Television. Thank you, Miyakawa-san, for your presentation. Let me ask you about the trend in mobile sector. NTT DOCOMO and KDDI au announced price hike the other day. What is your view? What are you going to address going forward in that trend? And those two competitors With zone and satellite mobile service, those added services will be utilized for their price hike ambition. What is your view?
About their pricing, t he inflation is becoming a challenge in the society in general. In that circumstance, the telecommunication industry is against the trend, meaning pricing is decreasing. This is industry's structural issue or challenges. And one of the top carriers, DOCOMO and au, they started price hike, which could be an opportunity for the industry as a whole. Because our industry, like I mentioned, has been deflationary industry. As pricing has been going down, we try to address the situation by reducing costs, but we are beginning to see the limitation of how much we can do by ourselves. For the whole industry to grow in healthy manner, maybe this could be a timing to revisit the pricing.
As for SoftBank, we like to consider when and how would be the best for us to act. Talking about added value, we have been making pricing complicating by adding added values, if you will. As far as SoftBank is concerned, we need to have more time to talk publicly about what kind of service offerings that we should add. We have some ideas in our mind, but it is too early to tell in the public what kind of added service that we have in our mind.
Thank you so much. Next question.
Yamamoto from Nihon Economic Newspapers. I have two questions. One, AI agent. After fiscal year 2025, how you would make it profitable? And NTT has become the resale agent of the OpenAI Enterprise product. How would you position that? This is my first question.
Okay, then I will answer one by one. About AI agent, how we would make it profitable, that is something we need to spend a little more time. In the next mid to long management plan announcement, I want to make it to happen there at that time. About generative AI and others, whether AI is profitable or not or can be monetized, that is a discussion. This is just at the entrance, so it is not matured yet at all. AI is center, so our society is going to move forward. We do not have to hurry at this moment. NTT DATA with OpenAI. There is ChatGPT Enterprise, a standard version. I believe that they made contract over that, which does not affect Crystal Intelligence at all. We are aiming to develop and provide even higher performance AI agent product.
Thank you. The second question is again about NTT DATA. Under this reorganization of NTT, how do you think this reorganization of NTT impacts the market structure?
I do not know if I am a right person to answer to this, but NTT's advantage or the interest is the overseas expansion, and NTT DATA has a strong overseas expansion base as well. We were also thinking, and we were having a discussion with NTT DATA for the further overseas expansion opportunities. Looking at domestic market, if east and west of NTT and Data would just work for NTT only, then the transmission lines and bases are unique assets. Those racks can be used through data, or transmission lines can be used through NTT DATA. If that thing would happen, then it would not be competitive at all.
Therefore, under NTT Act, there should be a decent environment to remain for us to be able to have a fair, competitive market. It is understandable that, if NTT wants to make overseas expansion, they would like to utilize NTT DATA.
Next question from the floor again. Sana, freelance journalist.
First question is about pricing of DOCOMO and KDDI. You also mentioned that additional values are added, but for their sub-brand products, it seems like they are defocusing on sub-brands, as opposed to they are refocusing on standard or high-value pricing. What is your view on that?
Whether sub-brand is not profitable, I don't think so. Y!mobile, for example, we have a brand power of Y!mobile, and Y!mobile should be an entry point for generic potential customers. Like we do Pay-toku, we want to upsell our products to those Y!mobile customers. That kind of effort has been making fruit, and I think it's better for customers to have many options. Some users would not mind paying more for the services, and other users may mind paying more. If they want to refocus or deprioritize sub-brands, they are different from us. Do you take it as an opportunity for us, for you? We never know until we try whether it's an opportunity for us or not. As far as SoftBank is concerned, we have no intention to defocus a sub-brand or making sub-brands smaller.
Next question, KDDI, the satellite connectivity and service offering. They have partnership with SpaceX, and Rakuten announced that they want to offer a service in 2026. For you, what's your view on satellite mobile communication and its service offering?
It's different satellite configuration from the one we have been studying with OneWeb. Actually, next year, we have a plan to launch satellite mobile direct service as a SoftBank service. Next year. We are still not sure whether the service should be free of charge or paid. At the moment, I cannot tell exactly who is the satellite operator that we are working with to launch the service next year. Again, we have a plan on our own.
Next question. This will be the last question from the floor.
I am Ishino, freelancer. First question is about the churn rate. As far as I see, the churn rate is getting higher. What is the reason behind? Q4 is the seasonal timing, but compared to the previous year, it seems a bit higher.
Regarding the churn rate, there is a contract called SIM- Only, with LINEMO or Y!mobile. Therefore, there are a certain number of customers who convert to others in a short period of time. It is no t a surprise for us.
Thank you. Second question is about other carriers' price increase. You were, I believe, I would say the first one to actually mention about a price increase from before. Are you thinking about following them, or do you think you can still bear with only cost reduction? It could be a great opportunity for you to acquire new subscribers or new users. What is your opinion on that?
I have a few things in my mind. Of course, price increase for our industry, in order for our industry to survive moving forward, it has to be at this fair enough environment. Considering the inflation now a social issue, I think it is the right direction to increase prices. But we are competing each other, and we are doing well with revenues, and also the ARPU is now almost at term. When we look at in mid long term perspective, we do not want to compromise ourselves and our tactics. When will be the right timing for us to increase prices? We would like to well consider the right timing and our strategy.
We are not talking about other carriers' products, but a price structure with unnecessary things added. By doing so, if the price was higher, it is not a healthy way or healthy structure in terms of price hike. What would be a satisfactory approach for our customers or users? Of course, we can make the same services or products, but I do not believe that would satisfy our customers. We would like to spend more time thoroughly and then to come up with a thorough strategy. Thank you.
Is there any other question you want to ask from the floor? Maybe you are the last one from the floor.
Matsumoto from Business Insider. Thank you for taking my questions. First, about Sarashina and the timing of commercializing Sarashina. I believe you mentioned autumn 2025. Is it ChatGPT-like chatting service, like a dialogue kind of service for Consumers? That is the first question. Thank you.
Thank you. Maybe let me answer the first question first. Whether Enterprise or Consumer, we plan to offer the service to both segments. Obviously, percentage-wise, Consumer could be bigger customer base. Whether dialogue or chat type service or not, maybe that would be the start. Maybe video creation, image creation, we have some capabilities in our mind. Probably we take step-by-step approach, starting from tech space, and expand the service offerings or capabilities.
Thank you. The second question. There was a report that OpenAI gave up turning itself into a profitable entity. I wonder if this could have any impact on Crystal Intelligence. Thank you.
I confirm that with OpenAI that at this time, our decision should not affect or impact Crystal Intelligence at all. AI is evolving very fast, and I understand their view of trying to make AI as safe as possible, and we will see how it goes going forward.
That is all from the floor. Now, we would like to take questions from Zoom. If you have a question, please press raise your hand button. Bloomberg News, Hyuga-san, please unmute and ask your question.
I am Hyuga from Bloomberg News. Thank you so much for your presentation. One of the main topics today is preparation of PayPay's IPO. What is the purpose of that? I would like to hear once again. You said that you started the preparation of IPO. What do you mean? How do you define the start? What did you do for that? Also, they will be thinking about the list on the U.S. stock exchange and so on. Please share that kind of information in details.
Regarding PayPay's IPO, personally, I believe that it was a little too early, but when I hear what they say, considering the motivation of the employees, also the further competent talent acquisition. From those perspectives, they had a strong will to go public, which I understood. With this opportunity, we also went through the same path, and we also had opportunity to grow even further with IPO. After thorough consideration, I decided to agree. I believe that it would also lead to improve the corporate value as well. I also mentioned that to consider going and considering overseas expansion. We are not in a position as SoftBank to make any comments on this.
So far, the governance enhancement of PayPay and we have been preparing for IPO in different perspectives. Also, we were talking about the very specific and more concrete item is now in discussion or consideration. Now the discussion is more in detail. That is why we said that they started preparation.
You said that you expect overseas expansion of PayPay, so means that PayPay in the future would consider overseas expansion, is that right? In that case, the listing overseas, and that will be on the U.S. stock exchange, is that a correct way to understand?
I am very, very sorry, but it could lead to the pre-solicitation. I cannot say in details, especially the first part of your question, I cannot touch upon much. Why I say that I expect overseas expansion is my expectation to them. Whether PayPay would do so or not is not something that I can say right now. The second point and which area, which market is that, where PayPay's corporate value can be highly evaluated, then I think the U.S. is quite reasonable as an option. If U.S. is one of the options, then I believe that is really reasonable to think.
Thank you.
Next, from the Zoom, Ishikawa-san, a freelance journalist. Please unmute and ask us questions.
You mentioned that you plan to launch the satellite mobile direct service next year, whereas NTT Group announced that they will launch the HAPS service next year. What is your status on your HAPS initiative in SoftBank?
Thank you for your question. HAPS. We are having final discussion with regulatory body, and we would like to launch a HAPS service as soon as possible. Once we finalize discussion with regulator, we want to make announcement accordingly.
According to Opensignal, Your network quality is rated poorer than KDDI. What is your view?
I think competition is good because it should drive improvement of the industry. We will definitely win back the position next time, and I believe that my engineers are listening to my message. We want to be positioned as a threat to President Matsuda. Thank you.
Thank you. Next question is from Chayama-san from Toyo Keizai. Please unmute and ask the question, please.
I am Maki instead of Chayama. I have a question about data center. I have two questions around that. First, Watt- Bit collaboration. You are one of the members of that, so how do you evaluate the purpose and the objective of this initiative? You have an idea to expand and roll out the data center areas distributed throughout nationwide. The second question is about with the foreign affiliated fund, I think data centers are being built, but this also causes the conflict with the local people, residents. Regarding data centers, any regulations and the rules, what do you think about those establishing the regulations around the data center construction?
First about Watt- Bit collaboration. Yes, I am also a member of this discussion. Watt & Bit is to keep the balance between the demand and the supply by pulling the power cables and the communication cables together. To make the more effective collaboration between the power and the information communications. This is a very important discussion in order to proceed the realization of core existing society with AI. This discussion has to be actively made time to time, and also to be able to be used by the industry as a whole. Even though there was area that we wanted to build the data center, but due to the lack of power, it was not feasible. This collaboration should be able to solve such challenges in the future.
The second question. In Inzai City and Chiba Prefecture, and Shima, and Mie Prefecture, the submarine cables were there, and now data centers are concentrated in that area. If more data centers are built in Inzai City alone, they will be overwhelmed.
When we look at local areas, it is more obvious, and in the tens of megawatt, there are some black lists. The balance between demand and the supply is really important. Of course, we do not believe that we can do anything we want to do in terms of increasing the number of data centers. We need to solve these social issues. We believe that the government also should set some certain level of degrees of rules and regulations around that.
Now we would like to take questions from analysts and institutional investors. First, Kikuchi-san from SMBC Nikko Securities.
I have two questions. Miyakawa-san mentioned that return to shareholders and potentially more return to shareholders, which was a positive surprise for me. More specifically, under what conditions you may consider share buyback or increased dividend? Talking about return to shareholders, profits of LINE Yahoo , which is a listed company, is not going to be used for you as a dividend source. As SBKK standalone, do you have plenty of capacity to add more return to shareholders?
Again, the question is, under what condition you consider adding more return to shareholders? Like I described in the presentation, under such an inflationary society, keeping a dividend as is effectively lower dividend. At the same time, in order for us to increase corporate value in the long run, we need to keep investing for the future. If we could make a profit, even investing for the future, definitely the capacity should be used for adding more return to shareholders. In the next mid-term plan, whether it be increased dividend or share buyback, we want to consider as one of the commitments in mid-term plan next time. I just have an idea, but I do not have a concrete plan.
Like Kikuchi-san mentioned, SoftBank K.K.'s standalone profit is a source for a dividend. If we make more profit as SBKK standalone, we should be able to use that capacity to add more return to shareholders. For active investment in AI, as much as about JPY 100 billion, and if we could save half, then it could help us to make a standalone profit. Then we will consider how we can return to shareholders.
Thank you. Aside from next mid-term plan, for the particular fiscal year, you may consider doing something as more return to shareholders.
Yes, we are open.
A second question is about the PayPay IPO. I understand we cannot ask you detailed questions, but generally speaking, PayPay or Finance has the biggest potential for growth in your segments. If PayPay goes public or financial business goes public, then SoftBank K .K. cannot control the company or business anymore. For example, LINE Yahoo . It looks like it is not really reflected in your share price, because someone like LINE Yahoo is out of your control as listed company.
If an important segment goes out of your control, especially if or when the business goes public abroad, it is far away from your control, which could be a waste of your value or assets. I understand you are mindful of corporate value and I am a little concerned about your group business management if your important segment goes public.
Personally, I think it is too early, and I wanted to keep PayPay as long as possible or a little longer, but LY or PayPay, we involved in establishing a business, and eventually, we expected them to go public anyway. It is not necessarily out of our plan. From our strategic perspective, w e don't see LY as outside of our group. They are in our family. I'm not talking about numbers or our equity interest, but rather services that we want to offer and the direction that humankind should go to.
We have the same vision with those group companies. Whether PayPay goes public or not, we remain on the same page with regards to the vision we are looking ahead to. Hopefully, I don't know if I say this or not. I'll forget about this. Anyway, hopefully we want to deepen our relationship with them going forward. I hope that you think we are looking far ahead.
Thank you so much. Next, Masuno-san from Nomura Securities, please unmute and ask your questions.
This is Masano from Nomura Securities. I have one question about JPY 100 billion of negative due to the upfront investment. I don't know or I cannot understand the background of this negative figure and the Sakai data center with this impact. I believe that there will be more cost on the development and the research and development cost. As you explained about large LLM, it would take another year or so, even it's been taking a year and a half already, which is taking more cost. But still, you need to spend the cost on the research and development. Is that the reason of this JPY 100 billion? Please elaborate on the background of JPY 100 billion.
This is just a rough number. We do not have the detailed plan on this. JPY 100 billion, we wanted to be able to spend this amount of cost on the research and development. That's what I had planned when I became president. Even with the accumulation of JPY 100 billion of R&D, still the company would be on the stable operation. This is what I wanted to do. That's why this rough JPY 100 billion, I said that it would be for R&D. It's not that we are going to spend all of this for now.
The last year and a little bit more, this is what we expect for this fiscal year. If anything remains out of JPY 100 billion, then there will be upswing of the operating income, which is a good thing. We just want to become a company with the abundant R&D budget. Thank you so much.
Thank you. We would like to take the last question, and in the interest of time, please keep the question one. Tokunaga-san from Daiwa Securities, please ask us one question.
About next mid-term business plan. Competitors are raising prices and Enterprise where the Crystal Intelligence coming up, then Enterprise business could grow further. Should we expect continuous growth? Or in the third phase, would you like to invest more like JPY 100 billion? What kind of consideration we should have in our mind when we are looking at your third phase of mid-term plan?
I cannot disclose lot of numbers now, but the things that we are working on, for example, data centers, our own GenAI, like Sarashina. We want to show in numbers in those initiatives that we are working on in the next mid-term plan, so we can show even further grown SoftBank in the mid-term plan.
Thank you very much. That is the end of our Q&A. Thank you very much for joining us. SoftBank Corporation's earning result for the fiscal year ended March 31st, 2025. These earning results will be available on demand on our corporate website. Once again, thank you very much for joining us today. Thank you.