11/12/2020 | Press release | Distributed by Public on 11/12/2020 03:33
|Date||Wednesday, November 4, 2020 4:00 pm - 5:30 pm|
Ken Miyauchi (President & CEO)
Junichi Miyakawa (Representative Director & CTO)
Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)
Recently the Ministry of Internal Affairs and Communications (MIC) announced an action plan that included a policy for promoting the introduction of eSIM and eKYC (electronic personal authentication). Could you tell us about these?
We have taken a positive stance on the introduction of eSIM and eKYC, and launched eKYC in September under the Y!Mobile brand. We are also working on introducing eSIM, but for security reasons we need to introduce eSIM in tandem with eKYC. We believe the introduction of eSIM and eKYC is a means of expanding our business going forward.
What are your thoughts regarding NIPPON TELEGRAPH AND TELEPHONE CORPORATION's (NTT) making NTT DOCOMO, INC. (DOCOMO) a wholly owned subsidiary?
Frankly, I was surprised. NTT Mobile Communications Network, Inc. (now DOCOMO) was spun off from NTT and established about 29 years ago, so some may wonder if it is appropriate to make it a wholly owned subsidiary now. NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION (NTT EAST) and NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION (NTT WEST) own the backbone network so I would like to discuss whether there are any concerns that DOCOMO's conversion to a wholly owned subsidiary may impact fair competition and express an opinion.
Y!Mobile has released a new price plan, Simple 20, and it feels as though the difference between Y!Mobile and SoftBank which offers the Merihari Plan is becoming smaller. Do you have any plan to increase the data volume of the SoftBank brand plans or take some other action to differentiate the two brands in the future?
Among the current price plans, we had not provided a 20GB plan. The 50GB Merihari Plan is very popular and surveys indicate that over 85% of users are satisfied with it. Unsatisfied users may migrate to the 20GB plan. We are conscious about this when we created the new price plan. It is important to respond to the needs of users and to increase users in a competitive environment.
Recently, the releases of 5G compatible Google Pixel and iPhone 12 were announced. How much of an impact do you expect this to have on 5G subscriber growth?
Six handset models were launched in October, and iPhone 12 mini and iPhone 12 Pro Max will be launched on November 13. Sales of Google Pixel have been strong, and the launch of iPhones is increasing the momentum to the 5G handset penetration. Various Android and iPhone handsets with all kinds of functions and pricing will lead to significant 5G subscriber growth going forward.
Could you tell us the impact of the Simple 20 price plan on earnings for this fiscal year? Also, assuming that full-scale user migration will begin from next fiscal year, what is the maximum negative impact on profits that you expect?
ARPU will naturally decline when users migrate from Merihari Plan to Simple 20. However, we have increased profit through growth in subscribers. By providing the lower-priced Simple 20, we can expect to attract users to switch over from our competitors or to have low data capacity Y!Mobile brand users upgrade to the larger data capacity plan. Therefore we don't expect the introduction of the new price plan to cause a significant decrease in profit.
The Company's stock price has decreased by around 15% since former Prime Minister Abe announced his retirement at the end of August. Even after the announcement of the new price plan on October 28, there is no sign of a recovery in the stock price. The market may be wary of a further decline. Could you explain the status of your discussion about price reduction of existing plans or introduction of new plans, including the SoftBank brand?
We take the decrease in stock price very seriously. In addition to concerns regarding the telecommunications sector going forward, I think the decline also reflects the secondary offering of shares worth 1.2 trillion yen that we conducted in September. Our business has become diversified, and we will strive to grow each segment of our business to earn appropriate valuation. We also expect to announce an unlimited 5G plan and others going forward.
What do you think about dropping the price of SoftBank brand price plans?
We are looking at ways to offer an unlimited 5G plan at an affordable price. We are not thinking of dropping the prices of existing plans at this stage.
You have announced that you will eliminate the MNP transfer out fee . However, at the first quarter results briefing held in August, you said that the MNP fee was appropriate if the procedure is conducted at a retail store or call center. When did you change your judgment on this? Also, the MIC has produced guidelines stating that an MNP fee of up to 1,000 yen can be set for processing at retail stores or call centers. Could you explain why in spite of this you have made it free?
As a result of our internal discussion, we made a decision to make it simple as free for all occasions, because changing fees depending on the method would cause confusion.
I assume that the competition environment will change when NTT makes DOCOMO a wholly owned subsidiary. Will SoftBank Corp. ('SoftBank') need to change its business strategy?
When it becomes a wholly owned subsidiary of NTT, DOCOMO's business will likely experience both benefits and disadvantages. However, we believe that we need to make our voices heard on ensuring a fair competitive environment.
SoftBank Group Corp. ('SoftBank Group') has announced that it won't sell additional shares of SoftBank. Is that the same as what you have been communicated?
I have heard from President Son of SoftBank Group that it will not sell any more SoftBank shares. This has also been clearly stated in SoftBank Group's press release. With this sale, minority shareholders have been left with a 59.8% share. As a listed company, this is a healthier position. Looking ahead, with our engineers and sales personnel, SoftBank will play an extremely important role in helping SoftBank Group to grow its portfolio companies' businesses in Japan. Therefore, I believe that SoftBank Group will maintain its holdings of 40.2% as the largest shareholder.
SoftBank and SoftBank Group are in a parent and subsidiary relationship. Therefore, the potential for conflicts of interest cannot be entirely ruled out. How about the protection of SoftBank's shareholders? Could you tell us about your approach to governance?
With regard to governance, we currently have four outside directors and they actively attend discussions at the monthly Board of Directors' meetings. Rather than a conflict of interest, I would describe it as a mutual win-win relationship. For example, we have created various joint ventures with SoftBank Group's portfolio companies, but these are not something we have been forced into; rather, we have asked to be involved. Our current environment, where we can connect easily to leading companies throughout the world, is a mighty advantage for us. President Son is in no way trying to control SoftBank. I have worked with him for 36 years, and if I have something to say, I say it.
You have said you will invest 2.2 trillion yen in 5G and 6G over 10 years. Could you give us some details regarding the number of base stations and your initiatives with KDDI Corporation ('KDDI')? Also, could you tell us the scale of your investment in HAPSMobile Inc. ('HAPS')?
As we announced previously, our target is to reach 10,000 5G base stations by the end of the current fiscal year, and we are currently working at a high pace to complete construction. We aim to build around 50,000 base stations at the end of FY2021, and approximately 200,000 base stations in five years. We already have 230,000 base stations for LTE network, but looking at data traffic for 5G users, 5G traffic has a greater traffic increasing momentum than that of LTE. Furthermore, in the regions where it is difficult to build 5G base stations as a single company, we are building shared base stations jointly with KDDI. I cannot talk about the planned number of base stations at this stage.
In terms of HAPS, we are investing several billion yen per year and implementing trials. Within three years, we plan to commence pre-commercial services and fully commercialize them over a 10-year period. We will maintain our current level of investment and work to suppress overall costs.
How do you feel about Prime Minister Suga's announcement that operating profit margins of 20% among major mobile operators are too high?
For a private sector company, the most important priorities are to grow businesses, make profits, and return them to shareholders. We see our role as a private company is earning the support and trust of users through our multi-brand strategy, and generating profits properly. By maintaining or increasing our profit margin, we will pay more tax and provide more shareholder returns. Meanwhile, we have invested around 5 trillion yen in building our network over the past 14 years. Investing considerable amounts in 5G and other investments going forward is the role of telecommunications operators, who provide lifeline services. Various matters may be pointed out to us, but satisfying users while increasing sales and profits is the mission that we have been given.