Financial Results for the 1 st Half of the Fiscal Year Ending March 2020 （ from April to September 2019 ） November 1, 2019 Makoto Takahashi President KDDI Corporation
Highlights of Financial Results for the 1 st Half
Highlights of Consolidated Financial Results for the 1 st Half Operating Income Operating Revenue (Unit : Billions of yen) (Unit : Billions of yen) 5,200.0 （ E ） 5,080.4 1,020.0 1,013.7 （ E ） Progress Progress Progress Progress 49.3 % 48.5 % 54.3 % 55.4 % 561.2 1H 553.4 2,564.5 1H 2,462.3 272.3 2Q 297.6 1,318.4 1,240.6 2Q 1Q 288.9 1,246.1 1,221.7 1Q 255.8 FY19.3 FY20.3 FY19.3 FY20.3 Convert to profit increase in 2Q and steadily progress toward the full-year target 2
Operating Income : Factor for Change, YoY for 1 st Half （ Unit : Billions of yen ） <Business <Handset ＜ Others ＞ <Life Design ＜ One Off ＞ Segment> Sales Cost> Domain> + 2Q +12.9 1Q +5.9 + 【 main details 】 2Q +14.0 ・ change accounting period for Myanmar business ・ accelerate depreciation for 3G shut down, etc. 1Q +5.0 + Growth Fields Inc.) the retention on the migration from 3G to 4G, etc. YOY (7.8) FY19.3 1H FY20.3 1H 2Q Profit in growth fields has increased more robustly than 1Q 3
Life Design Domain Sales/Operating Income Life Design Domain Life Design Domain (Unit : Billions of yen) (Unit : Billions of yen) Sales Operating Income 584.0 YOY ＋ 38.4 % 422.0 YOY 87.0 309.0 ＋ 27.9 % 68.0 225.0 2Q 49.0 35.0 2Q 275.0 197.0 1Q 38.0 1Q 33.0 FY19.3 FY20.3 FY19.3 FY20.3 Achieved double-digit growth in sales and operating income both 4
Business Services segment Operating Revenue / Operating Income Business Services segment Business Services segment (Unit : Billions of yen) (Unit : Billions of yen) Operating Income Operating Revenue YOY ＋ 4.3 % 451.0 432.4 YOY 82.6 ＋ 29.5 % 233.9 219.1 2Q 63.8 45.6 32.7 2Q 217.1 1Q 213.4 37.0 1Q 31.1 FY19.3 FY20.3 FY19.3 FY20.3 In addition to the robust performance of existing business, growth fields as IoT contributed to an increase in profit 5
ID × ARPA × Engagement
Maximizing Life Time Value ARPA Engagement Value-Added Collaboration with OTT Players Tele Evolution of au Smart Pass Fixed line Life Time communications × × Value Mobile Life design Telecommunications New price plan Smart Value au Smart Value towards the coming 5G (life design edition) Expand our IDs ID by implementing Group strategies Aim to expand Life Time Value v ia “ ID × ARPA × Engagement ” 7
Expand Our IDs by Implementing Group Strategies Mobile IDs * (Unit : Millions) Diverse sales channel and customer basis 27.09 26.70 26.08 25.70 MVNO subscriptions Customers want fast, smooth Customers au high-capacity prefer accounts communications lower prices 9/'16 9/'17 9/'18 9/'19 Act in collaboration with Group MVNO to increase the Mobile IDs for the entire Group 8 *au accounts + MVNO subscriptions
Total ARPA / Total ARPA Revenues Total ARPA (Unit : Yen) Total ARPA Revenues (Unit : Billions of yen) 7,770 569.4 7,450 549.4 YOY YOY ＋ 4.3 % + 3.6 % FY19.3 2Q FY20.3 2Q FY19.3 2Q FY20.3 2Q Achieved year on year growth in all components of Total ARPA * 9 * au ARPA, Value-added ARPA, au Denki ARPA, Handset Repair and Compensation ARPA
Growth Fields
Life Design Domain Expansion of Finance Business au PAY / au WALLET Earn points through smartphone Total over 33 million (electricity service) Over 6 million *1 Customers can utilize their au WALLET points in financial services Credit card Over 5 million *2 From Oct 2018 Within FY2019 From Apr 2019 a u’s Micro Point utilization Prepaid card iDeCo investments Micro loans Over 22 million ＊ 3 Finance through smartphone 3/'19 6/'19 9/'19 Aiming business growth by expanding settlement platforms and facilitating point circulation 11 *1) Subs. as of Oct 5, 2019 *2) Valid members as of Oct 12, 2019 *3) Valid members as of the end of Sep 2019
Life Design Domain au Smart Pass Premium The Members of au Smart Pass Premium Free take of Free Apps shipping *2 8.51 million members Selected (as of the end of Sep 2019) Coupon Concerts and Protection for entertainment breakage or events loss of a phone Penetration rate of au Smart Pass Premium *1 Reward Day 37 ％ (as of the end of Sep 2018) xR ↓ experience Member 55 ％ (as of the end of Sep 2019) privileges Expansion of services Offer attractive services to increase membership *1 Ratio of au Smart Pass Premium members to au Smart Pass members 12 *2 Products with premium marks and that were purchased on ‘au Wowma !’ will receive free shipping
Business Services segment Total Strength toward IoT Market Provide one-stop IoT Estimated Sizing of Domestic IoT Market by Business Category * for the entire group Analyze/ 7.6 Compile Transmit Stock Visualize (Unit : trillion Yen) High growth market Estimate 1.8 times in 6 years Utilize data 4.9 4.3 /cloud 2.4 Tele 2.7 communication 1.9 / device FY19.3 FY21.3 FY23.3 FY25.3 Aiming for growth that surpasses the market with total Group strength 13 * Created by KDDI based on “IT Navigator 2019 Edition” written by Nomura Research Institute, Ltd.
Business Services segment Collaboration with Partners More than 250 from Diverse Sectors companies use since establish in September 2018 Expand into Osaka and Okinawa in September 2019 TOKYO OSAKA OKINAWA Accelerate collaboration to help customers realize DX 14
5G 5G Roadmap au 5G Plan for Establishing Base Stations Establish more than FY20.3 FY21.3 FY22.3 50 thousands * base stations 3 (the largest number in Japan) Ｇ by the end of March 2024 50 thousand 4 4G LTE Base stations Ｇ 5 4G LTE +5G 5G Pre-5G (NSA) （ SA ） Ｇ NSA SA [Non -Stan dalon e] [Standalone ] Full rollout Rollout by using high-speed using unique high-volume transfer 5G characteristics FY20.3 FY22.3 FY24.3 Aim to secure a resilient network by efficiency and swiftly establishing base stations * Based on “the authorization of establishment plans for specified base stations for the diffusion of the 5 th Generation (5G) mobile communications systems” 15 (granted by Japan’s Ministry of Internal Affairs and Communications) The number of base stations are described the sum of ext erior and interior (the number is counted as KDDI + Okinawa Cellular total)
5G Customer Experience Value in the 5G Era 5G-Compatible Solution = 拡 張 C r e a t e n e w v a l u e “Projection× 5G ” Launch a trial platform S p o r t s w i l l c h a n g e in November 2019 T o w n w i l l c h a n g e E n t e r t a i n m e n t w i l l c h a n g e Deliver new experience value towards the era that telecommunications will be prevalent everywhere 16
Our Response in Times of Disaster Retrieval Activities use Equipment Various Back-Up Activities Satellite Rental of Ship-mounted Refuge communication restoration base stations charger support equipment support goods Free Wi-Fi au shop Vehicle-mounted Portable base stations 00000JAPAN charger BOX electric generator Realize quick telecommunication restoration and disaster area support 17
Received Top Awards J.D. Power Customer Satisfaction “ No.1 in Business IP “ No.1 in Business “ No.1 in Mobile Phone “ No.1 in Business Mobile Network Service Service Satisfaction” Phone and Direct Line Phone Service Satisfaction” Satisfaction 4 consecutive years Phone Service ＜ large and mid-sized corporation market segment ＞ Satisfaction” ＜ large enterprise market segment ＞ 4 consecutive years 7 consecutive years Pursue further improvement of customer satisfaction Source ： J.D. Power 2016-2019 Mobile Phone Service Satisfaction Study. Based on responses from 27,600 mobile phone users in 2019. J.D. Power 2016-2019 Business Mobile Phone Service Satisfaction Study. Based on 2,872 companies with 100 or more employees in a survey in 2019. 18 J.D. Power 2013-2019 Business IP Phone & Direct Line Phone Service Satisfaction Study. Based on 1,519 companies with 100 or more employees in a survey in 2019. J.D. Power 2019 Business Network Service Satisfaction Study. Based on 598 companies with 1,000 or more employees in a survey in 2019. jdpower-japan.com
Summary Convert to profit increase in 2Q and steadily 1H progress toward the full-year target Financial Achieved double-digit profit growth both in the life design Result domain and the Business Services segment Expand Life Time Value via “ ID × ARPA ×Engagement” We aim to achieve business expansion in the life design domain, as our core remains telecommunication services, by taking advantage of finance and settlement solutions Growth and au Smart Pass Premium Fields Promote to tackle the growth fields especially IoT in the Business Services segment Deliver new customer experience value towards the coming 5G 19
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