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FY2016/1H Results Presentation October 28, 2016 1. Results - PowerPoint PPT Presentation

FY2016/1H Results Presentation October 28, 2016 1. Results Highlights Key Financial Data, Segment Results Telecommunications Business, Smart Life Business & Other Businesses Revised FY2016 Full-Year Guidance 2. New Initiatives


  1. FY2016/1H Results Presentation October 28, 2016

  2. 1. Results Highlights  Key Financial Data, Segment Results  Telecommunications Business, Smart Life Business & Other Businesses  Revised FY2016 Full-Year Guidance 2. New Initiatives for Child-Raising Families

  3. FY2016/1H Results Snapshot U.S. GAAP YOY increase in both operating revenues/income ◆ Financial data  Operating revenues: ¥2,288.3billion (Up 3.3% year-on-year)  Operating income: ¥585.6 billion (Up 26.6% year-on-year) ◆ Operating income by segment  Telecommunications business: (Up 24.9% year-on-year) ¥524.7 billion  Smart life business: (Up 10.6% year-on-year) ¥37.0 billion  Other businesses: (Up 166.5% year-on-year) ¥23.9 billion 2 ◆ Consolidated financial statements in this document are unaudited

  4. Selected Financial Data U.S. GAAP Changes FY2015/1H FY2016/1H (Billions of yen) (1) (2) (2) - (1) +73.4 Operating revenues 2,215.0 2,288.3 Operating expenses 1,752.4 1,702.7 -49.7 Operating income 462.6 585.6 +123.0 (Excluding irregular *1 factors) (517.6) (+55.0) Net income attributable to NTT 317.1 405.4 +88.3 DOCOMO, INC. Capital expenditures 219.5 246.1 +26.6 Adjusted free cash flow *2 298.4 341.6 +43.3 *1: Excludes the impact on operating income caused by the change in depreciation method, etc. and the impact on operating income caused by “Zutto CarryOver”, etc. 3 *2: Adjusted free cash flow is calculated excluding the effects of changes in investment derived from purchases, redemption at maturity and disposals of financial instruments held for cash management purposes with original maturities of longer than three months.

  5. Results by Segment U.S. GAAP FY2015/1H FY2016/1H Changes (1) (2) (2) – (1) (Billions of yen) 1,807.0 1,856.6 +49.6 Operating revenues Telecommunications business 420.2 524.7 +104.6 Operating income 246.3 250.4 +4.1 Operating revenues Smart life business 33.4 37.0 +3.5 Operating income 173.5 193.4 +19.9 Operating revenues Other businesses 9.0 23.9 +14.9 Operating income Operating revenues 419.8 443.8 +23.9 <Ref.> Smart life business and Operating income Other businesses 42.4 60.9 +18.5 4

  6. Key Factors behind Changes in Operating Income Decrease in (Billions of yen) network- related Increase in expenses *2 : Decrease in other operating Down 48.5 selling revenues: 585.6 expenses *1 : Increase in mobile Up 17.9 Down 26.9 Increase in communications other services revenues: 517.6 operating Up 50.5 Decrease in expenses: selling 462.6 Increase in optical-fiber Up 25.7 revenues: broadband service Down 36.7 revenues, etc. : Up 41.7 Selling revenues Income impact from the change of and expenses: Down 9.9 depreciation method, etc. : Up 50.0 Income impact from “Zutto CarryOver”, etc.: Up 18.0 Operating revenues Operating expense Up 73.4 Down 49.7 FY15/1H FY16/1H *1: Sum of cost of equipment sold and commissions to agent resellers 5 *2: Sum of depreciation/amortization, loss on disposal of property, plant and equipment and intangible assets, and communication network charges

  7. Operational Performance (1) (Millions subs) Mobile telecommunications Total smartphone/ Churn rate services subscriptions tablet users 72.94 68.49 34.09 0.58% 30.75 0.58% FY15/1H FY16/1H FY15/1H FY16/1H FY15/1H FY16/1H 6

  8. Operational Performance (2) (Millions subs) “Kake-hodai & Pake-aeru” “docomo Hikari” new billing plan subs optical-fiber broadband subs 33.42 2.53 23.78 0.72 FY15/1H FY16/1H FY15/1H FY16/1H 7

  9. Enrichment of Billing Service 2016 2014 2015 For “docomo feature phone” users ● “Kake-hodai Light (feature phone)” plan ● “Keitai Pack” For high-usage customers ● “Ultra Pack,” “Ultra Share Pack” For long-term customers ● Introduction of two selectable discount programs: “Zutto DOCOMO Discount Course” &“Free Course” ● Expansion of “Zutto DOCOMO Discount,” Reward points for contract renewal For low-usage customers ● “Share Pack 5,” Expanded applicability of “Kake-hodai Light” plan For low voice call usage customers ● “Kake-hodai Light” plan Enrichment of new billing plan ● “Data L Pack,” “Packet Carryover,” Extended usage period of data top up 新料金 Launch of new billing plan 開始 ● ”Kake-hodai & Pake-aeru,” “Zutto DOCOMO Wari,” “U25 Ouen Wari” 8 Oct. 2014 Jun. Sep. 2015 Sep. 2016 Mar. Jun. Sep.

  10. ARPU/MOU Trend of improvement continues (Yen) Voice ARPU Packet ARPU docomo Hikari ARPU 4,420 4,440 4,190 4,110 180 40 2,900 2,990 2,910 2,820 1,540 1,290 1,250 1,240 FY13/2Q FY14/2Q FY15/2Q FY16/2Q MOU 136 117 121 134 (Minutes) 9 ◆ For an explanation of ARPU and MOU, please see the slide “Definition and Calculation Methods of ARPU and MOU” in this document.

  11. New Products NEW 2016-2017 Winter/Spring Models docomo Simple, yet high-quality, original affordable and convenient smartphone MO-01J VoLTE-enabled LTE-enabled docomo waterproof phones feature phones SH-01J P-01J Compatibility with Compact ultra-high speed of mobile Wi-Fi router up to 682Mbps N-01J 10

  12. New Services NEW “Mierudenwa” docomo docomo Automatically converts Switch mode “Mierudenwa” a caller’s spoken words to text Support Desk: 03-XXXX-XXXX 画像更新 All right. (スマホのワク) Can I now ask your phone number? Trial service started For confirmation purpose, October 19, 2016 may I have your name? Understand. My name is Suzuki. Thank you for calling. 11 ◆ Service in Japanese only.

  13. LTE Network 149,600 Total no. of LTE base stations: 115,400 Expanded to 1,240 cities across Japan 38,100 370Mbps service using 3.5GHz band: Rolled out in 82 cities across Japan PREMIUM 4G-enabled base stations: 7,700 FY15/1H FY16/1H ◆ The transmission speeds described herein are theoretical maximum downlink rates specified in the technical standard and the actual rate may vary depending on the propagation conditions, etc. ◆ Two frequency bands of 3.5GHz and 1.7GHz are used for the provision of 370Mbps service, which is available in 50 cities nationwide. 12 (The maximum downlink speed provided in areas other than Tokyo, Nagoya and Osaka is 332.5Mbps, for which the two frequency bands of 3.5GHz and 2GHz are used. The 332.5Mbps service has been rolled out in 32 cities nationwide.)

  14. Network: Planned Advancements 2020 2016 2014 2015 5G Bringing the next stage of evolution to “speed” and “comfort” Up to 1Gbps Further sophistication 682 Mbps 256QAM 4X4 MIMO 500 Mbps 256QAM 370Mbps 3.5GHz band 300Mbps 375Mbps 225Mbps TDD+FDD FDD PREMIUM 4G Service launch 13

  15. Cost Efficiency Improvement (Billions of yen) FY16/1H FY16 (Initial guidance) Focus areas: 1Q actual: 【 Network 】 -25 Capital expenditures, 2Q actual: maintenance outsourcing cost, etc. -18 【 Marketing 】 -43 Sales tools, etc. 【 Other 】 R&D, information system, etc. -80 14 ◆ The numbers above are the amount of cost reduction compared to the FY2015 level.

  16. Smart Life Business & Other Businesses: Operating Income Steadily progressing Principal services, etc: (Billions of yen) 120.0 Smart life business Content services Finance/Payment services 60.9 Group companies 42.4 Other businesses Enterprise solutions Support services for customers’ peace of mind, etc. FY15/1H FY16/1H FY16 (Initial guidance) 15

  17. Content Services “dmarket” “Anshin Pack” 15.82 (Million subs) 15.34 13.95 12.15 FY15/1H FY16/1H FY15/1H FY16/1H “Anshin Net Security” “dmagazine” “dTV” “dhits” “danime store” “dgourmet” “dkids” “Anshin Remote Support”* “dhealthcare pack” “dliving” “Mobile Device Protection Service”* 16 * “Anshin Remote Support” and “Mobile Device Protection Service” are included in the “Support Services for Customers’ Peace of Mind”.

  18. Finance/Payment Services “d CARD Gold” (Million subs) “d CARD” Over 1.7 million subs 16.97 NEW 15.92 “d CARD PREPAID” To start accepting applications from late November 2016 NEW iD/d CARD to work on Apple Pay Started Oct. 25, 2016 Easy set-up using “d CARD app” FY15/1H FY16/1H 17 ◆ The total “d CARD” subscriptions represent the combined subscriptions to “d CARD” and “d CARD mini”

  19. “dPOINT” Loyalty Program No. of “dPOINT” merchants 22 alliance partners 20,900 11,100 At service launch Oct. 2016 (Dec. 2015) 18

  20. Promotion of No. of partners: Grew to 164 164 33 ~ FY15.2Q 3Q 4Q FY16.1Q 2Q FY16.1Q 19 * No. of “+d” partners: The number of partners that have created new value by integrating DOCOMO’s business assets with their own assets

  21. Initiatives: Drones Community development using ICT Concluded collaboration agreement for use of drones for disaster prevention/mitigation and verification trial on near-future technology Announced Aug. 29, 2016 Productivity improvement in agriculture/forestry Concluded collaboration agreement on a drone verification project for maintenance/management of rice paddies and forest reserves planted along the coast Announced Sep. 21, 2016 Proxy shopping service Verification trial using cellular drones in long-distance, beyond-visual-range flights to start in Fukuoka City in November 2016 Announced Oct. 19, 2016 20

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