Performance Analysis by Segment

(Years ended March 31)

Personal Services Segment

Overview of Operations

In the fiscal year ended March 31, 2017, operating revenue increased 3.7% year on year to ¥3,633.0 billion. This increase mainly reflected an increase in mobile communications revenues and an increase in sales of services in the life design business, such as "au Denki" and "au WALLET Market." Meanwhile, operating income rose 8.3% year on year to ¥711.1 billion, reflecting a decrease in handset procurement cost, despite conducting impairment of certain idle assets related to 3G services.

au ARPA / Mobile Devices per Person

au ARPA rose ¥140 year on year to ¥5,830, partly due to an increase in the number of mobile devices per person and a 3.6 point increase in the smartphone penetration rate from the end of the previous fiscal year to 61.8%.

Number of "au Smart Value" Subscriptions

"au Smart Value" has continued to expand its customer base through mutual cross-selling of mobile and fixed-line services. The churn rate for "au Smart Value" subscriptions is comparatively lower than the rate for standalone au smartphone subscriptions, contributing to stronger retention.

Looking at the number of "au Smart Value" subscriptions, the number of mobile subscriptions increased 1.11 million from the end of the previous fiscal year to 12.66 million, mainly reflecting the increase in "au Smart Value" affiliate partners, while the number of subscriptions among fixed-lined broadband households rose 0.52 million to 6.24 million.

Value Services Segment

Overview of Operations

In the fiscal year ended March 31, 2017, operating revenue rose 66.0% year on year to ¥451.1 billion. The increase mainly reflected an increase in value-added ARPA revenues due to an increase in the number of "au Smart Pass" members and an increase in "au WALLET" settlement commissions. A further factor was an increase in sales associated with the consolidation of Jupiter Shop Channel Co., Ltd.

Meanwhile, operating income increased 31.3% year on year to ¥95.9 billion, reflecting the impact of consolidating Jupiter Shop Channel Co., Ltd. as well as organic profit growth.

Value-Added ARPA

In the fiscal year ended March 31, 2017, value-added ARPA grew ¥70 year on year to ¥510. The main factors behind this increase were steady growth in the number of members of online services such as "au Smart Pass," along with an increase from growth in "au WALLET Market" and "au WALLET" settlement commissions.

Number of "au Smart Pass" Members and "au Smart Pass Premium" Members

The number of members rose 5.2%, or 750,000, from the previous fiscal year-end to ¥15.22 million members. The increase reflects growth in support from customers for "au Smart Pass" security services and special offers for members, as well as the launch of "au Smart Pass Premium" in January 2017 as an advanced version of "au Smart Pass" designed to enhance customer experience value even further.

Business Services Segment

Overview of Operations

In the fiscal year ended March 31, 2017, operating revenue in this segment increased 0.8% year on year to ¥637.3 billion, as higher revenues from terminal sales and higher sales at consolidated subsidiaries, such as KDDI MATOMETE OFFICE CORPORATION, absorbed a decrease in mobile communications revenues associated with the introduction of flat rate voice communications.

Meanwhile, operating income increased 17.4% year on year to ¥72.1 billion, mainly reflecting a decrease in access charges, although the cost of solutions devices and sales commissions increased.

Global Services Segment

Overview of Operations

In the fiscal year ended March 31, 2017, operating revenue declined 5.8% year on year to ¥277.2 billion. The main contributing factor was foreign exchange effects due to the yen’s appreciation as well as a decline in revenues associated with the liquidation of unprofitable operations in the U.S. consumer business, which continued from the previous fiscal year.

Operating income declined 24.9% year on year to ¥24.2 billion, also reflecting the foreign exchange effect and the impact of liquidating operations.

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