KDDI HOMECorporate InformationInvestor RelationsIR DocumentsPresentationsFY 2017.3Performance Highlights and Q&A for the Third Quarter of the Fiscal Year Ending March 2017

Performance Highlights and Q&A for the Third Quarter of the Fiscal Year Ending March 2017

Date Thursday, February 2, 2017 5:00 pm-6:00 pm
Location 20F Conference Room, Garden Air Tower
Respondents Takashi Tanaka, President; Hirofumi Morozumi, Executive Vice President; Makoto Takahashi, Executive Vice President; Yuzo Ishikawa, Executive Vice President; Hidehiko Tajima, Senior Vice President; Yoshiaki Uchida, Senior Vice President; Takashi Shoji, Associate Senior Vice President; Shinichi Muramoto, Associate Senior Vice President; Hiroki Honda, General Manager, Corporate Management Division; Keita Horii, General Manager, Investor Relations Department (MC)

Performance Highlights

A Look of the Presentation of the Financial Results

In the presentation of the financial results, President Tanaka described three points; "Performance in 1-3Q," "Promoting Business Strategies," and "Revision of Full-year Results Forecasts."

1. Performance in 1-3Q

For the third quarter of the fiscal year ending March 2017 (from April to December 2016,) consolidated operating revenue was ¥3,522.2 billion (74.9% progress for the initial forecast.)

Consolidated operating income was ¥775.7 billion (87.7% progress for the initial forecast,) mainly due to the increase of mobile communications revenues [1] and the decrease of the handset sales expense and EBITDA was ¥1,203.4 billion (81.3% progress for the initial forecast.)

  • [1]
    au ARPA revenues + MVNO revenues

2. Promoting Business Strategies

In our domestic telecommunications business, we are promoting expansion in mobile IDs, which is the sum of au accounts and the MVNO subscriptions provided by our consolidated subsidiaries. We are aiming for a share of 30% in the new MVNO market with UQ mobile, which bolsters that growth.

At the end of January this year, KDDI consolidated BIGLOBE as one of our subsidiaries. BIGLOBE has a customer base of more than 2.4 million users in the FTTH and MVNO business. In the near future, we will collectively take advantage of BIGLOBE's customer base and KDDI's life design business and network technology to increase the number of multi-service users and create a wide variety of synergies.

In the life design business, we started au STAR (long-term user preferential service) in August 2016 and have expanded further. And we also launched au Smart Pass Premium and Wowma! (KDDI shopping mall service) in January this year.

As a result, the number of au Smart Pass Memberships, which constitutes the base for expanding the au Economic Zone, has steadily increased and now exceeds 15 million members.

The au WALLET settlement strongly drove the gross merchandise value of the au Economic Zone for the third quarter of the fiscal year ending March 2017 to 897 billion yen. The current attainment rate of our term forecast of 1,200 billion yen is at 74.8% and showing steady progress.

The churn rate of our customers who are using multiple KDDI services is low compared to customers who are only subscribed to an au smartphone, as shown in the figures. We will continue to reinforce retention by increasing and improving life design services.

Lastly, to create IoT businesses, we will develop a number of enablers to establish new business models to work with our partners.

For development support, KDDI acquired iret, Inc., a company that has been certified as an AWS Premier Consulting Partner for five consecutive years. We will be drawing on iret's know-how for our IoT development support. As for the platform, we have already released KDDI IoT Connect Air, an IoT-targeted network service jointly developed with SORACOM, INC.

As we are preparing both network and devices, we expect to step up our IoT business to full-scale operation.

3. Revision of Full-year Results Forecasts

With these favorable performance, KDDI raised the targets for the fiscal year ending March 2017; consolidated operating income rose ¥25 billion from the initial forecast to ¥910 billion and EBITDA was up ¥20 billion from the initial forecast to ¥1,500 billion.

In addition, KDDI resolved to revise its forecast for cash dividends per share to 45 yen, 5 yen up from the initial forecast with a record date of March 31, 2017.

Questioner 1

Questioner 2

Questioner 3

Questioner 4

  • QWhat is the reason for the +100 yen upward revision of au ARPA?

    ARPA can be broken down into ARPU times the unit of mobile devices per person; the number of mobile devices is faltering vis-à-vis our internal plan partly due to the release of the new tiered data plan. ARPU, on the other hand, steadily grew driven by the 3.7% increase in smartphone penetration rate compared to the previous term.

  • QWhat are the details of the revision of the performance forecast of the Global Services segment?

    The operating income of the Global Services segment for the first-to-third quarter decreased 5.1 billion yen year-on-year. This is primarily due to unfavorable currency movements affecting overseas subsidiaries and the disposal of high-risk low-return businesses; aside from this impact, the performance shows a substantially increased income. The forecast was revised based on the current circumstances.

Questioner 5

Questioner 6

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