Performance Analysis by Segment

(Years ended March 31)

Personal Services Segment

Overview of Operations in the Fiscal Year Ended March 31, 2020

Operating revenue increased 3.3% year on year to ¥4,568.0 billion. A decrease in mobile handset revenue was offset mainly by higher revenue from "au" total ARPA [1] and MVNOs and the effects of consolidating ENERES and Jibun Bank.
Operating income fell 1.3% year on year to ¥872.7 billion, due mainly to expenses incurred for sustainable growth and temporary factors suppressing profit [2] in the first half despite a 22.4% year-on-year increase in operating income in the life design domain that exceeded initial forecasts.

  • [1]
    au ARPA revenues + Value-Added ARPA revenues + Handset Repair and Compensation revenues + au Denki revenues
  • [2]
    Mainly accelerated amortization for the suspension of 3G service on March 31, 2022 and effects due to the change of fi scal year in the Myanmar business

au ARPA

au total ARPA rose ¥330 thanks to expansion in "au Denki" ARPA, which increased ¥130 year on year driven by a steady increase in contracts, and to an increase in value-added ARPA that was driven by growth in the percentage of "au Smart Pass Premium" members and its expanded use for payments and commerce.
We expect au total ARPA to continue expanding from the fiscal year ending March 31, 2021 onward driven mainly by "au Denki" ARPA and value-added ARPA.

au Churn Rate

The au churn rate increased in the first half due to a temporary surge in demand ahead of a consumption tax hike and the amendment of the Telecommunication Business Act in October 2019, but the rate fell significantly in the second half as the overall liquidity of the market declined. As a result, the full-year rate was 0.72%, down 0.04 percentage points year on year.
To reduce the au churn rate, KDDI continues to enhance engagement with customers.

Life Design Domain

Overview of Operations in the Fiscal Year Ended March 31, 2020

Operating revenue expanded 28.8% year on year to ¥1,218.0 billion mainly owing to higher revenue from not only the energy field, [3] and the settlement and finance field, [3] but also "au Smart Pass," commerce, repair and compensation.
Meanwhile, operating income grew 22.4% year on year to ¥180.0 billion, owing mainly to higher income in the energy field, driven by a steady increase in "au Denki" contracts, and higher income in the content field, driven by strong results in "au Smart Pass," repair and protection.

  • [3]
    Including consolidation effects mainly of ENERES and Jibun Bank

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

The number of "au Smart Pass" and "au Smart Pass Premium" members increased 10 thousand compared with the end of the previous fiscal year to 15.50 million. Of this number, memberships of "au Smart Pass Premium," which is a sophisticated version of "au Smart Pass," increased 2.35 million year on year to 9.65 million (growing to 62% of all "au Smart Pass" memberships) due in part to the provision of more special benefits for members as well as the effects of expanding the scope of services to encompass non-"au" customers.
Reference: "au Smart Pass" is a package service for a monthly data fee of ¥372. Around 500 apps, data storage services, coupons, repairs, protection and more are accepted.
"au Smart Pass Premium" is a sophisticated version for a monthly data fee of ¥499.

Three Fields of the Life Design Domain

Content field: The profit contribution from "au Smart Pass" is significant, and the profit margin is higher than other fields. We are working mainly to strengthen entertainment functions for the 5G era and cooperate with the financial and commerce field.
Energy field: The profit margin is low, but the number of users is steadily increasing and the growth rate is the highest. In addition to helping expand sales and enhance engagement, this field is showing that its profit contribution ratio is increasing.
Financial and commerce field: The field is in the phase where active users are rising, and we are spending to ensure medium-term growth. We aim for future profit contributions and expect the field to help enhance engagement with "au" users.

Business Services Segment

Overview of Operations in the Fiscal Year Ended March 31, 2020

In the fiscal year ended March 31, 2020, operating revenue expanded 4.2% year on year to ¥923.5 billion. This increase mainly reflected higher revenue from mobile and fixed-line telecommunications business, including IoT-related sales, and higher revenue from domestic Group companies, including KDDI MATOMETE OFFICE CORPORATION and KDDI Evolva, Inc.
Operating income climbed 20.8% to ¥147.5 billion, thanks to a significant increase in income from the mobile telecommunications due to a steady expansion in contracts as well as an increase in income from all domains, including the fixed-line telecommunications business, domestic Group companies, and the overseas business.

IoT Connections

KDDI is actively expanding its IoT connections, emphasizing IoT as a necessary technology for customers to promote their own DX by connecting all things with the internet.
In November 2019, the number of connections surpassed 10 million, and by March 31, 2020, the number steadily grew to over 11.50 million.
Although the outlook is unclear due to the impact of the COVID-19 pandemic, we will continue working to achieve our goal of 18.00 million by March 31, 2022, which is the final year of our medium-term management plan.

  • As of March 2020

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