Q&A for 2Q of FY2015.3

Q&A for the First Half of the Fiscal Year Ending March 2015

Date Friday, October 31, 2014, 7:00 pm-8:00 pm
Location 20F Conference Room, Garden Air Tower
Respondents Takashi Tanaka, President; Hirofumi Morozumi, Executive Vice President; Makoto Takahashi, Senior Vice President; Yuzo Ishikawa, Senior Vice President; Tsutomu Fukuzaki, Associate Senior Vice President; Hidehiko Tajima, Associate Senior Vice President; Yoshiaki Uchida, Associate Senior Vice President; Takashi Shoji, Vice President; Hiroki Honda, General Manager, Corporate Management Division; Kenji Aketa, General Manager, Investor Relations Department (MC)

Questioner 1

Questioner 2

Questioner 3

Questioner 4

Questioner 5

  • "au Smart Value" subscriptions continue to be favorable, and in October J:COM expanded the scope include TV + telephone customers. How is this working out?

    "au Smart Value" penetration among au HIKARI customers is up to 58%, but the rate is not yet that high for cable customers. This is partly because we did not target mainstay television customers with discounts. We have expanded the scope because, going forward, we are aiming to increase penetration among television customers before competitors begin offering set discounts on mobile and optical fiber. This spring, we expanded the scope to include TV + Internet, and penetration is moving ahead steadily in this area. In October, J:COM expanded the scope to include TV + telephone. We believe that boosting "au Smart Value" penetration will enable us to respond sufficiently to changes in the competitive environment.

  • Revenues in the Business Services segment were down year on year for both 1Q and 2Q. Why was this?

    In the Business Services segment, the "Maitsuki Discount (Monthly Discount)" unit price was at a high level in the first half of the previous fiscal year, so in the second half of the fiscal year we introduced measures to restrain the monthly discount portion. As a result, in the first half of the current fiscal year it became more difficult to generate profits than in the first half of the previous year. Also, unit terminal sales were up year on year, which pushed up total selling costs. This was another factor holding down income.

  • Is performance in the Business Services segment progressing in line with your plans for the full fiscal year?

    Usage characteristics for corporate mobile service customers are opposite those in the consumer segment. Voice volumes are high and data volumes are low, so the new rate plan has a negative impact on profits. At the same time, because smartphone penetration is still low, we believe ARPU will recover going forward, according with the increase of the smartphone penetration. For the current fiscal year, in the Business Services segment it may be difficult to reach the level of operating income we had initially forecast, but in the second half we expect to remain on a par with last fiscal year.

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