KDDI HOMECorporate InformationInvestor RelationsIR DocumentsPresentationsFY 2020.3Performance Highlights and Q&A for the First Quarter of the Fiscal Year Ending March 2020

Performance Highlights and Q&A for the First Quarter of the Fiscal Year Ending March 2020

Date Thursday, August 1, 2019 5:00 pm-6:00 pm
Location Conference Room, Garden Air Tower
Respondents Yoshiaki Uchida, Executive Vice President; Takashi Shoji, Senior Vice President; Shinichi Muramoto, Senior Vice President; Keiichi Mori, Senior Vice President; Kei Morita, Associate Senior Vice President; Nanae Saishouji, General Manager, Corporate Management Division; Keita Horii, General Manager, Investor Relations Department (MC)

Performance Highlights

The Presentation of the Financial Results

In the presentation of the financial results, Senior Vice President Muramoto described two points;
"Highlights of Financial Results for 1Q", "Launched New Medium-Term Management Plan".

1. Highlights of Financial Results for 1Q

In the first quarter of FY2020.3, the consolidated operating revenue increased 2.0% year-on-year, to 1,246.1 billion yen. Even though there was a steady increase in the life design domain and business services segment, the consolidated operating income was 255.8 billion yen, which is an 11.4% year-on-year decrease. This was due to an increase in sales costs in order to strengthen our retention measures, mainly in response to the entry of new operators in the second half and the migration of 3G users to 4G in advance of the termination of 3G at the end of March 2022. The decrease was also due to temporary factors such as the change in the accounting period for the Myanmar business in the previous fiscal year, the accelerated depreciation of 3G equipment, and the devaluation of some handsets.
On the other hand, there was a steady increase in the number of mobile IDs, due to the penetration of unbundling plans and the effects of bundling the life design services. In addition, the growth in the telecommunications and non-telecommunications fields remained firm due to steady growth in the total ARPA revenues, au ARPA revenues, and value-added ARPA revenues as well.

2. Launched New Medium-Term Management Plan

We are now conducting our business operations under new brand slogans, which were revised in May. The KDDI brand slogan was changed to "Tomorrow, Together", and the au brand slogan was changed to "Explore the extraordinary".
The 5G era will be an era of competition and collaboration, in which we will work with partners to develop infrastructure and platforms, while actively competing to offer superior services and prices. We will leverage 5G to promote open innovation that leads to the creation of new experience value, and we will actively pursue efforts to develop next-generation services that lead to new platforms and regional revitalization.

Regarding the development of infrastructure for the 5G era, we are planning to launch 5G next spring as a non-standalone (NSA) network. Our brilliant 4G, which has been refined over many years, will be combined with special 5G and deployed as a hybrid network. In addition, to speed up the launch of 5G, we reached an infrastructure sharing agreement with SoftBank in July 2019 aimed at promoting the early development of the 5G network in rural areas. Through such efforts, we aim to make rapid progress in constructing a resilient 5G network.

Regarding open innovation for the 5G era, we opened KDDI Digital Gate in September 2018 as a site for facilitating collaboration with our partners. One example is our collaboration with JAL INNOVATION Lab, with whom we are conducting research, development, and trials for next-generation services using 5G and IoT. This autumn, we will expand into Osaka and Okinawa to provide powerful support for the creation of new business.

In the area of smart drones, we have formed an alliance with LGU+ to further grow the international drone market. In MaaS, we are collaborating with NAVITIME to promote the digital transformation of transportation in partnership with transportation operators and local governments. Through such activities, we will continue to develop a variety of specialized platforms and use them to collaborate with a variety of partners and create new business.

In the area of regional revitalization, we launched the regional revitalization fund in May this year and have concluded agreements with 63 local governments. Moving forward, we will continue working to achieve the SDGs and actively focus on regional revitalization and education business as social issues to be solved through our business.

Next, with respect to au, we will continue to provide individual customers an exciting experience that is centered on the smartphone, through payment, e-commerce such as au PAY and au Wowma!, and financial services. In addition, we will continue expanding the scale of the life design domain to further promote the integration of telecommunications and life design, around our core business of telecommunications.

In regards to payments, the number of au PAY subscribers has surpassed 4 million within four months of launch. As a result of our partnership with Rakuten, the smartphone payment service can be used in over 1 million locations. In the field of e-commerce, Wowma! was renamed as au Wowma! in July of this year. Furthermore, we will launch live commerce services and offer free shipping for au Smart Pass Premium members, as part of our efforts to provide smartphone-centric consumer services that are more familiar to the customers.

In the area of finance, we completed a takeover bid of Securities Co., Ltd. in June of this year, and made au Insurance Company, Ltd. as a subsidiary in July. As a result, we are now prepared to provide one-stop access to all financial products in the au Financial Holdings circle. With our finance services based on the Smart Money Concept, we will continue to bring payment and financial services closer to customers both through the smartphone, which has become central to daily life, and through au WALLET, which has had more than 20 million cards issued.

Regarding the evaluations related to SDGs, we were selected as a component stock for the FTSE4GOOD Index Series and MSCI ESG Leaders Indexes, which are world-renowned socially responsible investment indexes, for the third consecutive year. We were also selected by the S&P Carbon Efficient Index Series for the second consecutive year, and have received high evaluations from a variety of institutions.
We will continue aiming for sustainable growth with society by pursuing efforts to achieve the KDDI SDGs.

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