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

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

Date Friday, January 31, 2020 5:00 pm-6:05 pm
Location Conference Room, Garden Air Tower
Respondents Yoshiaki Uchida, Executive Vice President; Takashi Shoji, Senior Managing Executive Officer; Shinichi Muramoto, Senior Managing Executive Officer; Keiichi Mori, Senior Managing Executive Officer; Kei Morita, Managing Executive Officer; Toshitake Amamiya, Managing Executive Officer; Nanae Saishouji, Corporate Officer, 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 Managing Executive Officer Muramoto described two points;
"Highlights of Financial Results for 1Q-3Q", "Aiming to Step Up Engagement".

1. Highlight of Financial Results for 1-3Q

Consolidated operating revenue for the first nine-month period of fiscal year ending March 2020 (April-December 2019) was 3,902.6 billion yen and achieved 75.0% of the full-year forecast, and consolidated operating income was 843.9 billion yen and achieved 82.7%. Although earnings declined in the first half of the fiscal year, they increased in 1-3Q due to an increase in earnings in 3Q alone.

Regarding consolidated operating income, the growth fields, Life Design Domain and Business Services Segment, continue driving the results. In addition, handset sales cost, which increased in 1-3Q, has significantly decreased since October due to some factors such as the amendment of the Telecommunications Business Act. Backed by the high achievement of the full-year forecast, we will strengthen the preparation for sustainable growth in the future.

Both Life Design Domain and Business Services Segment have maintained double-digit income growth. Life Design Domain and Business Services Segment achieved 81% and 90% of the full-year forecast, respectively, and we will strive to create the foundation for sustainable growth by investing in the enforcement of engagement in 4Q.

The au churn rate has greatly recovered, and the number of Mobile IDs has increased. Further, Life Design Domain has driven the growth of total ARPA and total ARPA revenues.

2. Aiming to Step Up Engagement

1) Affiliation with Lawson, Inc. and Point Service "Ponta"
Through unifying KDDI's au WALLET points and Ponta points from this May, the member base will expand and exceed 100 million, one of the largest in the country. In addition, we will aim to increase au PAY membership and strengthen our service foundation with the point system that is easy to use and save, utilizing 4.1 billion visitors to Lawson, about 14,600 brick-and-mortar stores nationwide, over 1.7 million of points and payments affiliated stores, and over 200 billion points issued a year.
Through the tie-up, we will also provide new, customer-tailored consumer experiences as an AUGMENTED convenience store using our 5G and AI, as well as advanced technologies such as big data, and at the same time we will resolve social issues through convenience stores.

2) Enhanced Entertainment with an Eye toward the 5G Era
KDDI strives to expand attractive contents with an eye toward the 5G era. Regarding au Smart Pass Premium, we have dramatically expanded the unlimited digital contents of videos, music and literary since last November. As for Video Pass, we cooperate with TV Asahi and expand their unique contents in addition to the existing ones, and will begin a service as new Video Pass from this spring. We will continue our endeavors so that we can satisfy all customers including non-au customers by expanding both quality and quantity of content.

3) KDDI Group IoT Connections
The cumulative number of IoT connections KDDI has provided to corporate customers since 2001 exceeded 10 million in November 2019. While going forward to increase utilization and applications further in the existing fields, we will expand our IoT services outside Japan through KDDI IoT Worldwide Architecture, and at the same time we will further provide value and pursue digital transformation together with our partners.

4) 5G
KDDI provides customers with new experience value and steadily upgrades the infrastructure for the launch of 5G commercial services in March. Also, we have steadily conducted demonstration tests based on the use case assumptions with our various partners toward achieving 5G. We will create new experience value for the 5G era looking toward sustainable growth and developing future together with the society.

5) Our Initiatives for Network Resilience
Assuming large-scale earthquake disasters like Nankai Trough earthquake, KDDI is increasing the number of the core transmission lines throughout Japan to three. Most recently, Okinawa Cellular is constructing a 760-kilometer submarine cable from Okinawa to Kyushu and slated for completion in March, and with this line, the three nationwide lines will be realized. As a telecommunications carrier who has a role in important social infrastructure, we will strive to fortify networks against natural disasters in order to provide reliable telecommunication service 24 hours a day, 365 days a year.

6) DPS
To implement "Further strengthening shareholders returns" formulated in the medium-term management plan, we revised the FY2020.3 dividend forecast and increased it by 5 yen to 115 yen. KDDI will continue striving to attain sustainable growth and strengthening shareholders returns.

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