KDDI HOMECorporate InformationInvestor RelationsIR DocumentsPresentationsFY 2022.3Performance Highlights and Q&A for the Financial Results for the Third Quarter of the Fiscal Year Ending March 2022

Performance Highlights and Q&A for the Financial Results for the Third Quarter of the Fiscal Year Ending March 2022

Date January 28, 2022 (Fri), 5:30-6:30 PM
Location Online conferencing from Conference Room, Garden Air Tower
Respondents Takashi Shoji, Executive Vice President; Shinichi Muramoto, Executive Vice President; Keiichi Mori, Senior Managing Executive Officer Director; Kazuyuki Yoshimura, Managing Executive Officer Director; Nanae Saishouji, Executive Officer, General Manager, Corporate Management Division; Ikuko Hongou, General Manager, Investor Relations Department (MC)

Highlights of the Financial Results

The Presentation of the Financial Results

At the financial results meeting, Executive Vice President Muramoto presented "Consolidated performance in the first to third quarter and KPIs", and "Topics."

1. Consolidated performance in the first to third quarter and KPIs

Consolidated sales from the first to the third quarter were 4.0138 trillion yen with an annual forecast progress rate of 75.0%, and consolidated operating profit was 874.6 billion yen with a progress rate of 83.3%, growing steadily toward the annual forecast.

Thanks to the increase in revenue in mobile communication and in the growth fields, consolidated operating profit from the first to the third quarter grew significantly by 3.5 billion yen on the year. Even though Multi-Brand communications ARPU revenues recorded a 56.4 billion-yen decrease, mobile communication revenue grew by 7 billion yen thanks to group MVNO revenue and roaming revenue. In addition, the Life Design Domain and Business Services segment, which are growth fields, saw a profit increase of 16.8 billion yen. This was partly due to a temporary increase in profits associated with decreased provisions in the third quarter. From the beginning, we had forecast that the growth fields would show significant growth in the fourth quarter, so these fields made steady progress toward the annual forecast.

The number of group IDs turned the corner in the third quarter, recording a net increase to 31.56 million subscriptions, which is equivalent to a net increase of 48,000 units as the total of the three quarters. The steady progress of the Multi-Brand strategies helped to recover momentum. As 5G spread to more areas, au saw steady sales of 5G models. UQ mobile demonstrated the positive effects of the "discount with Denki (electricity)/Internet" being launched in the first half of the year and of being offered at all au shops across Japan. povo has been seeing greater usage mainly among highly active digital-native users since late September, which is when povo2.0 was launched with the slogan "From zero, in your own way." Thanks to the good timing of the expansion of 5G areas and to the timing for marketing the new iPhone, cumulative 5G unit sales had grown steadily to 6.2 million units as of the last day of December 2021, and the outlook is for them to grow to 8 million by the end of the fiscal year ending March 2022. Demand for larger data packages is also increasing, and 5G mobile data traffic per person has grown by more than 2.5 times compared to that of 4G LTE.

In the third quarter, the Multi-Brand communications ARPU recorded 4,200 yen, down 240 yen year-on-year. Multi-Brand communications ARPU fluctuated as a greater than expected number of subscribers stayed with au, for whom the 5G effect was a plus, while the number of UQ mobile and povo subscribers also increased while staying within the range of the annual forecast. We will operate ARPU to ensure it will achieve the annual target of 4,200 yen.

For the growth fields, the Life Design Domain recorded operating profit of 181 billion yen, with a progress rate of 72.4% toward the annual forecast, and the Business Services segment also recording operating profit of 141.7 billion yen with a progress rate of 77.0%. Both are expected to see significant increases in profits in the fourth quarter and are currently progressing steadily toward their annual forecasts.

For the Life Design Domain's KPI, the core service customer base has continued to see steady growth. The number of subscribers for au Denki etc., has reached 3.24 million, the number of au PAY Card members 7.3 million, and the number of au Smart Pass Premium members 12.12 million.

In the Energy Business, the performance showed rapid fluctuations due to the price fluctuations of the power market as a whole in the last term, and profits were high from the first to the third quarter thanks to the lower procurement costs, but profits worsened in the fourth quarter as costs soared. This year, aiming to control costs, we have increased procurement ratio of private and stable procurement from local energy companies, etc. instead of from the wholesale electricity market. With this initiative taking effect, we saw profits decrease year-on-year in the first to the third quarter but expect to see significant profits in the fourth quarter.

In the Business Services segment, the NEXT core that are the drivers of growth recorded a two-figure growth in sales, up 17% year on year. Corporate DX, Business DX and Business infrastructure services are all steadily expanding their business fields. We will continue to promote the NEXT core and aim to grow entire Business Services segment through leveraging synergies with core businesses, such as attracting more IDs and improving customer engagement.

2. Topics

Based on the slogan "Zutto, Motto, Tsunagu Zo, au (Connecting more and always with au), we are creating safe and reliable 5G networks in areas where people are likely to go on a daily basis. With the au "Rail Line 5G Conversion" announcement, we are looking to cover 26 lines by the end of fiscal 2021, including JR and private sector lines. Furthermore, for steady network operations, we will enhance DX at operation sites and incorporate automation to monitor locations in the east and west to ensure network connectivity even during disasters.

We will also continue to enhance our collaboration with OTT partners. As we are seeing increasing consumer interest in 5G video services, we have expanded services from OTT partners who lead the entertainment industry to address such customer needs. We will continue to meet customer expectations, capitalizing on the strength of our partnerships.

With regards to the metaverse, KDDI has been accumulating use cases over a period of about two years through partnerships with community-based municipalities and tourism associations. The Halloween Fes that we held in October 2021 in "Virtual Shibuya" recorded a total of over 500,000 visitors. We have also recently launched "Virtual Osaka", enhancing collaborations with physical cities. To enable anyone to enjoy the metaverse with a sense of safety, we have also launched "Virtual City Consortium" to devise guidelines and so forth. We will lead industry standardization based on our extensive track record.

In the new mobility business, we will connect people, objects and events in cities and regional areas together with our partners under the concept of "Transforming mobility into exciting experiences" to solve social issues. In December 2021, we announced that we will offer the short-trip service "mobi" together with WILLER, for trips within a 2 km radius. By facilitating freer travel, we will look to solve travel issues in regional areas, offering people more opportunities to go out and enjoy interactions in their communities, thus vitalizing their communities. As a spinoff venture from KDDI, we have also established a new company "KDDI SmartDrone Inc." and we will announce the details in February.

Connected services are also steadily expanding. KDDI's Global Telecommunication Platform excels in centrally managing different communication lines from different countries, offering high quality and stable communication. Our offers to key domestic car manufacturers are expanding, including to TOYOTA, SUBARU and SUZUKI, and in regions not just in Japan but also in Europe, China, Australia, and North America, for total of 5 regions globally.

We are also advancing our efforts at global data centers. Telehouse boasts the top performance in the world in London and the top performance in France in Paris, aggregating resilient and quality data centers with communication providers and mega-clouds to create a strong ecosystem with robust connectivity. We plan to extend such success cases from Europe to Southeast Asia and launch Telehouse Bangkok by the spring of 2023.

We have also passed a resolution to expand the treasury stock limit by 50 billion yen, from 150 billion yen to 200 billion yen.

Questioner 1

Questioner 2

Questioner 3

Questioner 4

Questioner 5

Questioner 6

Print This Page
Change Text Size

E-mail Alerts

E-mail Alerts is a service that informs subscribers by E-mail of updates to the Investor Relations website, financial results, and other vital up-to-the-minute information.

Open link in a new windowRegistration

KDDI IR Official Twitter