Before I begin my presentation on the results for the first six months of the fiscal year ending March 31, 2021 (FY2020/2Q), I would like to express my deepest apologies for causing inconvenience to many people with the fraudulent use of "docomo kouza" service.
With respect to the compensation of full amount of losses to the victims, we completed the payment for all cases that have been uncovered so far.
To strengthen fraud prevention, we have introduced eKYC-based personal identification procedures for customers who have registered a chargeable bank account and do not use DOCOMO's mobile telecommunications service.
We will continue to steadily implement enhanced security measures to ensure safe and worry-free use for customers.
Now, let me start my explanation on the financial results for FY2020/2Q.
The highlights of FY2020/1H results are summarized here.
Operating revenues decreased by 47.5 billion yen year-on-year to 2,282.5 billion yen. Operating profit, on the other hand, increased by 23.3 billion yen to 563.6 billion yen, making a favorable progress toward our full-year guidance.
Net profit attributable to shareholders of NTT DOCOMO, INC. grew by 18.9 billion yen to 391.3 billion yen.
We thus recorded a decrease in revenues but an increase in profit.
Although we recorded a drop in operating revenues due to the impact of the new rate plans, "Gigaho", "Gigalight" and other customer return measures, as well as a decline in selling revenues and international roaming revenues caused by COVID- 19, we secured an increase in operating profit mainly as a result of our steadfast actions for the expansion of Smart life business.
Adjusted free cash flow decreased by 178.8 billion yen to 307.1 billion yen, because of the impact of the proceeds from the sale of Sumitomo Mitsui Card shares in FY2019 and other factors.
Here are the results by segment.
In "Telecommunications business," operating revenues and operating profit posted
a year-on-year decrease of 108.6 billion yen and 12.1 billion yen, respectively.
On the other hand, for "Smart life business" and "Other businesses" combined, operating revenues and operating profit recorded a year-on-year increase of 66.1 billion yen and 35.5 billion yen, respectively.
This slide explains the key factors behind the year-on-year changes in operating profit.
Operating revenues posted a decline of 47.5 billion yen due mainly to:
A decrease in mobile communications services revenues of 29.9 billion yen caused by the expanded impact of customer return measures and a drop in international roaming revenues, etc.;
An increase of optical fiber broadband services revenues of 22.6 billion yen;
An increase in other operating revenues of 53.7 billion yen; and
A drop in selling revenues of 93.9 billion yen owing to a significant decrease in the number of wholesale handsets sold.
Operating expenses recorded a decrease of 70.8 billion yen.
Consequently, operating profit increased by 23.3 billion yen from the same period of the previous fiscal year to 563.6 billion yen.
About "d POINT CLUB" membership.
The total number of "d POINT CLUB" members reached 78.15 million as of September 30, up 8% from the number a year ago, achieving our FY2021 target of 78-million earlier than planned. We will aim to further expand the membership base to 100 million as quickly as possible.
The total number of "d POINT CARD registrants" (i.e., the number of users who can
earn and use points at participating stores) grew to 46.76 million, recording an increase of 22% in the last 12 months.
"d POINTs" used grew by 22% year-on-year to 115.3 billion points, of which points used at participating stores amounted to 80.5 billion, accounting for approximately 70% of the total.
As for the operational performance of telecommunications business, the total number of mobile telecommunications service subscriptions grew by 2% year-on- year to 80.99 million as of September 30.
Churn rate excluding MVNO subscriptions was 0.46%.
We successfully maintained the handset churn rate to a very low level of 0.38% as a result of the measures aimed at expanding the adoption of the new rate plans and other initiatives.
The total number of smartphone and tablet users increased by 3% from the level a year ago to 42.51 million as a result of the implementation of "Zutto Hajimete Sumaho Wari" discount program and other measures.
The total number of "docomo Hikari" subscriptions increased by 10% year-on-year to 6.8 million as of September 30.
Regarding our ARPU performance, the FY2020/2Q aggregate ARPU (including the impact of discounts) was 4,820 yen.
Despite the expanded impact from the new rate plans and other customer return measures, the aggregate ARPU recorded a year-on-year increase of 80 yen driven mainly by the reduction of discounts and an increase in "docomo Hikari" subscriptions.
This explains the progress of cost efficiency improvement.
In the first half of FY2020, we achieved efficiency improvement totaling 39 billion yen.
The progress so far has been in line with our plan, and we will continue to tackle cost efficiency improvement to deliver on our full-year target 100 billion yen.
Operating profit from Smart life business and Other businesses for FY2020/1H grew by 38% from the same period of the previous fiscal year to 130 billion yen driven mainly by the steadfast expansion of finance/payment business and factors relating to accounting treatment.
The contribution from each category was as follows:
Content/lifestyle (e.g., dTV, dhits, etc.) accounted for approximately 25%;
Finance/payment (e.g., d CARD, d Payment, etc.) approximately 20%;
Support services for customers' peace of mind (e.g., Mobile Device Protection
Service, etc.) approximately 40%; and
Others (e.g., enterprise solutions, etc.) approximately 20%.
Some comments about our finance/payment services.
The total transactions processed with our finance/payment services grew by 33% year-on-year to 3,180 billion yen, of which the transactions handled with "d CARD" accounted for 2,410 billion yen, posting an increase of 27% year-on-year.
The total amount of transactions has been growing at a favorable pace due to the effects of various campaigns and other factors.
The total "d CARD" members reached 13.55 million, up 13% compared to the number a year ago. The number of "d CARD GOLD" members, in particular, continued to increase and reached 7.34 million as of September 30, marking an increase of growth of 23% year-on-year.
As for "d Payment" service, the total transactions processed with "d Payment"
expanded remarkably to 332 billion yen, which represented a 2.4-fold increase over the same period of the previous fiscal year. The total number of "d Payment" users grew to 29.99 million as of September 30, 1.7-fold the number a year ago.
The number of locations where our payment and point services can be used increased by 2.2-fold from the number a year ago to 2.66 million. We achieved the 2-million locations target set for FY2021 ahead of schedule.
We will continue to strive for the proliferation and expansion of smartphone
payment service by further increasing the number of stores that support "d Payment" and enriching our service offerings.
This slide shows the expansion of "+d" value co-creation program.
Including the names listed in this slide, the total number of partners reached 1,397 as of September 30, 1.4-fold the number a year ago, and continues to increase at a steady pace.
Working hand in hand with our partners, we will accelerate the value co-creation activities under the "+d" program.
The total number of our 5G subscriptions as of September 30 was approximately 380,000, which thereafter grew to 500,000 as of today (October 29, 2020).
In the second half, we will drive uptake through the release of 5G-enabled iPhones and less expensive standard Android handsets, toward the goal of acquiring 2.5 million subscriptions by the end of the fiscal year.
As for 5G coverage, we completed the rollout in 144 cities in FY2020/1H, and in September, we commenced 5G service using the millimeter wave.
We are making favorable progress toward our target of deploying 5G in 500 cities across Japan including all government-designated cities by March 31, 2021.
With respect to 5G services, we created 50 special seats in Kashima Soccer Stadium where spectators can experience multi-angle viewing, enabling them to see game footage taken from various viewpoints in real time.
We also distributed artist Ko Shibasaki's live performance online via our
"Shintaikan Live CONNECT" service, and started the provision of "The Heart of ZIPANGU," a content service that incorporates MR, at the digital experience facility, "Haneda Dejima," in "Haneda Innovation City".
In addition, at Tokyo Joypolis, we started offering "Tokyo Godzilla Museum", an XR content jointly produced by DOCOMO and Toho Co., Ltd.
During FY2020/2Q, we started offering five new 5G solutions presented on this slide.
We rolled out solutions that primarily feature "image transmission" and "virtual space and XR" technologies that enjoy strong demand in the market, making steadfast advancements in social implementation.
We will continue to endeavor to expand the number of compatible solutions and promote digital transformation leveraging 5G, thereby solving various social challenges.
This slide explains our initiatives toward a remote-style society.
To support the promotion of "GIGA School" program, we provided tablet devices to various municipalities across Japan and provided assistance for their utilization.
Particularly, as part of our collaboration with Kumamoto City, in 2018, we launched a project that covers all public elementary/junior high schools in the city. Under this project, we plan to supply 65,000 units of tablet devices within this fiscal year.
Through the provision of learning assistance software and operational support to schools, DOCOMO intends to play a positive role to drive the adoption of ICT for education in Kumamoto City.
The project has drawn the attention of many educators, as it enables smooth execution of remote classes despite the difficulties caused by the COVID-19 crisis.
By supporting the realization of "GIGA School" program, etc., we will continue to promote actions that will contribute to the creation of a remote-style society.
Here, I will give you an update on the progress of execution of our Medium-Term
strategy 2020 "Declaration beyond."
With respect to the initiatives to deliver "value and excitement to customers";
Under Declaration 1, we introduced "U15 Hajimete Sumaho Wari," "Zutto Hajimete Sumaho Wari" and "Oshaberi Wari" discount programs.
For Declaration 2, we commenced sales of anime-related goods on "d anime store".
As part of our actions under Declaration 3, we participated in Tokyo Metropolitan
Government's program as a tech partner for COVID-19.
For "value co-creation with partners," we have taken the following steps:
Under Declaration 4, we established a new venture for planning and development of XR services, "Fukugo-Genjitsu-Seisakuｊo, INC."
For Declaration 5, we started ex-ante evaluation experiment for Japan's first remote surgery at Tokyo Women's Medical University using our commercial 5G network.
And in relation to Declaration 6, we announced the introduction of common authentication ID for enterprises, "Business d Account".
Other than what I just explained, many other initiatives are currently underway.
We will further accelerate our undertakings to deliver on "Declaration beyond"
toward the goal of realizing a richer future.
The slide here presents the disaster preparedness measures that we have employed.
Learning from the experience of the 2011 Great East Japan Earthquake, we have stepped up our disaster preparedness on various fronts investing over 100 billion yen. I would like to highlight four key initiatives.
Large-zonebase stations: These are deployed in 106 locations across Japan primarily in prefectural offices.
Medium-zonebase stations: These are rolled out in 2,000 locations nationwide, mainly in core disaster hospitals and municipal offices.
To reinforce the auxiliary power supply to base stations, we installed batteries that can operate for more than six hours during outages in 14,000 locations across Japan, including major public institutions and evacuation centers.
For the transmission line, we secured multiple transmission routes between 1,200 communication buildings.
These stepped up measures turned out very effective in the July 2020 torrential rain and Typhoon No. 10 that struck Japan this year.
For Typhoon No. 10 of 2020, we established a wide-area support structure before it made landfall.
We mobilized mobile base station vehicles, shipboard base stations and responders to Kyushu in advance, to be ready to start restoration activities swiftly in the event of a disaster.
Also, as part of our disaster relief efforts, we provided battery charging and Wi-Fi services for free, and rented out mobile devices and satellite phones to administrative institutions and municipalities in the affected areas.
We, at DOCOMO, are committed to making ongoing efforts to strengthen and improve our disaster preparedness, thereby enhancing the safety and reliability of our network.
The slide here explains our response to COVID-19.
The support measures for users under 25 years old have been used by over a total of 1.3 million users in the 5-month period after April when the program was launched, under which we have offered an average of 5GB of data per month for free.
This was realized as a result of our endeavors to secure a proper communication environment for students.
Further, since April, we have been organizing the "smartphone/feature phone safety classes" in a "remote format" connecting lecturers and schools via web conferencing applications, to protect children from the various risks and problems that may arise from the use of mobile devices. We have hitherto held
approximately 140 sessions and garnered 18,000 participants.
Other COVID-19 related initiatives that are still ongoing are presented here.
Next, I would like to introduce three new discount plans that we have newly added to enrich our offerings.
In the past, we implemented various initiatives to support child-raising families, including the "Child Raising Support Program" and "Kids Keitai Plan," etc.
This time around, in view of the socioeconomic circumstances affected by COVID-19, in order to fulfill our social mission as a company sustaining telecommunications
infrastructure, we will start offering a new discount service, "Kosodate Support Waribiki" on December 9, for customers in a single-parent family.
Under this program, eligible customers will receive a discount of 1,000 yen on their monthly mobile phone charges. In addition, a 700-yen discount will be provided for the "5fun-tsuwa-muryo option" to enable them to use this 5-minute calling option effectively for free.
We will also expand the privileges offered under "Hearty Discount" and provide nearly the same discounts as the abovementioned "Kosodate Support Waribiki"
from December 1.
And for students, we prepared the "docomo Long Gakuwari" discount program.
Under this plan, users will be able to enjoy monthly discounts until the age of 22.
For users of the large-capacity "Gigaho" plan, a monthly discount of 1,000 yen will continue until age 22. For the first six months, an additional discount will be applied, enabling 4G "Gigaho" users to use the service from as low as 900 yen a month, and 5G "Gigaho" users from 980 yen a month.
For users of the smaller data bucket, "Gigalight" plan, we will provide a monthly discount of 500 yen and 2GB additional data allowance until age 22. And an additional discount will be available for the first six months, enabling both 4G and
5G "Gigalight" users to use 3GB of data from 980 yen a month.
We will start accepting applications from October 30, and discounts will be applied from the month of December.
We will strive to cater to the varying lifestyle needs of each customer and further improve our rate plans to allow our customers to use our services for a long period of time free of any concerns.
A summary of our FY2020/1H results is given in this slide.
We will continue to pursue our journey to become a company that can deliver new value and excitement, connecting customers and society through ICT.
NTT DoCoMo Inc. published this content on 13 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2020 09:38:04 UTC