Financial Results for the Fiscal Year Ended March May 10, 2018 President Makoto Takahashi KDDI Corporation

Transcription

1 Financial Results for the Fiscal Year Ended March 2018 May 10, 2018 President Makoto Takahashi KDDI Corporation

2 1 Today s Presentation Integration of Telecommunications and Life Design Financial Results for FY18.3 Financial Forecasts for FY19.3 Disclaimer Statements made in these documents with respect to the KDDI Group s performance targets, projected subscriber numbers, future forecasts and strategies that are not historical facts are forward-looking statements about the future performance of the KDDI Group, based on company s assumptions and beliefs in light of the information available at the time they were made. They therefore include certain risks and uncertainties. Actual results can differ from these statements due to reasons including, but not limited to, domestic and overseas economic trends, competitive position, formulation, revision or abolition of laws and ordinances, regulations or systems, government actions or intervention and the success or lack thereof of new services. Consequently, please understand that there is a possibility that actual performance, subscriber numbers, strategies and other information may differ significantly from the forecast information contained in these materials or other envisaged situations.

3 Integration of Telecommunications and Life Design

4 Integrate Telecommunications and Life Design Connect with Customers via Telecommunications to Enhance Experience Value 3 Customer Telecommu nications Shift Life Design Telecommu nications Telecommu nications Life Design

5 Business Domain of Life Design 4 Expanding the Customer Touchpoints in Every Aspect of Life Household Consumption Expenditure Composition Ratio (Household with two or more people)* (%) Others Food au Insurance 3.8 Clothing Utility au Home Mortgage (Physical) au Denki (Electric Power Service) Customer Touchpoints (Online) *Created by KDDI based on Family Income and Expenditure Survey Report (Household Receipts and Disbursements) Preliminary Average for 2017 issued by Ministry of Internal Affairs and Communications)

6 We Stand By You KDDI provides the best & the most familiar service for you 5 Aim for Providing New Experience Value Focusing on Customers Experience Value 1 Foundation of all service and platform Backbone to reward customers Earnings base including commission income Experience Value Experience Value 2 Experience value by integrating with telecommunications Total ARPA growth by providing experience value 3 Strengthening reward by using various services Promote longterm use by bundle

7 *1) Prior to FY10.3, sales of content/media business. From FY12.3, revenue from external customers in Value Services segment. From FY18.3, revenues of the energy, education and others from the Personal Services segment are added (au Economic Zone Sales) *2) Prior to FY10.3, sales outside the group of telecommunications business in Mobile Business Look Back over the Past 6 Ratio of Value-Added Revenues Value-Added Revenues Value-Added Revenues *1 Value-Added Revenues *1 Mobile Communications + *2 Revenues 24% Steadily Expanded Value-Added Business from 3G to 4G Era 1% 2% 3% 6% 9% 10% FY06.3 FY10.3 FY14.3 FY18.3

8 Strive at the Frontier of Technology 7 Accelerate Adaptation to New Technologies That Can Transform Experience Value Increase connected devices 5G Large data volume 3G 4G Low latency IoT Big Data AI

9 Strive at the Frontier of Technology 8 Create New Growth Through Open Innovation Minority Investment M&A Accelerate growth through KDDI asset utilization and commercialization Open Innovation An initiative for growing in new businesses with high levels of uncertainty and domains where the group has limited expertise, by collaboration and partnering with external companies Excavation of business opportunities /Support for launching services KDDI DIGITAL GATE R&D 5G Construction

10 Financial Results for FY18.3

11 Consolidated Highlights of Results for FY Promoting Business Strategy toward the New Growth Stage Operating Income ,657 (Billions of yen) YOY +5.5% FY16.3 FY17.3 FY18.3 Financial Results/Operations Operating income: YOY+5.5% Promoting new price plan Strengthened the life design business Shareholder Return/Capital Strategy Dividends per share : 90 (E) Repurchased own shares of 150 billion* Canceled portion of treasury shares exceeding 5% of total issued shares *Aggregate number of shares: 33,526,600 shares(from May 12 to September 15, 2017) and 18,953,100 shares (from February 1 to March 23, 2018)

12 Consolidated Operating Income: Factor for Change, YOY for FY Promoting Measures for Growth toward Next Year and Beyond <Personal> <Life Design*> <Business> <Global> <Others> (Billions of yen) Mobile communications revenues Valueadded ARPA revenues FY FY18.3 *From FY19.3, segment name of "Value Services segment" is changed to "Life Design Services segment"

13 Domestic Telecom (Personal) New Price Plan New Approach and Competitive Advantage in Mobile Price Plans 12 Existing Plan *1 au Pitatto Plan (New Price Plan) 8,000-6,200-7,000-4,900-10,000- Monthly Discount (of which the amount depends on handset model) applied in addition to the plan 1GB 3GB 5GB 20GB 30GB Monthly payments in accordance with usage Up to 1GB 3,480- Up to 5GB 6,480- Up to 3GB 5,480- Up to 2GB 4,480- Up to 20GB 7,480- Discount plans+campaign Up to 1GB, for one year From 1,980/month *2 Note) Indicated figures are monthly charge and exclude taxes. Basic charge (Everybody discount for two years contract) + Data flat fee + LTE NET *1) SuperKakeho + Data flat fee (1/3/5/20/30) *2) The amount shown is au Pitatto Plan (SuperKakeho) (Applied with Everybody discount for two years contract, au Smart Value and Big news campaign )

14 Domestic Telecom (Personal) au Pitatto Plan / au Flat Plan (New Price Plan) The Number of Subscribers Increased Significantly, the Selectivity of High Volume Data Plan Also Increased 13 Cumulative Subscribers Selectivity* Exceeded 7 millions (as of April 8) 76% 59% au Pitatto Plan Around one in three of au smartphone users signed up to new price plans 24% 41% au Flat Plan (20GB/30GB) 7/'17 4/'18 *Based on 4G LTE smartphone sales (Counting period: [7/ 17] from July 14 to 31, [4/ 18] from April 1 to 22)

15 Domestic Telecom (Personal) 14 au Churn Rate Improved YOY due to the effect of the new price plan 0.91 FY18.3 FY au Churn Rate (%) Q 2Q 3Q 4Q

16 Domestic Telecom (Personal) Mobile IDs The Decline of au Accounts Narrowed, and Mobile IDs * is Steadily Growing 15 Full-Year Basis YOY au accounts MVNO subscriptions (Millions) % % +0.3% 3/'16 3/'17 3/'18 3/'16 3/'17 3/'18 *au accounts + MVNO subscriptions

17 Domestic Telecom (Personal) au ARPA / Mobile Communications Revenues Temporary Impact of New Price Plan Absorbed by MVNO Revenues 16 au ARPA Mobile Communications Revenues * (Yen) au ARPA revenues MVNO revenues (Billions of yen) 5,830 5,910 1, , YOY +1.4% 1, ,762.4 FY17.3 FY18.3 FY17.3 FY18.3 *au ARPA revenues + MVNO revenues

18 Domestic Telecom (Personal) 17 au Smart Value (Bundled Plan) Growth in Both Mobile and Fixed-Line Subscribers au Smart Value au subs (Mobile) Households* (Fixed-line, etc.) (Millions) /'16 3/'17 3/'18 *Total for KDDI group companies and fixed-line allied companies

19 Financial Forecasts for FY19.3

20 Positioning of FY Aim to Achieve the Current Medium-Term Targets FY22.3 FY19.3 FY20.3 FY21.3 FY17.3 FY18.3 Present

21 Consolidated 20 Operating Income (Billions of yen) Operating Income ,020.0 Aim to Achieve the Current Medium-Term Targets Toward CAGR+7% FY16.3 FY17.3 FY18.3 FY19.3 (E)

22 Consolidated Highlights of Forecasts for FY19.3 Aim to Sustainable Business Growth 21 Operating Revenue Profit for the period attributable to owners of the parent EPS* (Billions of yen) (Billions of yen) (Yen) 4, , CAGR +4.9% CAGR +7.8% CAGR +9.2% FY16.3 FY19.3 (E) FY16.3 FY19.3 (E) FY16.3 FY19.3 (E) *Basic earnings per share

23 Domestic Telecom (Personal) Maximizing Lifetime Value 22 Expand Lifetime Value by Customer Retention au Churn Rate Lifetime Value Aim for improvement with YOY 0.88% 0.83% 0.86% [au ARPA] [Average contract period*] FY18.3 [ 5,910] FY19.3 (E) [ 5,850] (E) au ARPA FY16.3 FY17.3 FY18.3 FY19.3 (E) Average contract period *Based on au churn rate

24 Life Design 23 Value-Added ARPA (Yen) Value-Added ARPA Accelerate Growth YOY +15.7% 700 YOY +18.6% FY17.3 FY18.3 FY19.3 (E)

25 *Revenue from external customers of Life Design Services segment + Revenue from education, energy and others of Personal Services segment Life Design au Economic Zone GMV / Sales Accelerate Growth towards a New Stage 24 au Economic Zone Gross Merchandise Value (Trillions of yen) Others au carrier billing au WALLET settlement YOY x (Billions of yen) au Economic Zone Sales* YOY x FY17.3 FY18.3 FY19.3 (E) FY17.3 FY18.3 FY19.3 (E)

26 Life Design Customer Base 25 Both Online Customer Touchpoint and Settlement Platform Growing Steadily au Smart Pass Premium Members More than 4M For the entire au Smart Pass members including au Smart Pass Premium millions (as of March 31, 2018) Credit cards au WALLET Valid Cards Reached 3.4M (Millions) Credit card Prepaid card 3/'17 6/'17 9/'17 12/'17 3/'18 3/'16 3/'17 3/'18

27 Business 26 Global Business Services Segment Operating Income Global Services Segment Operating Income (Billions of yen) (Billions of yen) Business/ Global Aim for Income Growth YOY +10.1% YOY +6.6% FY18.3 FY19.3 (E) FY18.3 FY19.3 (E)

28 Business Business Services Segment 27 Promoting Digital Transformation by Utilizing IoT/5G Accelerate new value creation by supporting customer's business design Excavating issues Analyze Develop Examine Design thinking + Agile development Launch service

29 Business Generate New Business 28 Co-Creating New Value with Customers and Partners Comprehensive support Enterprise Customers A leading company in the IoT field KDDI DIGITAL GATE Feel Realize Encounter Open Space Total consulting on telecommunication services World-class AWS implementation performance State-of-the-art analysis technology World-leader in agile development Comprehensive security solutions

30 Global Global Services Segment Aim for Further Business Growth as No. 1 Operator 29 LONDON Docklands Zzz Introduced carrier aggregation, launched movie service (February 2018) Aim for ARPU growth Zzz Completed LTE base station installation in all provincial government capitals nationwide (July 2017) Aim for area expansion and quality improvement Zzzzzzzzzz zzzzzzzzzz zzzzzzzzzz Number of business operator zzzzzz connections by site World No.1 * Aim for business expansion by making use of connectivity *Source) Peering DB ( (As of March 31, 2018)

31 Consolidated Material Sustainability Issues Find Ways to Solve Issues through Business, Seeking a Sustainable Society 30 Set material issues based on SDGs* Material Sustainability Issues Released in March Safer and more robust connected world 2. Cyber security and privacy protection 3. Rewarding workplaces for diverse talents 4. An energy-efficient, circular economy 5. Fulfilled life brought through ICT 6. Respect for human rights and fairness in business *Sustainable Development Goals:The 17 goals laid out for sustainable world by the United Nations

32 Dividends per Share Aim for Consecutive Increase of DPS by Sustainable Business Growth FY03.3 FY04.3 FY05.3 FY06.3 FY07.3 FY08.3 FY09.3 FY10.3 FY11.3 FY12.3 FY13.3 FY14.3 FY15.3 FY16.3 FY17.3 FY18.3 FY19.3 (E) (E) Note) Figures are adjusted to reflect stock split

33 Consolidated Summary Aim to Achieve the Current Medium-Term Targets 32 Business Strategy Aim to provide new experience value through the integration of telecommunications and life design Accelerate adaptation to new technologies that can transform experience value Promote initiatives in new growth areas Financial Results and Forecasts Shareholder Return FY18.3 Operating income exceeded the initial forecast New price plan acquired more than 7M subs. au churn rate improved Repurchased own shares of 150 billion *1 FY19.3(E) Aim to achieve the current medium-term targets DPS *2 YOY +11.1% Plan to increase dividend for 17th consecutive year Resolution of repurchase of own shares up to aggregate amount of 150 billion *3 *1) Aggregate number of shares: 33,526,600 shares(from May 12 to September 15, 2017) and 18,953,100 shares (from February 1 to March 23, 2018) *2) Dividends per share *3) Aggregate number of shares: Up to 63,000,000 shares (from May 11, 2018 to March 22, 2019)

34