Before I begin my presentation on the results for the fiscal year ended March 31, 2020 (FY2019), I would like to express my deepest sympathy to all those who contracted the new coronavirus (COVID‐ 19) and as well as those whose lives that have been affected by its outbreak. I pray for the earliest possible recovery of all who fell ill, and hope that the spread of infections in many regions around the world will come to an end as soon as possible. I will touch upon DOCOMO’s response to COVID‐19 during the course of today’s presentation. Now, let me start my explanation on the FY2019 results.
In the first section I will present the results highlights for FY2019, which will be followed by an explanation on the principal actions planned for FY2020 in the second section.
The highlights of FY2019 results are summarized here. Operating revenues decreased by 189.6 billion yen year‐on‐year to 4,651.3 billion yen and operating profit dropped by 159.0 billion yen to 854.7 billion yen. Net profit attributable to shareholders of NTT DOCOMO, INC. recorded a decrease of 72.1 billion yen to 591.5 billion yen. Adjusted free cash flow, on the other hand, grew by 179.2 billion yen to 798.6 billion yen owing to the sale of Sumitomo Mitsui Card shares and other factors. Although we recorded a decline in both revenues and profit as a result of the implementation of the new rate plans, “Gigaho”, “Gigalight” and other customer return measures, operating profit came in higher than our full‐year guidance of 830 billion yen.
Here are the results by segment. In “Telecommunications business,” operating revenues and profit decreased by 290.1 billion yen and 159.8 billion yen, respectively, over the previous fiscal year. For “Smart life business” and “Other businesses” combined, operating revenues and operating profit recorded a year‐on‐year increase of 108.2 billion yen and 0.8 billion yen, respectively. In “Smart life business,” despite the increase in operating revenues of 95.5 billion yen due to the consolidation of NTT Plala, Inc. and other factors, operating profit dropped by 36.7 billion yen as a result of our aggressive promotion of “d Payment” and video services, etc.
This slide explains the key factors behind the year‐on‐year changes in operating profit. Operating revenues posted a decrease of 189.6 billion yen due mainly to: ‐ A decrease in mobile communications services revenues of 86.6 billion yen caused by the expanded impact of the customer return measures; ‐ An increase of optical fiber broadband services revenues of 50.2 billion yen; ‐ An increase in other operating revenues of 83.0 billion yen as a result of NTT Plala’s inclusion as a consolidated subsidiary and other factors; and ‐ A drop in selling revenues of 236.2 billion yen owing to a reduction in the number of wholesale handsets sold, etc. Operating expenses recorded a decrease of 30.6 billion yen due mainly to a decline in cost of equipment sold, which more than offset the expense growth in Smart life business caused by the aggressive sales promotion of certain services. Consequently, operating profit dropped by 159.0 billion yen from the previous fiscal year to 854.7 billion yen.
About “d POINT CLUB” membership. The total number of “d POINT CLUB” members surpassed the 75‐ million mark and reached 75.09 million as of March 31, up 7% from the number a year ago. Among them, 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 43.26 million, recording an increase of 28% in the last 12 months.
As for the operational performance of telecommunications business, the total number of mobile telecommunications service subscriptions topped 80 million and reached 80.33 million as of March 31, up 2% year‐on‐year. Churn rate excluding MVNO subscriptions was 0.54%. Despite the increasing harshness in the competitive environment, we successfully maintained the handset churn rate at a low level of 0.44% through various measures including those aimed at facilitating subscribers’ migration to the new rate plans and smartphones.
The total number of smartphone and tablet users increased by 4% from the level a year ago to 42.04 million. We will continue our efforts to accelerate subscriber migration from feature phones to smartphones through the “Hajimete Sumaho Kounyu Support” program for first‐time smartphone users and various other measures. The total number of “docomo Hikari” subscriptions increased by 13% year‐on‐year to 6.49 million as of March 31.
The new rate plans continue to enjoy great reviews and their total number of applications reached 16.51 million as of March 31, and continued to grow to exceed 17 million on April 17. The number of applications as of March 31 was slightly short of our annual target of 17 million, but still very close. To solidify our customer base even further, we will continue to aggressively pursue users’ migration to the new rate plans.
Regarding our ARPU performance, the FY2019/4Q aggregate ARPU (including the impact of discounts) was 4,760 yen. Despite the steady increase in “docomo Hikari” subscriptions, the aggregate ARPU dropped by 10 yen year‐on‐year due primarily to the expanded impact from the new rate plans and other customer return measures.
This slide provides a comparison of the effective network speeds with other mobile carriers, which is based on the data measured and announced by each carrier in accordance with the guidelines set forth by the Ministry of Internal Affairs and Communications. As you can see, we delivered the fastest speed in Japan for both downloads and uploads for two consecutive years. We will continue our endeavors to construct a comfortable network environment for our customers.
About our cost efficiency improvement. We achieved cost efficiency improvement of 56 billion yen in the three‐ month period of FY2019/4Q and a total of 130 billion yen for the full year of FY2019, delivering on our annual target. We will continue to address cost efficiency improvement in FY2020 as well.
Operating profit from Smart life business and Other businesses for FY2019, as I mentioned earlier, fell short of our initial guidance of 160 billion yen due to the aggressive sales promotion of “d Payment” and video services, etc. The contribution from each category to the operating profit of 148.1 billion yen was as follows: ‐ Content/lifestyle (e.g., dTV, DAZN for docomo, etc.) accounted for approximately 15%; ‐ Finance/payment (e.g., d CARD, d Payment, etc.) approximately 5%; ‐ Support services for customers’ peace of mind (e.g., Mobile Device Protection Service, etc.) approximately 60%; and ‐ Others (e.g., enterprise solutions, etc.) approximately 20%.
About our finance/payment services The total transactions processed with our finance/payment services grew by 1,410 billion yen year‐on‐year to 5,320 billion yen, of which the transactions handled with “d CARD” accounted for 4,150 billion yen, recording an increase of 1,010 billion yen year‐on‐year. The amount recorded a significant increase to over 5 trillion yen due to the effects of various campaigns that we executed throughout the year as well as the government’s point reward program for cashless payments launched in October 2019. The total “d CARD” members grew by 14% from the number a year ago to 12.97 million. The number of “d CARD GOLD” members, in particular, continued to increase, reaching 6.85 million as of March 31, up 30% from a year earlier.
Some comments on “d Payment” service. The total transactions processed with “d Payment” expanded remarkably to 399.0 billion yen, which represented a 3.2‐fold increase over the previous fiscal year. The total number of “d Payment” users exceeded the 25‐million mark and reached 25.26 million as of March 31, double the number a year ago, as a result of the various “d POINT” reward campaigns we executed throughout the year with the aim of expanding its user base. The stores participating in the “d Payment” program has also expanded at a favorable pace, with the addition of “UNIQLO” stores and “Yoshinoya” restaurants to its network. The number of locations where our payment and point services can be used grew by 63% year‐on‐year to 1.71 million. We will continue to strive for the proliferation and expansion of cashless payments by further increasing the number of stores that support “d Payment” and enriching our service offerings.
Here are some updates on the “d POINT” program. With the total “d POINTs” used growing by 23% year‐on‐year to approximately 200 billion points, we believe “d POINT” has now become one of the largest point programs in Japan. As a result of our continuous efforts to expand the number of stores participating in the program, the points used at partners’ stores grew to 121.1 billion points, or roughly 60% of the total 200 billion points. Meanwhile, the number of “d POINT” partners increased by 1.8‐fold over the last twelve months to 752 and continues to grow at a favorable pace.
This slide shows the expansion of “+d” value co‐creation program. The number of partners reached 1,250, approximately 1.5‐fold the number a year ago, and continues to show a steady increase. Working together with our partners, we will continue to drive the value co‐creation activities under the “+d” program.
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