Financial Results for the Fiscal Year Ended March 2018 May 10, - PowerPoint PPT Presentation

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

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.

Integration of Telecommunications and Life Design

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

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) * （％） 20.9 25.7 Others Food au Insurance 3.7 au Home C lothing 3.8 au Denki Mortgage (Electric Power Service) 3.9 9.9 (Physical) (Online) Utility 4.5 Customer 4.7 Touchpoints 9.3 5.8 7.6 *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)

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

6 Look Back over the Past Ratio of Value - Added Revenues Value-Added Revenues *1 Value - Added Mobile Communications *1 + *2 Value-Added Revenues Revenues Revenues 24% Steadily Expanded 10% Value-Added Business 9% 6% from 3G to 4G Era 3% 2% 1% FY06.3 FY10.3 FY14.3 FY18.3 *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

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

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

Financial Results for FY18.3

Highlights of Results for FY18.3 10 Consolidated Promoting Business Strategy toward the New Growth Stage Financial Results/Operations Operating Income  Operating income: YOY+5.5 % (Billions of yen)  Promoting new price plan 962.8  Strengthened the life design business 913.0 Shareholder Return/Capital Strategy 832.6 6,657 YOY  Dividends per share : ¥90 (E) +5.5 %  Repurchased own shares of ¥150 billion*  Canceled portion of treasury shares exceeding 5% of total issued shares FY16.3 FY17.3 FY18.3 *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)

Operating Income: 11 Consolidated Factor for Change, YOY for FY18.3 Promoting Measures for Growth toward Next Year and Beyond (Billions of yen) ＜Personal＞ ＜Life Design*＞ ＜Business＞ ＜Global＞ ＜Others＞ 962.8 +12.6 913.0 +7.8 +8.4 Value - Mobile added ARPA communications revenues revenues +1.5 +19.5 +49.8 FY17.3 FY18.3 *From FY19.3, segment name of "Value Services segment" is changed to "Life Design Services segment"

New Price Plan 12 Domestic Telecom (Personal) New Approach and Competitive Advantage in Mobile Price Plans Existing Plan au Pitatto Plan (New Price Plan) *1 ¥ 10,000 - Monthly payments in Up to 20GB ¥ 7,480 - accordance with usage ¥ 8,000 - ¥ 7,000 - ¥ 6,200 - Up to 5GB ¥ 6,480 - ¥ 4,900 - Up to 3GB ¥ 5,480 - Up to 2GB ¥ 4,480 - Monthly Discount (of which the amount Discount plans＋Campaign depends on handset model) applied Up to 1GB Up to 1GB, for one year in addition to the plan ¥3,480- From ¥ 1,980 /month *2 1GB 3GB 5GB 20GB 30GB 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”)

au Pitatto Plan / au Flat Plan 13 Domestic Telecom (Personal) (New Price Plan) The Number of Subscribers Increased Significantly, the Selectivity of High Volume Data Plan Also Increased Cumulative Subscribers Selectivity* Exceeded 7 millions 59% au Pitatto Plan （ a s of April 8） 76% Around one in three of au smartphone users 41% signed up to au Flat Plan 24% new price plans (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)

14 Domestic Telecom (Personal) au Churn Rate （％） 1.07 au Churn Rate 0.91 FY18.3 0.96 0.79 0.78 Improved YOY FY17.3 due to the effect of 0.78 0.77 0.72 the new price plan 1Q 2Q 3Q 4Q

Mobile IDs 15 Domestic Telecom (Personal) The Decline of au Accounts Narrowed, and Mobile IDs * is Steadily Growing Full - Year Basis YOY (Millions) au accounts MVNO subscriptions +1.8% 26.469 26.008 25.785 0.106 0.866 1.778 25.679 +0.9% 25.142 24.691 +0.3% 3/'16 3/'17 3/'18 3/'16 3/'17 3/'18 *au accounts + MVNO subscriptions

au ARPA / Mobile Communications Revenues 16 Domestic Telecom (Personal) Temporary Impact of New Price Plan Absorbed by MVNO Revenues au ARPA Mobile Communications Revenues * (Yen) (Billions of yen) au ARPA revenues MVNO revenues 1,787.8 5,910 1,786.3 5,830 6.0 25.4 YOY +1.4 % 1,780.3 1,762.4 FY17.3 FY18.3 FY17.3 FY18.3 * au ARPA revenues + MVNO revenues

17 Domestic Telecom (Personal) au Smart Value (Millions) au subs (Mobile) Households* (Fixed - line, etc.） 13.65 12.66 au Smart Value 11.55 (Bundled Plan) 6.77 6.24 5.72 Growth in Both Mobile and Fixed-Line Subscribers 3/'16 3/'17 3/'18 *Total for KDDI group companies and fixed - line allied companies

Financial Forecasts for FY19.3

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

20 Consolidated Operating Income (Billions of yen) Operating 1,020.0 962.8 913.0 Income 832.6 Aim to Achieve the Current Medium-Term Targets Toward CAGR+ 7 % FY16.3 FY17.3 FY18.3 FY19.3 (E)

21 Highlights of Forecasts for FY19.3 Consolidated Aim to Sustainable Business Growth Profit for the period attributable Operating Revenue EPS* to owners of the parent (Billions of yen) (Billions of yen) (Yen) 5,150.0 620.0 4,466.1 257.75 494.9 197.73 CAGR CAGR CAGR ＋ 4.9 % +7.8 % +9.2 % FY16.3 FY19.3 FY16.3 FY19.3 (E) FY16.3 FY19.3 (E) (E) *Basic earnings per share

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

23 Life Design Value - Added ARPA (Yen) Value-Added 700 590 ARPA 510 Accelerate Growth YOY YOY +15.7 % +18.6 % FY17.3 FY18.3 FY19.3 (E)