SoftBank Group Corp. · TSE:9984
SoftBank — Q3 FY2017 Earnings Presentation
103 slides from SoftBank's earnings presentation, Feb 9, 2018
Slide 1: Earnings Results for the Nine-month Period Ended December 31, 2017
v.1.1 Earnings Results for the Nine-month Period Ended December 31, 2017 Investor Briefing February 9, 2018 SoftBank Group Corp.
Slide 2: Legal Disclaimer for SoftBank Presentation
LEGAL DISCLAIMER for SoftBank Presentation This presentation (this “Presentation”) is furnished to you for informational due diligence purposes and is not, and may not be relied on in any manner as, legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an off
Slide 3: Disclaimer
Disclaimer This material was prepared based on information available and views held at the time it was made. Statements in this material that are not historical facts, including, without limitation, plans, forecasts and strategies are “forward-looking statements”. Forward-looking statements are by t
Slide 4: Definition of Company Names and Abbreviations
■ Definition of Company Names and Abbreviations Used in this material Except as otherwise stated or interpreted differently in the context, company names and abbreviations are as follows: Company names / Abbreviations Definition SoftBank Group Corp. (SBG) SoftBank Group Corp. (standalone basis) The
Slide 5: Accounting
Accounting * Supplementary handbook on operations and accounting treatment of SoftBank Vision Fund will be available at our website at a later time. 5
Slide 6: Segments and Core Companies
Segments and Core Companies FY16 FY17 Reportable segments Core companies Reportable segments Core companies Domestic SoftBank Domestic SoftBank Telecommunications Wireless City Planning Telecommunications Wireless City Planning Sprint Sprint Sprint Sprint Yahoo Japan Yahoo Japan Yahoo Japan ASKUL Ya
Slide 7: Entities that compose SoftBank Vision Fund and Delta Fund
Entities that compose SoftBank Vision Fund and Delta Fund SoftBank Vision Fund and Delta Fund consist of GP/SBIA UK, SBIA US/SBIA JP, and Limited Partnership (Fund). Parent Company SoftBank Group Corp. （SBG） Wholly-owned subsidiary Wholly-owned subsidiary SoftBank Vision Fund or LP Delta Fund Invest
Slide 8: Accounting Treatment for Investment Portfolio
Accounting Treatment for Investment Portfolio (investees) SBG consolidated financial statements treat subsidiaries as consolidated and the others as financial instruments at FVTPL in principle. SBG consolidation: Fund (stand-alone): SoftBank Group Corp. SoftBank Group Corp. (NOT investment entity un
Slide 9: Accounting Treatment for Third-party Interests
Accounting Treatment for Third-party Interests in SoftBank Vision Fund and Delta Fund Third-party interests are classified as liabilities Fund life is finite; Third-party interests Obliged to distribute classified as “liabilities” to investors Types of contribution to SVF; - Equity (Performance-base
Slide 10: Outline of Funds in the SoftBank Vision Fund and Delta Fund
Outline of Funds in the SoftBank Vision Fund and Delta Fund As of Dec. 31, 2017 SoftBank Vision Fund Delta Fund Major limited partnership SoftBank Vision Fund L. P. SB Delta Fund (Jersey) L. P. Total committed capital USD 91.7 bn *1 USD 6.0 bn *1 SBG USD 28.1 bn *2 SBG USD 4.4 bn Third-party investo
Slide 11: Capital Deployment of SoftBank Vision Fund and Delta Fund
Capital Deployment of SoftBank Vision Fund and Delta Fund (USD bn) As of Dec. 31, 2017 Total The Company Third-party investment Committed capital SoftBank Vision Fund 91.7 *1 28.1 *2 63.6 *1 *1 *1 Delta Fund 6.0 4.4 1.6 Contribution from limited partners SoftBank Vision Fund 20.8 6.3 14.5 Delta Fund
Slide 12: Investments of SoftBank Vision Fund and Delta Fund -1
Investments of SoftBank Vision Fund and Delta Fund -1 Investment portfolio Acquisition Fair As of Dec. 31, 2017 Company names cost value Businesses (in alphabetical order) Investments acquired 27.4 29.7 SoftBank Vision Fund Arm Semiconductor technology designer AI-based autonomous driving system Bra
Slide 13: Investments of SoftBank Vision Fund and Delta Fund -2
Investments of SoftBank Vision Fund and Delta Fund -2 Acquisition As of Dec. 31, 2017 Fair value cost Investments acquired 27.4 29.7 Investments agreed to be transferred 0.1 0.1 from the Company Total (USD bn) 27.5 29.8 Excl. consolidated subsidiaries -6.3 -6.3 *Arm Total (USD bn) 21.2 23.5 Recorded
Slide 14: Consolidated P/L Summary (IFRSs)
Consolidated P/L Summary (IFRSs) <JPY bn> FY16 FY17 P/L item Change Main breakdown of changes Q1-Q3 Q1-Q3 Continuing operations Net sales 6,581.5 6,811.3 +229.8 Increased in all segments *1 Operating income (excluding income from Increased in Sprint (+146.7); decreased in Domestic Telecommunications
Slide 15: Consolidated B/S Summary (IFRSs) - Assets
Consolidated B/S Summary (IFRSs) - 1 <JPY bn> B/S As of As of Main items Mar 2017 Dec 2017 Change Main breakdown item Current assets 5,724.0 6,549.1 +825.1 Cash and cash 2,183.1 3,340.4 +1,157.3 See Cash Flow on page 20 for details. equivalents Sprint sold part of commercial paper held for short-ter
Slide 16: Consolidated B/S Summary - Breakdown of Goodwill
Consolidated B/S Summary (IFRSs) - 2 - Breakdown of Goodwill <JPY bn> B/S As of As of Change item Main items Mar 2017 Dec 2017 Changes in Outline Others exchange rate 4,175.5 4,383.1 +230.4 -22.8 Decrease in “others” is related to adjustment Arm 2,687.9 2,911.0 +227.4 -4.3 to the provisional amount
Slide 17: Consolidated B/S Summary - Breakdown of Intangible Assets
Consolidated B/S Summary (IFRSs) - 3 - Breakdown of Intangible Assets <JPY bn> B/S As of As of Change Main items Outline item Mar 2017 Dec 2017 Amortization Changes in Others exchange rate FCC licenses 4,100.7 4,209.6 - +30.3 +78.6 (non-amortized) Increase in “others” mainly related to FCC licenses
Slide 18: Consolidated B/S Summary - Liabilities
Consolidated B/S Summary (IFRSs) - 4 <JPY bn> B/S As of As of item Main items Mar 2017 Dec 2017 Change Main breakdown 5,226.9 5,588.6 +361.7 Short-term borrowings 667.7 865.9 +198.2 SBG 505.8 556.9 ＋51.1 Current liabilities SoftBank Vision Fund - 210.2 ＋210.2 Borrowings mainly to increase capital ef
Slide 19: Consolidated B/S Summary - Equity
Consolidated B/S Summary (IFRSs) - 5 <JPY bn> B/S As of As of Items Change Main breakdown item Mar 2017 Dec 2017 4,469.7 6,568.9 +2,099.2 Common stock 238.8 238.8 - Capital surplus 245.7 265.2 +19.5 USD-denominated Undated Subordinated issued in Jul 2017 Other equity instruments - 496.9 +496.9 by SB
Slide 20: Consolidated C/F Summary (IFRSs)
Consolidated C/F Summary (IFRSs) <JPY bn> FY17 C/F item Main breakdown Q1-3 1,202.7 Net income 1,152.4 Depreciation and amortization -254.9 Gain on investments at SoftBank Vision Fund and Delta Fund 383.3 Finance cost -319.6 Income on Equity Method Investments 485.2 Derivative loss Cash flows from 8
Slide 21: Impact of Sprint – U.S. GAAP > IFRSs Adjustment (1)
Impact of Sprint – U.S. GAAP > IFRSs Adjustment (1) <Adjustment to P/L items> (April 1, 2017 – December 31, 2017) <USD mil> Re- Difference of recognition and measurement IFRSs U.S. Network ARO Liability to Depreciation Sprint GAAP classifi- Tax effect on SoftBank Group cation (1) restructuring disco
Slide 22: Impact of Sprint – U.S. GAAP > IFRSs Adjustment (2)
Impact of Sprint – U.S. GAAP > IFRSs Adjustment (2) <Adjustment to B/S items> (as of December 31, 2017) <USD mil> Re- Difference of recognition and measurement Adjustment IFRSs U.S. classifi- Sprint GAAP cation Impaired Network ARO Liability to Tax effect on goodwill SoftBank Group (1) assets restru
Slide 23: Income on Equity Method Investments Related to Alibaba
Income on Equity Method Investments Related to Alibaba Alibaba SoftBank Group U.S. GAAP IFRSs (CNY mil) (JPY bn) Income on equity Reconciliation Income on equity Net income Net income Ownership method Exchange rate method investments to IFRSs investments FY16Q1 5,365 1,434 6,799 Approx. 33% 2,216 JP
Slide 24: Variable Prepaid Forward Contract: Financing from sale of Alibaba shares
Variable Prepaid Forward Contract (Monetization of Alibaba shares, Jun 2016) Financing from sale of Alibaba shares （Jun 2016） Alibaba shares pledged as collateral (to be delivered in Jun 2019) Mandatory Exchangeable Trust USD 5.4bn * (as advances received on sale of shares) (Notes) 1. Alibaba shares
Slide 25: Variable Prepaid Forward Contract: Alibaba share price decline
Variable Prepaid Forward Contract (Monetization of Alibaba shares, Jun 2016) Variable prepaid In case of forward contract (collar transaction) Alibaba share price decline Alibaba shares pledged as collateral (to be delivered in Jun 2019) Mandatory Exchangeable Trust USD 5.4bn * (as advances received
Slide 26: Variable Prepaid Forward Contract: June 2019 settlement
Variable Prepaid Forward Contract (Monetization of Alibaba shares, Jun 2016) Variable prepaid Jun 2019 forward contract (collar transaction) Cumulative derivative losses over 3 years to be converged to USD 0.9bn Alibaba shares pledged as collateral (to be delivered in Jun 2019) Gain on sale to be re
Slide 27: Collar Transaction Embedded in Variable Prepaid Forward Contract
Collar Transaction Embedded in Variable Prepaid Forward Contract Number of shares delivered to investors 86 million shares At signing of contract USD 6.6bn equivalent 73 million shares USD 76.69 USD 90.11 Alibaba share price 27
Slide 28: Collar Transaction Embedded in Variable Prepaid Forward Contract
Collar Transaction Embedded in Variable Prepaid Forward Contract Number SBG is not subject to of shares delivered Derivative gains downside even from a to be recorded to investors decline in share price 86 million shares SBG is partially subject to upside At signing of contract USD 6.6bn equivalent
Slide 29: Status of Alibaba Shares -1
Status of Alibaba Shares -1 $172 $108 USD Total market value $77 $88 128.8bn up USD 70.7bn Alibaba share price USD 116.2 USD bn Total market value 58.1bn of Alibaba shares Market value of Alibaba shares USD after settlement 51.5 Cumulative bn increase of Market value of USD 6.0bn Alibaba shares sche
Slide 30: Status of Alibaba Shares -2
Status of Alibaba Shares -2 $172 $108 $88 $77 Alibaba share price Increase in market value was not recorded on P/L Cumulative increase of Market value of USD 6.0bn Alibaba shares scheduled to be delivered USD 6.6bn USD 6.6bn USD 12.6bn Number of Alibaba shares Jun 2016 Dec. 31, 2016 Mar. 31, 2017 De
Slide 31: Status of Alibaba Shares -3
Status of Alibaba Shares -3 $172 $108 $88 $77 Alibaba share price Derivative liabilities recorded on B/S Cumulative increase of Market value of USD 6.0bn Alibaba shares scheduled to be delivered USD 6.6bn USD 6.6bn USD 12.6bn -USD 5.9bn -USD 1.3bn Derivative liabilities Number of Alibaba shares Jun
Slide 32: Status of Alibaba Shares -4
Status of Alibaba Shares -4 $172 $108 $88 $77 Alibaba share price Increase in derivative liabilities recorded on P/L (Cumulative derivative losses: USD 6.7bn) Cumulative Derivative assets increase of Market value of USD 6.0bn Alibaba shares of +USD 0.9bn scheduled to be delivered USD 6.6bn USD 6.6bn
Slide 33: Status of Alibaba Shares -5
Status of Alibaba Shares -5 $172 $108 $88 $77 Alibaba share price Total gain to be recorded at time of settlement (USD 10.9bn) Cumulative increase of Market value of Derivative assets USD 6.0bn +USD 10.9bn Alibaba shares of +USD 0.9bn USD 5.0bn Gain on sale scheduled to be delivered USD 6.6bn USD 6.
Slide 34: Gain or Loss at Measurement of Fair Value of Investments
Gain or Loss at Measurement of Fair Value of Investments by SBG and SBGC * (other than subsidiaries or equity method) (1) Financial assets at FVTPL (Fair Value Through Profit or Loss) Financial assets are measured at fair value at the end of each quarter, with changes to be recognized as net income
Slide 35: Effective Dates for US Tax Reform
Effective Dates for US Tax Reform Abolition of time limit on use of loss carryforward For US companies with their fiscal year beginning after January 1, 2018 US tax reform enacted Dec. 22, 2017 Jan. 1, 2018 Apr. 1, 2018 Effective date for Effective period for abolition of reduced tax rate for time l
Slide 36: Summary: Impacts from the US Tax Reform
（Summary）Impacts from the US Tax Reform (USD bn) (1) The US 5.2 corporate tax Increase Reversal of rate cut net income deferred tax liabilities Sprint’s 2.1 Recognition of (2) Abolition of time limit on use of USD 7.3 bn loss carryforward*2 deferred tax 15.4 deferred tax assets liabilities *1 * This
Slide 37: Impacts from the US Corporate Tax Rate Cut
(1) Impacts from the US Corporate Tax Rate Cut (USD bn) (1) The US Increase 5.2 corporate tax rate cut net income Sprint’s deferred tax 15.4 liabilities * (mainly related to 10.2 spectrum license) Before After Statutory tax rate Statutory tax rate 35％ 21％ * Deferred tax liabilities mainly related to
Slide 38: Effect of abolition of time limit on loss carryforward -1
(2) Effect of abolition of time limit on use of loss carryforward (image) -1 Before the US tax reform, (there was a time limit on use of NOL) To be provisioned (After Jan. 1, 2018) Future tax-reduction Accounting Tax effect Carrying value * (Part of Sprint‘s assets to be depreciated) * As of Decembe
Slide 39: Effect of abolition of time limit on loss carryforward -2
(2) Effect of abolition of time limit on use of loss carryforward (image) -2 Before the US tax reform, (there was a time limit on use of NOL) 35% × tax rate Future Future Accounting Tax taxable tax-reduction Deferred tax income effect assets expected *2 Carrying value *1 (Part of Sprint‘s assets to
Slide 40: Effect of abolition of time limit on loss carryforward -3
(2) Effect of abolition of time limit on use of loss carryforward (image) -3 Before the US tax reform, (there was a time limit on use of NOL) Low probability that NOL is used in the time limit (= no deferred tax assets recorded) 35% × tax rate Future Future Accounting Tax taxable tax-reduction Defer
Slide 41: Effect of abolition of time limit on loss carryforward -4
(2) Effect of abolition of time limit on use of loss carryforward (image) -4 After the tax reform, (time limit on use of NOL is abolished.) Taxable temporary differences mainly from FCC license (Record at the time of acquisition of Sprint) Future Future taxable tax-reduction income effect expected *
Slide 42: Effect of abolition of time limit on loss carryforward -5
(2) Effect of abolition of time limit on use of loss carryforward (image) -5 After the tax reform, (time limit on use of NOL is abolished.) High > probability that NOL is used in the time limit Future Future taxable tax-reduction income effect expected * * Within the time limit of use of NOL Future
Slide 43: Effect of abolition of time limit on loss carryforward -6
(2) Effect of abolition of time limit on use of loss carryforward (image) -6 After the tax reform, (time limit on use of NOL is abolished.) Not applicable (Jan. 1–Mar. 31, 2018) USD 2.1 bn Effect of to be increasing × 21% recorded net income Tax rate Future Future taxable tax-reduction income effect
Slide 44: Finance
Finance 44
Slide 45: Main Activities in FY2017 (Investments)
Main Activities in FY2017 (Investments) Category Event Amount Timing May First major closing of SoftBank Vision Fund*1 2017 Total committed capital: USD 93.2 bn USD 97.7 bn (incl. capital committed by SBG: USD 28.0 bn USD 32.5bn)*2 Addition of committed capital to By Sep SoftBank Vision Fund and Del
Slide 46: Main Activities in FY2017 (Funding)
Main Activities in FY2017 (Funding) Category Event Amount*1 Timing Issuance of USD-denominated NC6 (Perpetual) USD 2.75 bn (JPY 311.3 bn) July Undated Subordinated Hybrid 2017 Bonds NC10 (Perpetual) USD 1.75 bn (JPY 198.1 bn) USD7Y USD 1.35 bn (JPY 148.6 bn) USD10Y USD 2.00 bn (JPY 220.1 bn) Funding
Slide 47: Preparations Started for SBKK IPO
Preparations Started for SBKK IPO 47
Slide 48: SoftBank Group Corp. to be strategic holding company
Preparations Started for SBKK IPO SoftBank Group Corp. to be strategic holding company Before Listing After Listing SoftBank … SoftBank … KK Vision Fund KK Vision Fund 48
Slide 49: Adjusted EBITDA and Adjusted EBITDA Margin (1)
Adjusted EBITDA and Adjusted EBITDA Margin (1) Consolidated adjusted EBITDA has been stable. Adjusted EBITDA Adjusted EBITDA Margin <JPY bn> Domestic Telecommunications Domestic Telecommunications Yahoo Japan Sprint Distribution Yahoo Japan Arm Distribution Sprint Arm Other Consolidated 2,056.3 52%
Slide 50: Adjusted EBITDA and Adjusted EBITDA Margin (2)
Adjusted EBITDA and Adjusted EBITDA Margin (2) Domestic Telecommunications segment sustains high margin. Adjusted EBITDA Adjusted EBITDA margin (Domestic Telecommunications) <JPY bn> 994.7 964.0 SoftBank (Domestic 41% Telecommu- 40% nications) NTT DOCOMO 35% 34% KDDI 34% 33% SoftBank Group 30% 30% (
Slide 51: Interest-bearing Debt
Interest-bearing Debt No significant change compared to end-Sep 2017. Interest-bearing debt of JPY372.7 bn at SoftBank Vision Interest-bearing debt at Sprint <JPY bn> Main change from Sep. ’17 Fund and Delta Fund is excluded. Borrowings 1,280.5 Repayment (-150.0) <JPY bn> Bonds 2,822.8 14,653.7 14,7
Slide 52: Cash Position
Cash Position*1 Remain high due to cash reimbursement of bridge investment,*2 while new investments are executed. Cash position of JPY300.1 bn at SoftBank Vision Fund and Delta Fund is excluded. <JPY bn> 3,654.0 239.7 ① 3,177.9 ① Bridge investments by SBG 2,906.5 2,935.3 228.9 ② which had been agree
Slide 53: Net Interest-bearing Debt
Net Interest-bearing Debt Maintain the former level. Net interest-bearing debt of JPY72.6 bn at SoftBank Vision Fund and Delta Fund is excluded. <JPY bn> 12,280.2 11,269.3 11,207.6 11,239.4 11,525.2 7,581.5 8,642.5 7,667.6 7,455.6 7,911.3 Excl. Sprint Sprint 3,813.8 3,626.1 3,637.7 3,571.7 3,613.8 D
Slide 54: Leverage Ratio
Leverage Ratio No material change in net leverage ratio since Mar 2017. Leverage ratio (gross / net) 5.3x 5.6x (Gross) 4.3x (Net) 4.2x Mar'17 Dec '17 *1 Gross leverage ratio = interest-bearing debt / adjusted EBITDA *2 Net leverage ratio = net interest-bearing debt/ adjusted EBITDA *3 Adjusted EBITD
Slide 55: Net Leverage Ratio (Consolidated)
Net Leverage Ratio (Consolidated) Continue to focus on lowering leverage for a mid-term range. 6.2x (immediately after Vodafone K.K. acquisition) 4.3x 1.1x Jun '06 Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 Mar '12 Mar '13 Mar '14 Mar '15 Mar '16 Mar '17 Dec' 17 *1 Net leverage ratio = net interest-bea
Slide 56: Leverage ratio of Domestic Telco business and Debt coverage ratio
Leverage ratio of Domestic Telco business and Debt coverage ratio Leverage ratio of Domestic Telco business Debt coverage ratio Domestic Others Telco (incl. Sprint acquisition cost) etc. Net interest- Net interest- JPY 3.3 tn JPY 5.1 tn bearing debt bearing debt Adjusted = 2.8x Equity value of = 23%
Slide 57: Leverage ratio of Domestic Telco Business and Debt Coverage (details)
Leverage ratio of Domestic Telco Business and Debt Coverage (details) Domestic Telco Others 2.8x 23% Net interest-bearing debt (consolidated basis) +JPY 11.60 tn Domestic Telco - Net interest-bearing debt - JPY 6.46 tn Net interest-bearing debt (Domestic Telco, Sprint, YJ, Arm, SoftBank Vision Fund/
Slide 58: Shareholders’ Equity Ratio
Shareholders’ equity Ratio Significantly expand due to increased net income and the Hybrid Bonds issuance. Shareholders’ equity *1 Shareholders’ equity ratio <JPY bn> Adjusted *2 Adjusted ratio of 272.9 shareholders’ equity shareholders’ equity *2 19.6% 18.7% 231.4 15.5% 14.6% 5,505.7 3,586.4 Mar '1
Slide 59: Debt / Equity Ratio
Debt / Equity Ratio Debt / equity ratio (gross / net) 3.6x 2.9x 2.7x (Gross) 2.1x (Net) Mar. '17 Dec '17 *1 Debt / equity ratio = interest-bearing debt / equity attributable to owners of the parent (shareholders’ equity after considering adjustments related to Hybrid Bonds issued in Sep 2016 and Jul
Slide 60: Interest Expense
Interest Expense Increased due to Hybrid Bonds and Foreign Currency-denominated Senior Bonds. Interest expense (finance cost) Interest coverage ratio Excl. Sprint Sprint Excl. Sprint Consolidated <JPY bn> 383.3 343.4 8.4x 203.1 6.2x 200.6 5.8x 5.4x 180.2 142.8 FY16/Q1-Q3 FY17/Q1-Q3 FY16/Q1-Q3 FY17/Q
Slide 61: Market Cap: Major Listed Shareholdings of SBG and Its Subsidiaries
Market Cap: Major Listed Shareholdings of SBG and Its Subsidiaries Listed shareholdings amount to JPY 16 tn. 16.4 <JPY tn> Partial monetization (Alibaba) 12.6 11.3 9.7 13.0 Alibaba 8.1 8.0 7.1 4.6 Sprint Yahoo Japan Others 1.3 Mar '13 Mar '14 Mar '15 Mar '16 Mar '17 Feb '18 (Feb. 7) * Prepared by SB
Slide 62: Current Status of SoftBank Vision Fund and Delta Fund
Current Status of SoftBank Vision Fund and Delta Fund <Capital Deployment (as of Dec 31)> <USD bn> SoftBank Vision Fund Delta Fund SBG Third-party LP SBG Third-party LP 91.7 *1 6.0 *1 Total committed capital 28.1 *2 63.6 *1 4.4 1.6 *1 20.8 5.0 Total contribution 6.3 14.5 3.7 *3 1.3 ＜Main Investment
Slide 63: SBG: Price and Spread of Domestic Currency Denominated Bonds
SBG: Price and Spread of Domestic Currency Denominated Bonds Domestic currency-denominated bonds Domestic currency-denominated bonds price credit spread Z-spread, bps 105 450 Sub 2021 #1 Sub 2022 #2 2020 #47 Sub 2021 #1 Sub 2022 #2 2020 #47 2022 #48 2026 #50 Hyb 2021 #1 2022 #48 2026 #50 Hyb 2021 #1
Slide 64: SBG: Price and Spread of Foreign Currency-denominated Bonds
SBG: Price and Spread of Foreign Currency- denominated Bonds Foreign currency-denominated bonds price Foreign currency-denominated bonds spread Z-spread, bps 120 550 2022 USD 2025 USD 2022 EUR 2022 USD 2025 USD 2022 EUR 2025 EUR 2027 EUR Perp NC6 USD 2025 EUR 2027 EUR Perp NC6 USD Perp NC10 USD 2024
Slide 65: Sprint: Notes Price and Spread
Sprint: Notes Price and Spread Sprint senior notes price Sprint senior notes spread Z-spread, bps 120 1400 2024 USD 2024 USD 115 2021 USD 2021 USD 2025 USD 1200 2025 USD 110 2028 USD 2028 USD 105 1000 100 800 95 600 90 85 400 80 200 75 70 0 16/4 16/7 16/10 17/1 17/4 17/7 17/10 18/1 16/4 16/7 16/10 1
Slide 66: Trend of Credit Rating of SBG
Trend of Credit Rating of SBG Acquisition of Acquisition of Acquisition of Acquisition of 14 Japan Telecom Vodafone K.K. Sprint Arm A/A2 13 12 A－/A3 JCR (A－) 11 BBB+/Baa1 BBB/Baa2 10 9 BBB－/Baa3 S&P (BB＋) BB+/Ba1 8 BB/Ba2 7 Moody’s (Ba1) BB－/Ba3 6 B+/B1 5 4 2003 2004 2005 2006 2007 2008 2009 2010 20
Slide 67: SBG Bond Redemption Schedule
SBG Bond Redemption Schedule Straight bonds Subordinated bonds Hybrid Bonds 1,305.6 Foreign currency-denominated bonds Foreign currency-denominateds Hybrid Bonds 455.6 <JPY bn> 796.2 700.0 310.8 561.8 474.4 491.2 485.8 15.4 400.0 191.8 850.0 197.8 700.0 324.4 470.0 491.2 400.0 370.0 288.0 98.9 10.0
Slide 68: Financial Significance of SoftBank Vision Fund and Delta Fund
Financial Significance of SoftBank Vision Fund and Delta Fund (conceptual image) Maximize investment opportunities while managing leverage. Act as GP Third-party (Invest as LP) Limited Partners SoftBank Group SoftBank Vision Fund /Delta Fund Operating companies Yahoo Other SoftBank Sprint Arm Invest
Slide 69: FY2017 Financial Strategies
FY2017 Financial Strategies Balance investments by SoftBank Vision Fund and Delta Fund and credit improvement SoftBank Vision Fund/Delta Fund: A new investment strategy to accelerate enterprise value-oriented management • Maximize investment opportunities while managing leverage • Visualize mid- to
Slide 70: (Reference)
(Reference) 70
Slide 71: Sprint Debt Maturities
Sprint Debt Maturities Sprint notes and credit facilities <USD mil> JPY bn in ( ) (905.1) (905.1) 8,010 (620.1) 5,488 (433.7) (452.0) (426.9) (371.0) 3,838 8,010 4,000 3,778 3,283 (284.8) (279.7) 5,488 2,520 2,475 (226.0) 3,778 2,000 3,838 4,000 3,283 2,475 (39.2) 2,520 2,000 347 347 ~ ~ FY17 FY18 F
Slide 72: Interest-bearing Debt: Breakdown by Long/Short and Fixed/Variable
Interest-bearing Debt: Breakdown by Long/Short and Fixed/Variable Interest-bearing debt: Interest-bearing debt: Long / short ratio Fixed / variable ratio <JPY bn> Long-term Short-term <JPY bn> Fixed Variable 14,653.7 14,703.0 14,653.7 14,703.0 18％ 28％ 25％ 27％ 10,566.5 10,566.5 21％ 29% 82％ 75％ 72％ 73
Slide 73: Domestic Telecommunications
Domestic Telecommunications 73
Slide 74: Net Sales
<Domestic Telecommunications Segment> 1. Net Sales FY17 Q1-3 sales of JPY 2,406.9 bn, up JPY 6.2 bn YoY: telecom service revenue down JPY 25.7 bn, product and other sales up JPY 31.9 bn. Broadband revenue grew steadily, up JPY 45.3bn YoY. Net sales Telecom service revenue Product and other sales
Slide 75: Operating Income/Adjusted EBITDA
<Domestic Telecommunications Segment> 2. Operating Income/Adjusted EBITDA FY17 Q1-3 segment income of JPY 612.7 bn, down JPY 38.8 bn YoY. Operating Income Adjusted EBITDA YoY comparison YoY comparison <JPY bn> <JPY bn> 800 68.1 1,200 90.1 651.5 -38.8 612.7 214.3 600 598.3 -6.0% 233.2 994.7 -30.7 1
Slide 76: Segment Income YoY Analysis
<Domestic Telecommunications Segment> 3. Segment Income YoY Analysis Broadband business drove topline growth. Mobile communications revenue decreased due to an enhancement of Home Bundle Discount Hikari Set, introduction of Giga Monster, and decreases in MBB and PHS. Cost increased due to upfr
Slide 77: Mobile Communications Subscribers and Churn Rate
<Domestic Telecommunications Segment> 4. Mobile Communications Subscribers and Churn Rate (main subscribers) Subscribers: increased 765k YoY, with smartphone net adds of 1,128k for FY17 Q1-3. Churn rate: main subscribers improved 0.14pp YoY, while phones improved 0.06pp YoY Cumulative subscriber
Slide 78: ARPU (main subscribers)
<Domestic Telecommunications Segment> 5. ARPU (main subscribers) FY17Q3 ARPU decreased by JPY 160 YoY, with discount on ARPU widening by JPY 60 Adverse impact from higher mix of Y!mobile smartphones and expansion of Home Bundle Discount Hikari Set. ARPU 6,500 YoY comparison (JPY) Service ARPU 56
Slide 79: Broadband
<Domestic Telecommunications Segment> 6. Broadband 6.83mil SoftBank Hikari at FY17Q3-end; steady trend in customer acquisition. 7.62mil subscribers under Home Bundle Discount Hikari Set; a significant increase. Cumulative subscribers Home Bundle Discount Hikari Set (number of connected lines) cu
Slide 80: Capex / Free Cash Flow
<Domestic Telecommunications Segment> 7. Capex / Free Cash Flow FY17 Q1-3 Capex of JPY 197.6 bn. FY17 Q1-3 FCF of JPY 399.9 bn, down JPY 35.0 bn YoY. Capex*1 Free cash flow*3 <JPY bn> <JPY bn> YoY comparison 500 Depreciation*2 500 480.8 Adj. FCF*4 427.5 400 385.3 400 360.0 153.0 295.0 300 300 25
Slide 81: Growth Strategy ~Promoting “Beyond Carrier” Strategy~
<Domestic Telecommunications Segment> 8. Growth Strategy ~Promoting “Beyond Carrier” Strategy~ Expand customer base Generate new businesses Big Data EC FinTech Robotics Cloud Security AI Improve retention Increase loyalty 81 81
Slide 82: Expansion of Customer Base: Enhancement of Upfront Investment
<Domestic Telecommunications Segment> 9. Expansion of Customer Base Enhancement of Upfront Investment Comfortable shopping Match experience on Customer rewards various needs smartphone 82
Slide 83: Creation of New Businesses ~Strategy~
<Domestic Telecommunications Segment> 10. Creation of New Businesses ~Strategy~ Cutting-edge Business Models Incubator / JV SoftBank Vision Fund (Outside SoftBank Vision Fund) KK Ping An HealthKonnect Developing best practices Certain "SoftBank Vision Fund" investments described herein have not yet
Slide 84: Creation of New Businesses ~Examples~
<Domestic Telecommunications Segment> 11. Creation of New Businesses ~Examples~ Accelerate Businesses in Multiple Domains EC / Payment Fintech Security Cloud AI / Self-driving Others 84
Slide 85: Domestic Telco Forecast
<Domestic Telecommunications Segment> 12. Domestic Telco Forecast Prioritize upfront investment 1 Drive growth strategy 2 Maintain FCF over JPY 500bn Expect income*1 to decline in FY17 (maximum -7% YoY) 3 Focus on future growth *2 4 Income heading for increase in FY18 *1 Operating income of Domestic
Slide 86: Domestic Telecommunications Segment Breakdown of Net Sales
<Domestic Telecommunications Segment> (Reference) Domestic Telecommunications Segment Breakdown of Net Sales <JPN bn> FY2016 FY2017 Full Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1-Q3 Year Total net sales 761.8 792.8 846.1 793.1 3,193.8 755.7 773.3 878.0 2,406.9 Telecom service revenue 605.8 609.5 613.5 594.3 2,423.1 6
Slide 87: Definition and calculation method of principal operational data
Definition and calculation method of principal operational data <Mobile Communications Service> 1. Subscribers Main subscribers: smartphones, feature phones, tablets, mobile data communications devices, Wireless Home Phone and others * Wireless Home Phone is a new home-phone voice calling service us
Slide 88: Sprint
Sprint 88
Slide 89: Q3 SoftBank Investor Briefing: FY 2017 Results
Q3 SoftBank Investor Briefing FY 2017 RESULTS February 9th, 2018 ©2017 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted, confidential or privileged materials intended for the sole use of the i
Slide 90: Cautionary Statement
Cautionary Statement SAFE HARBOR This release includes “forward-looking statements” within the meaning of the securities laws. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan”, “outlook,” “providing guidance,” and si
Slide 91: Fiscal 3Q 2017 Highlights
Fiscal 3Q 2017 Highlights Net Additions Adjusted EBITDA* Operating Income HIGHEST Retail Net Additions in nearly three years HIGHEST for a fiscal third quarter in eleven years 8 consecutive quarters of Operating Income Operating Expenses Adjusted Free Network Cash Flow* MOST IMPROVED $1B Over operat
Slide 92: Sprint’s Foundation for Success
Sprint’s Foundation for Success NETWORK Differentiated experience with our strong spectrum assets VALUE PROPOSITION Compelling products and Unlimited data services DISTRIBUTION Enhance our retail distribution with several hundred new stores Customer This commercial strategy is supported by our conti
Slide 93: Sprint’s Next-Gen Network
Sprint’s Next-Gen Network TDD Spectrum Strategic Agreements Advantage Tri-Band Existing Sites 2.5 GHz 1.9 GHz 800 MHz New Macro Sites Massive MIMO Small Cells ©2017 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and m
Slide 94: Positioned to Lead in Mobile 5G
Positioned to Lead in Mobile 5G Most Spectrum Massive MIMO Best Spectrum Sub 6 GHz 204 MHz Simultaneous LTE/5G Suited For 5G 158 MHz 115 MHz 110 MHz 100 MHz Mid-band Channels Coverage Verizon AT&T T-Mobile Sprint Nationwide, population-weighted average spectrum holdings of major U.S. wireless carrie
Slide 95: Enhancing our Value Proposition
Enhancing our Value Proposition BEST Fully Featured Unlimited Plan for the BEST price in the Industry HD Video Hit Television Shows Mobile Hot Spot Award-Winning Original Series Free Data roaming in MORE Popular Movies countries than any other carrier ©2017 Sprint. This information is subject to Spr
Slide 96: Optimize & Expand Distribution
Optimize & Expand Distribution New 500+ Sprint Branded Stores this year New ENHANCING 500+ Boost Stores this year Digital Capabilities ©2017 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricted, c
Slide 97: Growing Connections
Growing Connections Postpaid Phone Net Adds Prepaid Net Adds Q315 Q316 Q317 Q315 Q316 Q317 10 NET ADDITIONS consecutive quarters of 4 NET ADDITIONS consecutive quarters of ©2017 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant aff
Slide 98: Revenue
Revenue Net Operating Revenues Postpaid Phone Average Billings per Dollars in Billions User (ABPU)* Q315 Q316 Q317 Q315 Q316 Q317 Wireless Service Rev Wireless Equip Rev Service Equipment Normalized for change in device insurance Consolidated Net Operating Rev ©2017 Sprint. This information is subje
Slide 99: Reducing Operating Expenses
Reducing Operating Expenses Operating Expenses Dollars in Billions Over $1.0B year-over-year REDUCTION YTD in CoS and SG&A[1] YTD16 YTD17 Cost of Services Selling, General & Administrative [1] after adjusting for hurricane and other non-recurring charges ©2017 Sprint. This information is subject to
Slide 100: Improving Profitability
Improving Profitability Adjusted EBITDA* Operating Income Dollars in Billions Dollars in Billions Q315 Q316 Q317 Q315 Q316 Q317 HIGHEST 8 OPERATING INCOME Fiscal Third Quarter in 11 YEARS consecutive quarters of ©2017 Sprint. This information is subject to Sprint policies regarding use and is the pr
Slide 101: Net Income/Loss
Net Income/Loss Net Income (Loss) Dollars in Millions (actual dollars) 3QFY17 3QFY16 Change Basic EPS $1.79 ($0.12) $1.91 Litigation & other contingencies ($0.06) ($0.06) Tax Reform $1.77 $1.77 Q315 Q316 Q317 Hurricane Charges $0.02 $0.02 Other expense ($0.03) $0.03 Includes $7.1B non-cash benefit f
Slide 102: Capex & Adjusted Free Cash Flow
Capex & Adjusted Free Cash Flow* Cash Capex Adjusted Free Cash Flow* Dollars in Billions Dollars in Millions Q315 Q316 Q317 Q315 Q316 Q317 Network/Other Device investing in our NETWORK investment POSITIVE eight of the last nine quarters ©2017 Sprint. This information is subject to Sprint policies re
Slide 103: SoftBank
SoftBank