Slide 1: Earnings Results for the Fiscal Year Ended March 31, 2007 Analyst Meeting
Earnings Results for the Fiscal Year Ended March 31, 2007 Analyst Meeting May 9, 2007 SOFTBANK CORP. 1
Slide 2: Content
Content Items Page Consolidated P/L Analysis 4 Consolidated B/S Analysis 17 Accounting Consolidated CF Analysis 24 CAPEX Analysis 28 Financial Activities 33 Interest-bearing Debt Status 35 Finance Overview of Mobile Business Acquisition Financing 54 Investment Results 61 Broadband Infrastructure Seg
Slide 3: Accounting
Accounting Kazuko Kimiwada General Manager Accounting, Internal Control SOFTBANK CORP. 3
Slide 4: Consolidated P/L Analysis
- Consolidated P/L Analysis - Consolidated B/S Analysis - Consolidated CF Analysis - CAPEX Analysis 4
Slide 5: Consolidated P/L Summary
Consolidated P/L Summary <PL-1> (m JPY) FY2006 FY2007 variance Net Sales 1,108,665 2,544,219 1,435,553 Operating income 62,299 271,065 208,766 (Operating margin) 5.6% 10.7% - EBITDA 149,913 525,428 375,515 (EBITDA margin) 13.5% 20.7% - Non-operating income 15,756 13,531 (2,225) Non-operating expense
Slide 6: Scope of consolidation/scope of equity method
Scope of consolidation/scope of equity method <PL-2> FY2006 FY2007 Core companies Consolidated subsidiaries 153 118 SOFTBANK MOBILE, SOFTBANK BB, SOFTBANK TELECOM, Yahoo Japan, SOFTBANK TECHNOLOGY, SOFTBANK Broadmedia, Itmedia, etc. Newly consolidated companies 23 17 SOFTBANK MOBILE etc. Subsidiarie
Slide 7: Consolidated net sales
Consolidated net sales <PL-3> •(Annual) Exceeded JPY 2.5 tn, the highest ever since the foundation thanks to newly consolidated SBM •(Quarterly) 3 telecom businesses flat QoQ. Sales growth maintained as YE sales of e-commerce robust. (m JPY) Annual Quarterly (m JPY) 2,544,219 Mobile 702,195 721,850
Slide 8: Consolidated operating income/loss
Consolidated operating income/loss <PL-4> •(Annual) Exceeded JPY 270 bn, the highest ever since the foundation thanks to newly consolidated SBM •(Quarterly) Decreased QoQ due to the increase of customer acquisition cost and free campaign, etc. in mobile business (m JPY) Annual (m JPY) Quarterly 300,
Slide 9: Consolidated EBITDA
Consolidated EBITDA <PL-5> •(Annual) Exceeded JPY 500 bn, an all-time record, thanks to the contribution of SBM •(Quarterly) Maintained a healthy trend in consolidated base, whereas decreased in SBM QoQ (m JPY) Annual (m JPY) 160,000 Quarterly 154,000 600,000 143,026 Mobile 525,428 Communications 14
Slide 10: Non-operating income/loss
Non-operating income/loss <PL-6> •Interest expense increased by JPY 52.5bn in relation to the Vodafone K.K. acquisition financing •Financing-related expenses JPY 28.7bn is(m aJPY) one-off expense due to the acquisition financing of SBM (m JPY) Annual 20,000 Quarterly 20,000 Interest income 10,000 0
Slide 11: Consolidated ordinary income/loss
Consolidated ordinary income/loss <PL-7> Maintained upward trend, along with the increase in consolidated operating income Annual Quarterly (m JPY) (m JPY) 200,000 50,000 40,000 30,000 100,000 48,924 153,423 20,000 41,808 36,696 29,747 25,994 10,000 27,492 11,228 0 0 (45,248) (466) (13,017) (10,000)
Slide 12: Special income/loss
Special income/loss <PL-8> (m JPY) Quarterly (m JPY) Annual 250,000 100,000 Sale of 4 Yahoo group companies and Tao Sale of SBI Holdings shares 200,000 80,000 Bao’s shares Special 150,000 60,000 income 40,000 100,000 Special loss 20,000 50,000 0 Special 0 income/loss (20,000) (NET) (50,000) (40,000)
Slide 13: Consolidated net income/loss
Consolidated net income/loss <PL-9> Annual Quarterly (m JPY) (m JPY) 100,000 50,000 40,000 39,730 57,550 50,000 30,000 28,815 22,002 20,000 0 13,021 10,000 6,971 7,494 6,881 1,418 0 (50,000) -59,871 (10,000) -11,153 (100,000) (20,000) FY05 FY06 FY07 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 (m JPY) FY2005 FY200
Slide 14: FY2007 Tax and other adjustments
FY2007 Tax and other adjustments <PL-10> (m JPY) 250,000 200,000 Income taxes; current 48,726 150,000 Income before income Income taxes; taxes & minority deferred Mainly Yahoo Japan 100,000 interest 93,676 Corporation 36,462 208,573 50,000 Minority interest 37,355 Net income 28,815 0 14
Slide 15: Effect of tax adjustments
Effect of tax adjustments <PL-11> Breakdown of tax expense for FY2007 (m JPY) Item Amount % Outline 1 Income before income taxes and minority interest 208,573 100% 2 Income taxes; Current 48,726 Yahoo Japan 44,264 Deferred provision in this period SBM use of deferred tax assets (loss carry-forwards)
Slide 16: Status of loss carry-forwards
Status of loss carry-forwards <PL-12> Breakdown of loss carry-forward at this FYE (m JPY) Balance Company Name Expiry date (end of March 2007) SOFTBANK MOBILE 185,913 2011/3 SOFTBANK BB 95,507 2011/3-2014/3 SOFTBANK IDC 67,688 2009/3-2013/3 SOFTBANK TELECOM 63,943 2012/3-2014/3 Others 125,004 2009/3
Slide 17: Consolidated B/S Analysis
- Consolidated P/L Analysis - Consolidated B/S Analysis - Consolidated CF Analysis - CAPEX Analysis 17
Slide 18: Summary consolidated B/S
Summary consolidated B/S Current assets Current liabilities Long-term liabilities Fixed assets Current assets Current liabilities Net assets SBM (m JPY) (m JPY) 1,500,000 1,500,000 1,247,433 502,303 556,000 1,142,903 1,000,000 (Ref.) Vodafone 1,000,000 677,817 480,452 308,382 (Ref.) Vodafone 454,085
Slide 19: Consolidated B/S analysis (1) Current assets
Consolidated B/S analysis (1) Current assets Current assets Current liabilities Long-term liabilities Fixed assets Net assets (m JPY) e/o March 2006 e/o March 2007 variance Outline Current assets 745,130 1,247,433 502,303 SBM ー 677,817 677,817 Others 745,130 569,616 (175,514) Cash and deposits 446,3
Slide 20: Consolidated B/S analysis (2) Tangible assets
Consolidated B/S analysis (2) Tangible assets Current assets Current liabilities Long-term liabilities Fixed assets Net assets (m JPY) e/o March 2006 e/o March 2007 variance Outline Non-current assets 1,062,274 3,059,240 1,996,966 SBM ー 2,000,516 2,000,516 Others 1,062,274 1,058,724 (3,550) Property
Slide 21: Consolidated B/S analysis (3) intangible assets
Consolidated B/S analysis (3) intangible assets Current assets Current liabilities Long-term liabilities Fixed assets Net assets (m JPY) e/o March 2006 e/o March 2007 variance Outline Intangible assets, net 102,286 1,279,710 1,177,424 SBM ー 1,155,239 1,155,239 Goodwill ー 981,410 981,410 Others 102,2
Slide 22: Consolidated B/S analysis (4) current liabilities
Consolidated B/S analysis (4) current liabilities Current assets Current liabilities Long-term liabilities Fixed assets Net assets (m JPY) e/o March 2006 e/o March 2007 variance Outline Current liabilities 586,902 1,142,903 556,000 SBM ー 480,452 480,452 Others 586,902 662,450 75,548 Accounts payable
Slide 23: Consolidated B/S analysis (5) long-term liabilities
Consolidated B/S analysis (5) long-term liabilities Current assets Current liabilities Long-term liabilities Fixed assets Net assets (m JPY) e/o March 2006 e/o March 2007 variance Outline Long-term liabilities 874,232 2,451,712 1,577,480 SBM ー 1,562,942 1,562,942 Others 874,232 888,770 14,538 Corpor
Slide 24: Consolidated CF Analysis
- Consolidated P/L Analysis - Consolidated B/S Analysis - Consolidated CF Analysis - CAPEX Analysis 24
Slide 25: Cash flows from operating activities
Cash flows from operating activities <CF-1> •(Annual) Remarkably increased due to consolidation of SBM •(Quarterly) Decrease in QoQ due to the receivable from installment sales and free campaign from last autumn (m JPY) Annual (m JPY) Quarterly 500,000 200,000 400,000 177,276 Increase of receivable
Slide 26: Cash flows from investing activities
Cash flows from investing activities <CF-2> Temporary negative increase of investment cashflow due to acquisition of Vodafone K.K. share Annual (m JPY) 200,000 100,000 27,852 0 (100,000) (200,000) April, 2006 (300,000) (242,944) Acquisition of Vodafone K.K. share (400,000) (500,000) (600,000) (2,097
Slide 27: Cash flows from financing activities
Cash flows from financing activities <CF-3> Vodafone K.K. acquisition cost refinanced under WBS scheme 1,000,000 Annual (m JPY) 900,000 1,718,384 800,000 700,000 600,000 2006 500,000 Vodafone K.K. acquisition financing, etc. 400,000 300,000 277,770 200,000 100,000 30,078 0 FY05 FY06 FY07 Overview of
Slide 28: CAPEX Analysis
- Consolidated P/L Analysis - Consolidated B/S Analysis - Consolidated CF Analysis - CAPEX Analysis 28
Slide 29: CAPEX fixed asset addition
CAPEX fixed asset addition <CAPEX-1> •CAPEX spent mainly for 3G Base stations and network expansion in SBM •CAPEX for existing business is in downward trend 389,801 (m JPY) 400,000 Ref. Mobile Communications Vodafone 300,000 239,784 BB Infrastruture Fixed-line Telecommunications 200,000 Internet Cul
Slide 30: Depreciation and amortization
Depreciation and amortization <CAPEX-2> (m JPY) 80,000 Depreciation and amortization (excl. amortization of goodwill) 60,000 53,972 50,578 Mobile Communications 46,494 BB Infrastruture 38,048 40,000 Fixed-line Telecommunications Internet Culture 20,000 e-Commerce Others 0 FY07/Q1 Q2 Q3 Q4 (m JPY) FY
Slide 31: Amortization of goodwill
Amortization of goodwill <CAPEX-3> Revaluated the collectability of SBM deferred Amortization of goodwill tax assets at FYE, and reduced amount of Incl. depreciation of trade rights goodwill recorded at the acquisition (m JPY) retroactively. >>Recognized the revised amount of annual 20,000 amortizat
Slide 32: Finance
Finance Yoshimitsu Goto General Manager Finance, Group Management SOFTBANK CORP. 32
Slide 33: Financial activities, debt status, acquisition financing
- Financial activities - Interest-bearing debt status - Mobile acquisition financing summary - Investment results 33
Slide 34: Financial activities for this fiscal year
Financial activities for this fiscal year Month Content 2006/3 Announced Vodafone K.K. acquisition Implementation of Legal Defeasance with respect to Euro-denominated Senior Notes due 2011, amounting to 400 million euro in relation to the Vodafone K.K. acquisition 2006/4 Financing of Vodafone acquis
Slide 35: Interest-bearing debt status
- Financial activities - Interest-bearing debt status - Mobile acquisition financing summary - Investment results 35
Slide 36: Interest-bearing debt status By item-1
Interest-bearing debt status* By item-1 <Interest-bearing debt-1> (m JPY) Nov. 2006 WBS refinance 3,000,000 JPY 1,366.0bn 2,529,595 2,470,803 2,500,000 2,390,057 2,394,403 CP 2,000,000 April 2006 Vodafone K.K. acquisition Short-term bridge facility JPY 1,166.0bn borrowings 1,500,000 Long-term 1,000,
Slide 37: Interest-bearing debt status By item-2
Interest-bearing debt status By item-2 <Interest-bearing debt-2> (m JPY) 3,000,000 CP 2,529,595 2,470,803 2,390,057 2,394,403 Short-term 2,500,000 borrowings (others) 2,000,000 Bridge loan Bridge Bridge 1,500,000 loan Long-term loan borrowings Non-recourse WBS WBS (others) 876,145 850,743 905,293 lo
Slide 38: Interest-bearing debt and net interest-bearing debt
Interest-bearing debt and net interest-bearing debt <Interest-bearing debt-3> Interest-bearing debt increased in relation to the Vodafone K.K. acquisition financing. Repayment of acquisition debts started in FY07/Q4 (m yen) 3,000,000 Interest-bearing debt Net interest-bearing debt Cash and cash equi
Slide 39: Interest-bearing debt and net debt (excluding mobile)
Interest-bearing debt and net interest-bearing debt (excluding mobile*) <Interest-bearing debt-4> Excluding the Vodafone K.K. acquisition funds (non-recourse), the consolidated net interest-bearing debt maintains a downward trend (m JPY) 3,000,000 （excl. mobile）Interest-bearing debt （excl. mobile）Ne
Slide 40: Cash position
Cash position <Interest-bearing debt-5> Maintained ample cash position (m JPY) 700,000 Cash&cash equivalents Unused portion of credit line facility 600,000 511,679 502,637 500,000 455,254 440,795 400,000 319,904 322,524 310,958 300,000 265,055 200,000 100,000 0 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4(m JPY) 0
Slide 41: Shareholders' equity - equity ratio
Shareholders’ equity - equity ratio <Interest-bearing debt-6> The equity ratio deteriorated due to the fund-raising for the Vodafone K.K. acquisition, this will be improved through an accumulation of profit (m JPY) 3,000,000 150% Shareholders' equity Equity ratio 2,000,000 100% 1,000,000 50% 10.3% 1
Slide 42: Pro-Forma shareholders' equity and equity ratio
(Reference) Pro-Forma base shareholders’ equity and equity ratio <Interest-bearing debt-7> (including SB’s shareholdings) Pro-Forma equity ratio including unrealized gain of SB held listed shares Assumption (m JPY) 3,000,000 Shareholders' equity 150% 129.1% Equity ratio 109.2% 103.8% 96.4% 2,000,000
Slide 43: Interest expense
Interest expense <Interest-bearing debt-8> Interest expense on Vodafone K.K. acquisition bridge loan was approx. JPY 20.0bn (April 27,06-Nov. 06) Interest expense on SBM loan (WBS) was approx. JPY 21.0bn (Nov 06-March 07) (m JPY) Annual (m JPY) Quarterly 30,000 80,000 70,000 25,000 60,000 20,000 50,
Slide 44: Interest coverage ratio
Interest coverage ratio <Interest-bearing debt-9> Maintained firm trend (both in consolidated/ mobile excluded basis Interest coverage ratio (times) Interest coverage ratio (excl. Mobile) 5.0 3.9 4.0 3.1 3.0 2.1 2.0 1.0 0.0 FY05 FY06 FY07 *Interest coverage ratio=operating cash flow divided by inter
Slide 45: Debt/Equity ratio - Net Debt/Equity ratio
Debt/Equity ratio - Net Debt/Equity ratio <Interest-bearing debt-10> Gradually improving, after deterioration due to Vodafone K.K. acquisition Debt/Equity ratio (times) Net Debt/Equity ratio (times) 14.0 14.0 D/E ratio Net D/E ratio D/E ratio (excl. mobile) Net D/E ratio (excl. mobile) 12.0 12.0 10.
Slide 46: EBITDA margin - Operating margin
EBITDA margin - Operating margin <Interest-bearing debt-11> Margins significantly improved EBITDA margin Operating margin Ordinary margin (bn JPY) (bn JPY) (bn JPY) 600 25% 600 25% 600 25% EBITDA 20.7% Operating income(loss) Ordinary income (loss) Operating margin 500 500 500 EBITDA margin Ordinary
Slide 47: Corporate bonds details
Corporate bonds details <Interest-bearing debt-12> (m JPY) Interest rate March 06 March 07 Company name Bond Issue date Maturity Date Collateral change (%/year) balance balance 2nd series Unsecured Straight Bond 1995/9/27 2007/9/27 3.90 None 23,900 23,900 0 18th series Unsecured Straight Bond 2005/1
Slide 48: Bond redemption schedule
Bond redemption schedule <Interest-bearing debt-13> (m JPY) Phoenix JT Subordinated Notes 150,000 SOFTBANK CB SOFTBANK TELECOM Straight Bond SOFTBANK Straight Bond 118,887 100,000 65,000 52,500 50,000 50,000 50,000 43,900 38,672 32,400 15,000 0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 (m JP
Slide 49: Consolidated interest-bearing debt details
Consolidated interest-bearing debt details <Interest-bearing debt-14> Bonds and CP (m JPY) Borrowings from other financial institutions Yahoo Japan bank loan Mar-2006 477,622 427,671 Total, 905,293 Subordinate loan from Vodafone SBM loan Mar-2007 471,563 413,150 1,355,091 Total, 2,394,403 Vodafone K
Slide 50: Consolidated interest-bearing debt Short/long ratio
Consolidated interest-bearing debt Short/long ratio <Interest-bearing debt-15> Long-term interest-bearing debt ratio is approx 90%, 75% if SBM excluded Take sufficient measures for mid/long term interest rate rise risks <Short/long ratio in interest-bearing debt balance at e/o March 2007> 100% 100%
Slide 51: Bond Rating
Bond Rating <Interest-bearing debt-16> JCR (AA-) AA /AA3 WBS (senior) A+/A1 S&P (A) A/A2 A /A3 Moody’s (A3) BBB+/Baa1 JCR (BBB) BBB/Baa2 BBB /Baa3 BB+/Ba1 Moody’s (Ba2) BB/Ba2 BB /Ba3 S&P (BB-) B+/B1 2003 2004 2005 2006 2007 Acquisition of Acquisition of JAPAN TELECOM Vodafone K.K. 51
Slide 52: Rating: WBS (senior)
<Interest-bearing debt-17> Rating : WBS (senior) JCR (AA-) AA /AA3 S&P A+/A1 (SOFTBANK MOBILE Corp. issuer rating) S&P (A) A/A2 Moody’s Moody’s (A3) A /A3 (SOFTBANK MOBILE Corp. BBB+/Baa1 Senior debt rating) BBB/Baa2 BBB /Baa3 BB+/Ba1 withdrawn BB/Ba2 BB /Ba3 B+/B1 2005 2006 2007 WBS Whole Business
Slide 53: Reference: Lease financing status
Reference: Lease financing status <Interest-bearing debt-18> e/o March 2007 Capital leases in which the ownership of leased assets is transferred to lessees at the end of lease period (on balance) Lease obligation balance Due within one year JPY 18,049m Due after one year JPY 74,964m Total JPY 93,01
Slide 54: Mobile acquisition financing summary
- Financial activities - Interest-bearing debt status - Mobile acquisition financing summary - Investment results 54
Slide 55: Vodafone K.K. acquisition bridge facility
Vodafone K.K. acquisition bridge facility <Mobile acquisition financing-1> Yahoo YahooJapan Japan SOFTBANK Corporation SOFTBANK Corporation 100% equity Preferred stock JPY 120.0bn stock acquisition rights Mobiletech Mobiletech 100% equity Common stock JPY 200.0bn Bridge Bridgeloan loanlenders Bridge
Slide 56: WBS Scheme
WBS Scheme <Mobile acquisition financing-2> Yahoo YahooJapan SOFTBANK WBS Japan SOFTBANK WBSFunding Funding * Corporation Corporation 14 14financial financialinstitutions institutions* (at the completion of WBS financing) 100% Equity (at the completion of WBS financing) 4.Class1 preferred stock Toku
Slide 57: WBS refinancing (SBM loan)
1. WBS refinancing (SBM loan) <Mobile acquisition financing-3> <Outline of the loan> <Funds flow of SBM loan> Total Totalamount amountofofWBS WBSfacility facility Contract amount JPY 1,450.0 bn JPY JPY1,450.0bn 1,450.0bn (Amount (Amountborrowed borrowed1,441.9bn) 1,441.9bn) JPY 1,441.9 bn Amount bor
Slide 58: High ratings >> Reduction of interest expenses
Merit of WBS (1) <Mobile acquisition financing-4> 1. High ratings >>Reduction of interest expenses WBS (reference) Issuer Class A Class B SOFTBANK (Tranche 1) (Tranche 2,3) JCR AA- A- BBB Rating Moody's A3 Baa3 Ba2 S&P A BBB BB- 58
Slide 59: Flexible covenants >> Operational flexibility is secured
Merit of WBS (2) <Mobile acquisition financing-5> 2. Flexible covenants >>Operational flexibility is secured Cumulative debt reduction amount Quarterly debt reduction amount Financial target Adjusted EBITDA (*1) Leverage ratio (*2) Operational target Number of subscribers As long as above targets ar
Slide 60: Trust debt assumption of SBM 100bn JPY straight bonds
2.Trust debt assumption of SBM 100bn JPY straight bonds <Mobile acquisition financing-6> ¾Maintained interests of outstanding bond holders by WBS loan structure ¾Ensured stability of the structure <Overview of straight bond on which debt assumption was executed > Bond Issue amount Outstanding amount
Slide 61: Investment results
- Financial activities - Interest-bearing debt status - Mobile acquisition financing summary - Investment results 61
Slide 62: Investment results
Investment results Maintain performance in return on investment <Results of sale of capital holdings> (bn JPY) Initial investment Company name Amount Date Period amount 41.7 Tao Bao 2.3 Oct 2005 FY06 US$ 360m Yahoo! Europe 58.8 2.3 Nov 2005 FY06 Yahoo! Korea US$ 500 m SBI Holdings 5.0 136.0 Aug 2006
Slide 63: Future financial strategies
Future financial strategies Completion of mobile business acquisition related financing Completion of equipment finance (lease finance) Start financing through securitization of mobile handset sales installment receivables Accelerate repayment of debt funding Enhance financial stability - cred
Slide 64: Operation
Operation CFO, Telecom Businesses (SBM, SBB, SBTM) Kazuhiko Fujihara 64
Slide 65: Actual overview of major telecom business
Actual overview of major 3 telecom business <Broadband Infrastructure Business> From Sep. 2001 (m JPY) FY2005 FY2006 FY2007 Variance Net Sales 205,306 268,451 264,227 (4,224) Operating (loss) income (53,747) 20,672 26,809 6,137 EBIT DA (26,960) 48,910 55,601 6,691 <Fixed-line Telecommunications Busi
Slide 66: Broadband Infrastructure Business
- Broadband Infrastructure Business - Fixed-line Telecommunications Business - Mobile Communications Business 66
Slide 67: Summary - Broadband Infrastructure Business
Summary - Broadband Infrastructure Business - <BB-1> ¾Maintained net increasing trend of Yahoo! BB ADSL YoY YoY FY2005 FY2006 FY2007 variance variance rate Yahoo! BB ADSL Cumulative lines installed (k lines) 4,776 5,049 5,164 115 2.3% ¾Maintained upward trend in operating income/loss YoY FY2005 FY20
Slide 68: Operating income/loss and EBITDA (Broadband Infrastructure)
Operating income/loss and EBITDA (Broadband Infrastructure Business) <BB-2> Maintained upward trend (m JPY) 80,000 Operating income (loss) EBITDA 60,000 55,601 48,910 40,000 26,809 20,672 20,000 0 (20,000) (26,960) (40,000) (60,000) (53,747) FY05 FY06 FY07 68
Slide 69: Operating income/loss (Broadband Infrastructure Business)
Operating income/loss (Broadband Infrastructure Business) <BB-3> Steady trendImpact of modem rental business sell-off ( m JPY) Operating income (loss) excl. impact of modem rental business sell-off 20,000 Operating income (loss)(SB consolidated Broad band Infrastructure Segment) 12,321 9,361 10,000
Slide 70: EBITDA (Broadband Infrastructure Business)
EBITDA (Broadband Infrastructure Business) <BB-4> Maintained upward trend Impact of modem rental business sell-off m JPY) EBITDA excl. impact of modem rental business sell-off EBITDA (SB consolidated Broadband Infrastructure segment) 18,122 20,000 16,345 15,743 12,600 15,408 11,420+5,828+4,856 11,85
Slide 71: Operating expenses and revenues (Broadband Infrastructure)
Operating expenses and revenues (Broadband Infrastructure Business) <BB-5> Operating income increased as operating expenses reduced Operating expenses (impact of modem rental buniness sell-off) Operating expenses m JPY) Operating revenue (excl. impact of modem rental business sell-off) 300,000 Opera
Slide 72: CAPEX and depreciation (Broadband Infrastructure)
CAPEX and depreciation (Broadband Infrastructure business) BB 6 CAPEX largely reduced - CF largely improved as well (m JPY) 100,000 83,901 80,000 Lease 60,000 47,652 40,000 Lease 22,106 20,000 Lease 0 FY2005 FY2006 FY2007 Ref. Depreciation 27,222 m JPY (m JPY) FY2005 FY2006 FY2007 CAPEX (fixed asset
Slide 73: Number of lines and full charged users - ADSL
Number of lines and full charged users - ADSL - <BB-7> Maintained net gain of number of lines m lines) 6 5.146 5.161 5.164 4.972 5.007 5.049 5.089 Cummulative lines 4.889 5 4.776 installed 4.658 4.490 4.282 Charged users 4.534 4.575 4.524 4.381 4.436 4.462 4.474 4 4.130 4.206 3.938 3.784 3.571 3 2 1
Slide 74: Product MIX - ADSL
Product MIX - ADSL - <BB-8> Increase of high speed service and wireless LAN ratio BB Phone only YBB 8M (ADSL only) YBB 8M YBB 8M+WLAN YBB 12M YBB 12M+WLAN YBB 26M YBB 26M+WLAN YBB 50M YBB 50M+WLAN YBB 50MR YBB 50MR+WLAN 100% 100% 50M 90% 90% ratio 26.9% 80% 80% 70% 70% 60% 60% 50% 50% Wireless 40% 4
Slide 75: ARPU (User payment base) - ADSL
ARPU (User payment base*) - ADSL - <BB-9> Slight decrease of ARPU in Q4/07 compared to Q3 (JPY) 5,000 JPY 4,359 4,500 Yahoo! ISP BB security 4,000 BB phone call 3,500 Wireless LAN 3,000 Modem rental revenue 2,500 2,000 1,500 Basic fee 1,000 500 0 3 1 1 1 1 1 4 2 3 4 2 3 4 2 3 4 2 3 4 2 3 4 /Q /Q /Q
Slide 76: ARPU (after modem rental sell-off) - ADSL
ARPU (Based on sales after modem rental business sell-off) - ADSL - <BB-10> Receiving servicing fee, while modem rental revenue decrease (JPY) 5,000 ARPU trend on user payment basis 4,500 Recognition of deferred gain on sale 4,000 Receipt of servicing Fee ,etc. from modem operator 3,500 Yahoo! ISP 3
Slide 77: Churn rate - ADSL
Churn rate - ADSL - <BB-11> Maintained low and stable level of churn rate regardless of seasonal factors 10.0% 9.0% 8.0% 7.0% 6.0% Caused by one-off seasonal factors (moving, etc.) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 77
Slide 78: Fixed-line Telecommunications Business
- Broadband Infrastructure Business - Fixed-line Telecommunications Business - Mobile Communications Business 78
Slide 79: Summary - Fixed-line Telecommunications Business
Summary - Fixed-line Telecommunications Business - <Fixed-1> ¾Expansion of Corporate business base YoY FY2005 FY2006 FY2007 YoY variance variance rate Corporate voice lines (k lines) 1,560 1,363 1,772 409 30.0% Otoku Line + MYLINE ¾Big improvement in operating income/loss Consolidated Operating inco
Slide 80: Operating income/loss and EBITDA (Fixed-line Business)
Operating income/loss and EBITDA (SB consolidated/Fixed-line Business) <Fixed-2> Steady improvement of operating income/loss (m JPY) 60,000 Operating (loss) income EBITDA 42,588 40,000 6 months 21,496 (Oct-Mar) 20,000 0 (2,965) (6,551) (20,000) After amortization of SBTM goodwill (25,158) (approx. 4
Slide 81: Operating income/loss and EBITDA (SBTM consolidated)
Operating income/loss and EBITDA (SBTM consolidated) <Fixed-3> SBTM consolidated Operating loss turned positive (m JPY) 60,000 Operating (loss) income EBITDA 41,290 40,000 19,581 20,000 5,698 1,288 0 (20,000) (20,988) (40,000) (52,110) (60,000) FY05 FY06 FY07 81
Slide 82: Operating revenue and Operating expense (SBTM consolidated)
Operating revenue and Operating expense (STBM consolidated) <Fixed-4> Operating income improved as operating revenue increased and operating expense reduced (m JPY) 500,000 SGA Cost of sales Operating revenue 400,000 379,522 353,717 335,803 300,000 267,990 285,987 293,859 200,000 100,000 119,923 88,
Slide 83: CAPEX and Depreciation (Fixed-line Business)
CAPEX and Depreciation (Fixed-line Business) <Fixed-5> Reduced CAPEX largely (CF largely improved as well) (m JPY) 200,000 186,873 6 months (Oct-Mar) 150,000 Lease 100,000 82,652 Lease 50,000 37,686 Lease 0 FY2005 FY2006 FY2007 Ref: Depreciation 40,826 m JPY (m JPY) FY2005 FY2006 FY2007 CAPEX (fixed
Slide 84: Strategy of SOFTBANK TELECOM
Strategy of SOFTBANK TELECOM <Fixed-6> Enhance corporate business in 3 focused areas Otoku Otoku Line Line Data/Service Data/Service Mobile Mobile Enhancement of Corporate business Lean management Turn to positive 84
Slide 85: Corporate sales (SBTM Consolidated)
Corporate sales (SBTM Consolidated) <Fixed-7> Steady enhancement of corporate business base (m JPY) 400,000 Corporate Sales Consumer Sales 100% Corporate Sales Ratio 82.1% 75.6% 75.7% 80% 300,000 60% 200,000 40% 100,000 20% 0 0% FY05 FY06 FY07 * Mobile phone sales business of former Telecom Service
Slide 86: Number of Otoku-line/MYLINE users
Number of Otoku-line/MYLINE users <Fixed-8> Expanded corporate business base mainly with Otoku-line (k lines) 2,000 1,800 1,600 1,400 Corporate 1,200 MYLINE 1,000 800 Corporate 600 Otoku Line 400 200 0 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 86
Slide 87: Number of lines - Otoku Line
Number of lines - Otoku Line - <Fixed-9> Steady growth of Otoku Line number of lines (k lines) 1,400 Consumer SME(JTI) SME(excl.JTI) Large company 1,221 1,200 Heisei Denden Sales agent administration work Corporate end March 07) 1,000 was transferred to JTI SBTM focuses on direct sales to 733k lines
Slide 88: ARPU - Otoku Line
ARPU - Otoku Line - <Fixed-10> SOFTBANK TELECOM focuses on Otoku Line for large accounts, where higher revenue is expected . ARPU of corporate customers is increasing. (JPY) consumer SME(excl JTI) large company 12,000 10,000 8,000 6,000 4,000 2,000 0 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 88
Slide 89: Promote expansion of corporate mobile sales
Promote expansion of corporate mobile sales <Fixed-11> 4 commitments of mobile business are also important in the corporate market Enrichment Enrichmentof ofcorporate corporate Expansion Expansionof ofnetwork network handset handset X01HT X01NK/ Nokia E61 C01SI 813SH for Biz Enhancement Enhancemento
Slide 90: Mobile Communications Business
- Broadband Infrastructure Business - Fixed-line Telecommunications Business - Mobile Communications Business 90
Slide 91: Summary - Mobile Communications Business
Summary - Mobile Communications Business - <Mobile-1> ¾Expansion of net addition YoY YoY FY2005 FY2006 FY2007 variance variance rate Cumulative subscriber (k) 15,041 15,210 15,909 699 4.6% ¾Reference Subscriber situation at the end of Apr. 2007 Net addition 163,600 MNP NET) + 4,700 First positive si
Slide 92: Operating income/loss and EBITDA
Operating income/loss and EBITDA <Mobile-2> Maintained upward trend after acquisition SB consolidated (m JPY) SBM (former Vodafone K.K.) consolidated base (Mobile Communications 500,000 segment) Operating income Operating income EBITDA 402,840 EBITDA (Unit: m JPY) 400,000 350,064 321,484 300,864 300
Slide 93: Operating income/loss and EBITDA (Mobile communications segment)
Operating income/loss and EBITDA (SB consolidated/Mobile communications segment) <Mobile-3> Smooth recovery for various management challenges for initial year after acquisition (m JPY) 120,000 Operating income 104,082 100,000 EBITDA 87,985 80,000 73,615 Newly established in Q1 of FY2007 ended in Mar
Slide 94: Operating income/loss and EBITDA (SBM consolidated)
Operating income/loss and EBITDA (SBM consolidated) <Mobile-4> Firm trend compared to the performance under Vodafone K.K. (m JPY) 120,000 Operating income EBITDA 103,187 100,000 91,314 88,673 83,866 76,884 74,338 80,000 68,796 63,868 60,000 50,667 40,000 35,188 34,474 31,162 19,048 18,301 20,000 13,
Slide 95: 3G Network enhancement: base stations
3G Network enhancement: base stations <Mobile-5> (BS) 46,000 End April 07: + approx. 31,000 BS 29,404 achieved Scheduled to reach Property secured 46,000 BS in 1st half of FY 08 Construction FY2007 CAPEX(*) In service JPY 308,406m SB consolidation/ mobile communications segment (11 months) 0 Q1 Q2 Q
Slide 96: Net addition - Monthly
Net addition - Monthly <Mobile-6> Rapid growth of net addition after brand change in Oct. 2006 (k) 200 164 164 150 128 120 Net addition in Apr. 2007 100 97 163,600 69 57 64 63 Out of which MNP NET) 50 +4,700 27 23 24 18 18 17 16 12 13 First positive figure since MNP start 5 4 3 5 1 0 ay ay ar ar n b
Slide 97: Net addition - Quarterly
Net addition - Quarterly <Mobile-7> (k) 450 412 Net addition share in Q4/FY07 350 250 190 150 107 125 23% 93 65 67 37 25 30 50 Net addition in (50) Q4/FY07 (150) (119) (74) 412,000 2 3 4 2 3 4 2 3 4 1 1 1 Q Q Q Q Q Q Q Q Q /Q /Q /Q 05 06 07 [FY] Vodafone 97
Slide 98: Net addition - Annual
Net addition - Annual <Mobile-8> (k) 1,000 Net addition share of FY2007 800 699 600 14% 400 Net addition in FY2007 169 200 90 698,600 0 FY05 FY06 FY07 Vodafone 98
Slide 99: Cumulative subscribers - Annual
Cumulative subscribers - Annual <Mobile-9> (k) 20,000 16,072 15,909 15,210 15,002 15,041 15,000 13,963 12,232 Exceeded 16 million 9,978 10,000 8,166 6,179 5,000 4,123 0 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Apr J-phone Vodafone 99
Slide 100: Net addition - Monthly (competitors)
Net addition - Monthly <Mobile-10> (k) 600 KDDI 500 400 300 NTT DoCoMo 200 100 0 (100) r ug ug pr ay ay l l an an n b n b ar ar ct ct 06 ec 07 ec p p ov ov Ap Ju Ju Fe Fe Ju Ju Se Se A O O M M M M A A -J -J D D N N - 05 *Source: Disclosed information by each company 100
Slide 101: Net addition - Quarterly (competitors)
Net addition - Quarterly <Mobile-11> (k) 1,500 1,200 962.8 KDDI 900 600 412.0 NTT DoCoMo 407.2 300 0 [FY] (300) 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 *Source: Disclosed information by each company 101
Slide 102: Net addition - Annual (competitors)
Net addition - Annual <Mobile-12> (k) 3,000 KDDI 2,500 2,000 1,500 NTT DoCoMo 1,000 500 0 FY05 FY06 FY07 [FY] *Source: Disclosed information by each company 102
Slide 103: Cumulative subscriber number - Annual
Cumulative subscriber number - Annual <Mobile-13> (k) 60,000 NTT DoCoMo 50,000 40,000 30,000 KDDI 20,000 10,000 0 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 *Source: Disclosed information by each company 103
Slide 104: 3G Subscribers
3G Subscribers <Mobile-14> 3G ratio exceeded 50%, while prepaid subscribers decreased (k) 18,000 3G 2G prepaid 16,072 15,909 15,497 16,000 15,109 15,174 15,211 15,041 14,967 14,992 15,117 15,210 15,240 15,307 1,622 1,586 1,507 1,614 1,668 1,609 1,561 1,566 1,646 14,000 1,653 1,644 1,632 1,631 9,964
Slide 105: 3G ratio
3G ratio <Mobile-15> Enhancing efforts with the objective to further increase the 3G ratio (%) SoftBank NTT DoCoMo KDDI 100 75 50 51.1% (Apr-2007) 48.2 (Mar-2007) 38.4% (Dec-2006) 25 15.3% (Dec-2005) 0 2.4% (Dec-2004) 2003 2004 2005 2006 2007 [FY] *Source: Disclosed information by each company *SOFT
Slide 106: Impact from business model change
Impact from business model change <Summary> <Mobile-16> Penetration of installment sales method/ Reduce incentive/ Lower churn rate FY07/Q2 FY07/Q3 FY07/Q4 Medium/long term trend Large amount of Installment sales to customers Handset sales model sales incentive to be - (lump-sum payment also possibl
Slide 107: Installment receivables and New Super Bonus ratio
Installment receivables and New Super Bonus ratio <Mobile-17> New handset sales model settling in *New Super Bonus ratio: Apr-07 approx. 87% (preliminary figures) (m JPY) 200,000 100% Installment receivables 177,276 90% New Super Bonus ratio 77.2% 80% 150,000 70.9% 70% 60% 100,000 50% 87,552 40% 30%
Slide 108: ARPU
ARPU <Mobile-18> Data ARPU increase is the key for total ARPU improvement (JPY) Monthly charge 2 months free Packet flat rate fee 2 months free 7,000 Data Voice Super Bonus Special Discount and other promotions 6,000 5,210 5,000 4,000 3,830 3,000 2,000 1,000 1,380 0 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/
Slide 109: Acquisition cost per gross addition
Acquisition cost per gross addition <Mobile-19> Overall downward trend after introduction of installment sales method. Rose in 07/Q3-Q4 due to high season and decrease in handset gross margin (JPY) 80,000 70,000 60,000 50,000 43,800 40,000 29,000 30,000 22,400 20,000 10,000 0 06/Q1 Q2 Q3 Q4 07/Q1 Q2
Slide 110: Churn rate
Churn rate <Mobile-20> Downward trend in mid/long term due to introduction of installment sales method 4.00% SBM NTT Docomo au 3.00% 2.00% 1.63% 1.00% 0.00% 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 Churn rate % 1.85% 2.00% 1.82% 1.90% 1.69% 1.59% 1.47
Slide 111: Churn rate
Churn rate <Mobile-21> Downward trend 4.00% SBM Total 3G 3.00% 2.00% 1.63% 1.65% 1.37% 1.00% 1.22% 0.00% 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 Apr (preliminary figures) 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 Churn rate % 1.85% 2.00% 1.82% 1.90% 1.69% 1.59% 1.47% 1.61% 1.50% 1.27% 1.60%
Slide 112: Upgrade rate
Upgrade rate <Mobile-22> Downward trend 5.00% 4.00% 2.89% 3.00% 2.53% 2.00% 1.00% 0.00% 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 Apr (preliminary figures) 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 Upgrade % 1.89% 2.46% 2.06% 2.55% 2.05% 2.81% 2.61% 2.34% 1.99% 2.53% 3.02% 2.89% 112
Slide 113: MOU
MOU <Mobile-23> Maintained upward trend (min.) 200 145 150 100 50 0 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 MOU (m inutes) 137 136 132 125 127 130 131 134 140 144 148 145 113
Slide 114: SOFTBANK's Fundamental Management Policy
SOFTBANK’s Fundamental Management Policy Endeavoring to benefit society and the economy and maximize enterprise value by fostering the sharing of wisdom and knowledge gained through the IT revolution. 114
Slide 115: APPENDICES
APPENDICES 115
Slide 116: Mobile Communications Business
Mobile Communications Business Financial Data (m JPY) FY2005 FY2006 FY2007 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Net sales 232,467 351,991 430,328 427,252 1,442,040 Operating income 27,293 29,341 56,906 42,202 155,743 EBITDA Newly established in FY2007 55,802 73,615 104,082 87,985 321,484 Operat
Slide 117: Broadband Infrastructure Business
Broadband Infrastructure Business Financial Data (m JPY) FY2005 FY2006 FY2007 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Net sales 205,306 61,205 64,439 71,543 71,262 268,451 63,322 65,728 67,266 67,910 264,227 Operating (loss) income (53,747) (4,494) 3,483 9,361 12,321 20,672 5,479 6,189 7,747 7,393
Slide 118: Fixed-line Telecommunications Business / Internet Culture Business
Fixed-line Telecommunications Business Financial Data (m JPY) FY2005 FY2006 FY2007 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Net sales 166,878 88,604 83,300 90,256 92,071 354,233 88,673 93,276 93,712 98,466 374,129 Operating (loss) income (36,065) (14,089) (12,209) (1,787) 2,928 (25,158) 1,212 (916)
Slide 119: e-Commerce Business / Others
e-Commerce Business Financial Data (m JPY) FY2005 FY2006 FY2007 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Net sales 254,921 60,469 67,688 71,456 83,661 283,275 59,142 65,037 65,369 82,021 271,570 Operating (loss) income 5,240 726 817 1,473 1,843 4,860 1,461 1,399 2,010 1,809 6,680 EBITDA 6,355 1,001
Slide 120: http://www.softbank.co.jp
http://www.softbank.co.jp This presentation contains forward-looking statements including statements regarding future events, future strategies or future performance of SOFTBANK CORP. that involves risks or uncertainties. In evaluating these statements, a recipient thereof should specifically consid