Slide 1: Earnings Results for the Six-month Period Ended September 30, 2009
Earnings Results for the Six-month Period Ended September 30, 2009 (Apr-Sep 2009) October 29, 2009 SOFTBANK CORP.
Slide 2: Disclaimer
Disclaimer This material is made based on information available at the time of writing. Statements in this material that are not historical facts including, without limitation, our plans, forecasts and strategies are Forward-looking Statements. Forward-looking Statements are subject to various risks
Slide 3: Record High Profit
Record High * Profit 2 * Since SOFTBANKCORP. applied consolidated accounting in FY1995.
Slide 4: 'Record High' Results (2009 Apr-Sep)
9 ‘Record High’ Results (2009 Apr-Sep) Consolidated Results (YoY) *1 EBITDA Record high*5 6 consecutive periods +15% *5 Operating Income Record high 4 consecutive periods +28% Ordinary Income Record high*5 4 consecutive periods +48% *5 Net Income Record high +72% *5 Operating CF Record high +78% *5
Slide 5: Confident Will Achieve 1 Trillion JPY Free Cash Flow
Confident Will Achieve 1 Trillion JPY *1 Free Cash Flow *2 *1 Cumulative 3 years target (FY09-11). 4 *2 Free cash flow (FCF) = cash flows from operating activities + cash flows from investing activities.
Slide 6: FY09 forecast raised
* Free Cash Flow (bn JPY) 300.0 300 Forecast raised by 50.0bn JPY FY09 200 181.5 250.0 (former forecast) forecast 100 raised 0 FY08 FY09 (full year) (full year forecast) *Free cash flow (FCF) = cash flows from operating activities + cash flows from investing activities. 5
Slide 7: Confidence in Achieving 1t JPY FCF
*1 Confidence in Achieving 1t JPY FCF (bn JPY) 500 400 +α α Toward *2 Yahoo! Inc. + *1 300 +α 100.0 100.0bn JPY FCF + JPY 1 trillion +α *3 200 300.0 300.0 300.0 900.0bn JPY (300.0bn JPY x 3 years) (forecast) (assumption) (assumption) 100 0 FY09 FY10 FY11 *1 Free cash flow (FCF) = cash flows from ope
Slide 8: Consolidated Earnings Results
Consolidated Earnings Results 7
Slide 9: Summary of Consolidated Earnings
Summary of Consolidated Earnings (bn JPY) FY08/H1 FY09/H1 YoY (Apr-Sep/08) (Apr-Sep/09) Net sales 1,328.9 1,349.2 +20.2 *1 EBITDA 335.5 387.1 +51.5 Operating income 180.0 230.6 +50.6 Ordinary income 117.3 173.5 +56.2 Net income 41.1 70.7 +29.6 Operating Cash Flow 177.2 315.3 +138.1 *2 Free Cash Flow
Slide 10: Consolidated Earnings Growth (YoY)
Consolidated Earnings Growth (YoY) Revenue and +2% Net sales profit increase Operating income +28% Ordinary income +48% Net income +72% FCF * 14.6 times 9 * Free cash flow (FCF) = cash flows from operating activities + cash flows from investing activities.
Slide 11: Consolidated Earnings Growth (YoY)
Consolidated Earnings Growth (YoY) Mobile Communications drove overall increase +2% (SOFTBANK consolidated) Net sales +7% (Mobile Communications) +28% (SOFTBANK consolidated) Operating income +49% (Mobile Communications) 10
Slide 12: Status of Earnings Forecast
Status of Earnings Forecast (bn JPY) FY08 FY09 FY09 Actual Forecast H1 Actual Operating income 359.1 420.0 230.6 (+60.8) (+50.6) Free cash flow* 181.5 300.0 177.0 (+118.4) (+164.9) Progressing according to plan Note: figures in brackets are year-on-year comparison. 11 * Free cash flow (FCF) = cash f
Slide 13: Consolidated Net Sales (Apr-Sep)
Consolidated Net Sales (Apr-Sep) (bn JPY) 1,500 Achieved revenue 1,328.9 1,349.2 increase 2% increase YoY 1,000 770.1 827.4 Mobile Communications 500 116.9 103.3 Broadband Infrastructure 156.6 151.5 Fixed-line Telecommunications 124.1 128.9 122.2 Internet Culture 104.5 0 e-Commerce FY08/H1 FY09/H1 *
Slide 14: Consolidated EBITDA (Apr-Sep)
Consolidated EBITDA (Apr-Sep) *1 *2 (bn JPY) Record high 400 387.1 (H1 basis) 335.5 15% increase YoY 300 249.4 200.6 200 Mobile Communications 33.9 35.4 Broadband Infrastructure 100 28.4 29.9 Fixed-line Telecommunications 66.7 69.9 Internet Culture 0 FY08/H1 FY09/H1 e-Commerce *1 EBITDA =Operating i
Slide 15: Consolidated EBITDA (Apr-Sep) Record high for 6th period
Consolidated EBITDA (Apr-Sep) *1 (bn JPY) 500 *2 400 387.1 Record high 300 314.2 335.5 for 6th 200 228.4 consecutive 100 period 50.2 (H1 basis) 8.1 12.0 0 -4.5 -22.5 -23.6 -100 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 *1 EBITDA =Operating income (loss) + deprec
Slide 16: Consolidated Operating Income (Apr-Sep)
Consolidated Operating Income (Apr-Sep) (bn JPY) 230.6 Record high* (H1 basis) 200 180.0 28% increase YoY 131.7 Mobile Communications 88.1 100 Broadband Infrastructure 27.2 22.2 5.5 7.8 Fixed-line Telecommunications Internet Culture 61.1 64.1 0 e-Commerce FY08/H1 FY09/H1 15 * Since SOFTBANKCORP. app
Slide 17: Consolidated Operating Income (Apr-Sep) Record high
Consolidated Operating Income (Apr-Sep) (bn JPY) 300 * 230.6 Record high 200 167.7 180.0 for 4th 100 112.5 consecutive period 4.7 4.4 0 (H1 basis) -8.7 -6.7 -31.1 -39.3 -100 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 16 * Since SOFTBANKCORP. applied consolidated
Slide 18: Operating Income Comparison (Apr-Sep)
Operating Income Comparison (Apr-Sep) (bn JPY) 250.9 250 KDDI SOFTBANK 200 230.6 150 Closing in on KDDI 100 50 0 FY05 FY06 FY07 FY08 FY09 H1 H1 H1 H1 H1 *Created by SOFTBANK based on material publicly disclosed by KDDI. 17
Slide 19: Consolidated Ordinary Income (Apr-Sep)
Consolidated Ordinary Income (Apr-Sep) (bn JPY) 200 173.5 * 150 Record high 117.3 (H1 basis) 100 48% increase YoY 50 0 FY08/H1 FY09/H1 18 * Since SOFTBANKCORP. applied consolidated accounting in FY1995.
Slide 20: Consolidated Ordinary Income (Apr-Sep) Record high
Consolidated Ordinary Income (Apr-Sep) (bn JPY) 200 * 173.5 Record high 100 111.1 117.3 for 4th 62.6 consecutive 0 1.0 period -16.1 -13.4 (H1 basis) -25.9 -45.9 -53.6 -100 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 19 * Since SOFTBANKCORP. applied consolidated ac
Slide 21: Consolidated Net Income (Apr-Sep)
Consolidated Net Income (Apr-Sep) (bn JPY) 100 * 70.7 Record high (H1 basis) 50 41.1 72% increase YoY 0 FY08/H1 FY09/H1 20 * Since SOFTBANKCORP. applied consolidated accounting in FY1995.
Slide 22: Consolidated Net Income (Apr-Sep)
Consolidated Net Income (Apr-Sep) (bn JPY) FY08/H1 FY09/H1 Notes of FY09 Ordinary income 117.3 173.5 Special income/loss (net) (2.1) 3.2 115.2 176.8 Income before income taxes and minority interests Income tax: Current 34.4 48.8 Income tax: Deferred 17.4 34.7 SOFTBANK MOBILE, etc. Minority interests
Slide 23: Profit Growth Range (YoY)
Profit Growth Range (YoY) (%) 80% Accelerated 72% 70% Net income profit growth 60% 48% 50% Ordinary income 40% 28% 30% Operating income 20% 7% 15% 10% 7% EBITDA* 0% 6% -10% -12% -20% FY08/H1 FY09/H1 *EBITDA =Operating income (loss) + depreciation and amortization (including amortization of goodwill)
Slide 24: EBITDA Margin by Segment (Apr-Sep)
EBITDA Margin* by Segment (Apr-Sep) 34% (%) Broadband Infrastructure 30% 30 29% Mobile Communications 26% SOFTBANK Consolidated 26% 29% 24% 25% Expanding Trend 23% 20 20% 18% Fixed-line Telecommunications 14% 10 FY07/H1 FY08/H1 FY09/H1 • EBITDA margin = EBITDA / net sales EBITDA =Operating income (l
Slide 25: Cash Flow Results
—= softBank Cash Flow Results ee 2 4
Slide 26: Operating Cash Flow (Apr-Sep) Record high
Operating Cash Flow (Apr-Sep) * 400 (bn JPY) Record high (H1 basis) 315.3 300 +138.1bn JPY 200 177.2 100 0 FY08/H1 FY09/H1 25 * Since SOFTBANKCORP. applied consolidated accounting in FY1995.
Slide 27: Free Cash Flow (Apr-Sep) Record high
Free Cash Flow (Apr-Sep) *1 (bn JPY) Record high *2 300 (H1 basis) Free cash flow 200 177.0 exceeds expectations 100 +164.9bn JPY 12.1 0 FY08 FY09 H1 H1 *1 Free cash flow (FCF) = cash flows from operating activities + cash flows from investing activities. 26 *2 Since SOFTBANKCORP. applied consolidat
Slide 28: FY09 forecast raised
Free Cash Flow *1 (bn JPY) 300 Forecast 300.0 FY09 forecast raised by 50.0bn JPY raised 250.0 200 181.5 (former forecast) 100 Mainly operating CF improvement*2 50.0bn JPY (sales of installment receivables)*3 10.0bn JPY 0 FY08 FY09 (full year) (full year forecast) *1 Free cash flow (FCF) = cash flows
Slide 29: Free Cash Flow Around 1t JPY
Free Cash Flow *1 500 (bn JPY) (former forecast) *2 400 Around 1t JPY *1 300 250.0 FCF over the (forecast) 200 181.5 next 3 years 100 0 FY08 FY09 FY10 FY11 (actual) (forecast) *1 Free cash flow (FCF) = cash flows from operating activities + cash flows from investing activities. 28 *2 Cumulative 3 ye
Slide 30: Free Cash Flow FY09 forecast raised
Free Cash Flow *1 500 (bn JPY) FY09 forecast 400 raised 300.0 300 (forecast) Forecast to 300.0bn JPY raised by 50.0 200 181.5 100 Mainly operating CF improvement*2 50.0bn JPY (sales of installment receivables)*3 10.0bn JPY 0 FY08 FY09 FY10 FY11 (actual) (forecast) *1 Free cash flow (FCF) = cash flow
Slide 31: Confidence in Achieving 1t JPY FCF
*1 Confidence in Achieving 1t JPY FCF (bn JPY) 500 400 +α α Toward *2 Yahoo! Inc. + *1 300 +α 100.0 100.0bn JPY FCF + JPY 1 trillion +α *3 200 300.0 300.0 300.0 900.0bn JPY (300.0bn JPY x 3 years) (forecast) (assumption) (assumption) 100 0 FY09 FY10 FY11 *1 Free cash flow (FCF) = cash flows from ope
Slide 32: Total Cash Income
Total Cash Income Subscribers * Cash income per subscriber Total cash income * Cash income per subscriber= ARPU + handset installment payments + Backup Service Package etc. ARPU (Average Revenue Per User, communication revenue per subscriber) 31 = basic monthly charge +monthly usage charge +(data) c
Slide 33: Cumulative Subscribers Exceeds 21.00 million
Cumulative Subscribers Vodafone 21.32 (mil.) 20 Exceeds 15 15.20 21.00 million 10 Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep FY04 FY05 FY06 FY07 FY08 FY09 32
Slide 34: Cash Income per Subscriber Stable trend
Cash Income per Subscriber * * (JPY) 5,690 5,750 5,760 5,790 5,850 5,990 6,040 5,760 5,890 5,980 6,000 Stable trend 5,000 4,000 3,000 2,000 1,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY07 FY08 FY09 * Cash income per subscriber= ARPU + handset installment payments + Backup Service Package etc. ARPU (Avera
Slide 35: Expanding Cash Income
Expanding Cash Income *1 (Cash income *1 per subscriber)*2 Total Cash Income (assumption) 1.5t JPY 5,930 JPY (FY09/H1 average) 5,910 JPY 1.4t JPY (FY2009 assumption) (FY08 average) (FY2008) 5,750 JPY (FY07 average) 1.2t JPY (FY2007) 17.05mil 19.57mil 20.96mil (Subscriber) (FY07 average) (FY08 averag
Slide 36: Total Cash Income (annual)
Total Cash Income* (annual) (t JPY) Total Cash Income (assumption) * 1.5t JPY 1.5 1.4t JPY 1.2t JPY 1.0 0.5 0.0 FY07 FY08 FY09 (assumption) * Cash income per subscriber= ARPU + HS installment payments + Backup Service Package etc. ARPU (Average Revenue Per User, communication revenue per subscriber)
Slide 37: CAPEX (acquisition basis)
CAPEX (acquisition basis) (bn JPY) Planned CAPEX increased 400 389.8 by 40.0bn JPY 293.7 300 259.0 260.0 (after increase) 308.4 + 40.0bn JPY 200 220.0 Mobile Communications 148.9 235.3 (before increase) 199.1 47.6 Broadband Infrastructure 100 87.2 22.1 71.5 Fixed-line Telecommunications 82.6 14.5 37
Slide 38: Net Interest-bearing Debt Reduction Status
Net Interest-bearing Debt Reduction Status 37
Slide 39: Net Interest-bearing Debt Reduction of approx. 300.0bn JPY
* Net Interest-bearing Debt (bn JPY) Reduction 2,500 2,070.9 of approx. 300.0bn JPY 2,000 (compared to Sep 2008) 230.9 1,768.5 221.6 Securitization of installment 1,500 receivables (SOFTBANK MOBILE) 1,000 1,840.0 1,546.9 Other than securitization of installment 500 receivables 0 Sep Sep FY08 FY09 *
Slide 40: Net Interest-bearing Debt
* Net Interest-bearing Debt (bn JPY) 2,500 Reduction of approx. 300.0bn JPY Reduction of net 2,070.9 interest-bearing debt 2,000 1,768.5 on track to reduction 1,500 by half from Mar 2009 1,000 Half 500 0 Sep Sep FY11 2008 2009 (target) * Net interest-bearing debt = interest-bearing debt – cash posit
Slide 41: Corporate Bonds Redemption Schedule
Corporate Bonds Redemption Schedule Abundant repayment resources available Repayment Capability Corporate Bonds Redemption Schedule (bn JPY) Unused portion of credit line facility SB straight bond 800 Cash position *1 720.7 SBTM straight bond SB convertible bond *2 141.0 600 525.0 101.0 400 579.7 20
Slide 42: Credit Spread
Credit Spread SOFTBANK CDS and Bond Spread Trend <bp> 2,500 Market stabilizes 2,000 1,500 SOFTBANK CDS (5 years) 1,000 26th Unsecured Straight Corporate Bond (4.7 years remaining) 500 Source: CDS data by Bloomberg Bond spread data is calculated by 0 SOFTBANK based on Japan Securities Apr Jun Aug Oct
Slide 43: Improvement in Key Financial Indices
Improvement in Key Financial Indices Improvement FY08/H1 FY09/H1 Rate EBITDA margin*1 25.2% 28.7% +14% Equity ratio *2 9.4% 10.2% +9% D/E ratio*3 6.0 times 5.3 times +12% Net D/E ratio*4 5.0 times 4.0 times +20% *1 EBITDA margin = EBITDA / net sales *2 Equity ratio: shareholders’ equity/ total asset
Slide 44: Business Results
== ooftBank Business Results SS 4 3
Slide 45: Mobile Communications Net Sales (Apr-Sep)
Mobile Communications Net Sales (Apr-Sep) (bn JPY) 1,000 Revenue 827.4 800 770.1 increase 600 7% increase YoY 400 200 0 FY08 FY09 H1 H1 44
Slide 46: Mobile Communications Operating Income (Apr-Sep)
Mobile Communications Operating Income (Apr-Sep) (bn JPY) 150 131.7 Record high* profit (H1 base) 100 88.1 49% increase YoY 50 0 FY08 FY09 H1 H1 45 * Since SOFTBANKCORP. applied consolidated accounting in FY1995.
Slide 47: Record High TV CM Preference Ranking
Record High* TV CM Preference Ranking TV CM Preference Ranking (since the research began in 1989) Points Company Title (monthly) 1st SOFTBANK ‘SMAP Migration’ (2009) 361 2nd CREDIT SAISON ‘Giant Swing’ (2004) 284 3rd Suntory ‘Pyramid High school Students’ (2003) 278 4th Suntory ‘Upside down Dad’ (20
Slide 48: Enjoy our SMAP TV CM
Enjoy our SMAP TV CM 47
Slide 49: Turnaround of ARPU
—= softBank Turnaround of ARPU ————————————————— 4 8
Slide 50: Turnaround of ARPU
ARPU * (communication revenue per subscriber) (JPY) Turnaround 6,000 of ARPU 5,000 4,000 3,000 3,040 2,710 2,530 2,460 2,300 2,020 2,150 2,160 Basic charge + voice ARPU 2,000 1,000 1,790 1,820 1,880 1,990 Data ARPU 1,490 1,600 1,650 1,710 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY07 FY08 FY09 * ARPU (Average Reve
Slide 51: Cash Income per Subscriber Stable trend
Cash Income per Subscriber * * (JPY) 5,760 5,790 5,850 5,990 6,040 5,760 5,890 5,980 6,000 1,000 1,230 1,400 1,540 1,680 1,640 1,580 1,540 Stable trend 5,000 230 250 270 280 290 270 280 4,000 280 3,000 3,040 2,710 2,530 2,460 2,300 2,020 2,150 2,160 2,000 Handset installment payment Backup Service P
Slide 52: ARPU Comparison (YoY): Big Improvement
ARPU Comparison (YoY) (JPY) 0 SOFTBANK -100 Big -200 Improvement -300 KDDI -400 -500 NTT DOCOMO -600 -700 -800 *Created by SOFTBANK based on materials publicly disclosed by each company. -900 Q1 Q2 Q3 Q4 Q1 Q2 FY08 FY09 51
Slide 53: Improvement of Data ARPU
—~= SoftBank Improvement of Data ARPU 52
Slide 54: Data ARPU Continues increasing
DATA ARPU (average data communication revenue per subscriber) (JPY) 2,000 Continues increasing 1,500 1,990 1,880 1,790 1,820 1,710 1,600 1,650 1,470 1,490 1,410 1,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY07 FY08 FY09 53
Slide 55: Usage by Platform (shopping)
Usage by Platform (shopping) (%)100% 100 PC vs. Mobile 80% 80 59 Mobile platform 60% 60 68 increases PC > Mobile 40% 40 9 PC Mobile 5 8 PC < Mobile 20% 20 6 27 19 Mobile platform only 0 0% 2007 Research 2008 Research Source: Keitai White Paper 2009 issued by Impress R&D 54
Slide 56: Usage by Platform (blog)
Usage by Platform (blog) (%)100% 100 PC vs. Mobile 80% 80 56 50 Mobile platform 60% 60 increases PC > Mobile 9 40% 40 11 13 PC Mobile 10 PC < Mobile 20% 20 29 23 Mobile platform only 0% 0 2007 Research 2008 Research Source: Keitai White Paper 2009 issued by Impress R&D 55
Slide 57: Usage by Platform (SNS)
Usage by Platform (SNS) (%)100% 100 PC vs. Mobile 80% 80 57 45 Mobile platform 60% 60 increases PC > Mobile 40% 40 18 PC Mobile 17 21 PC < Mobile 20% 20 10 16 16 Mobile platform only 0% 0 2007 research 2008 Research Source: Keitai White Paper 2009 issued by Impress R&D 56
Slide 58: iPhone Drives Content Market
iPhone Drives Content Market TM More than Display prevented due 85,000 applications to protection of rights are available Exceeded 2.0bn downloads Source: Press release material by Apple on September 28, 2009. 57
Slide 59: Kaisha Shikiho iPhone Application
Introduction of innovative iPhone Application (1) Kaisha Shikiho (Japan Company Handbook) Distribute a whole volume of ‘Kaisha Shikiho’ • Not only page browsing, but also corporate websites and location of the head offices shown • Register to My Portfolio Display Corporate information with one click
Slide 60: MAGASTORE (sales of e-magazine)
Introduction of innovative iPhone Application (2) MAGASTORE (sales of e-magazine) Display prevented due to protection of rights Able to browse 19 magazines from different genres Display prevented due to protection of rights * Display prevented due to protection of rights *As of Oct 28, 2009 research
Slide 61: SekaiCamera
Introduction of innovative iPhone Application (3) SekaiCamera ‘Sticky note’ in the world seen through a camera Provide information suited to the ‘place’ and ‘time’ within the reality seen through the camera’s-eye Display prevented due Display prevented due to protection of rights to protection of ri
Slide 62: Features Which Stimulate Corporate Demand
Features Which Stimulate Corporate Demand (1) Hardware encryption Data in iPhone always encrypted (2) Security Data remotely-deleted upon loss of iPhone Display prevented due to protection of rights (3) Safe communication VPN access possible (4) Device control Customized control of which functionali
Slide 63: Conclusion
—~= SoftBank Conclusion 62
Slide 64: Record High Profit
Record High* Profit 63 * Since SOFTBANKCORP. applied consolidated accounting in FY1995.
Slide 65: 'Record High' Results (2009 Apr-Sep)
9 ‘Record High’ Results (2009 Apr-Sep) Consolidated Results (YoY) *1 EBITDA Record high*5 6 consecutive periods +15% *5 Operating Income Record high 4 consecutive periods +28% Ordinary Income Record high*5 4 consecutive periods +48% *5 Net Income Record high +72% *5 Operating CF Record high +78% *5
Slide 66: Confident Will Achieve 1 Trillion JPY Free Cash Flow
Confident Will Achieve 1 Trillion JPY *1 Free Cash Flow *2 *1 Cumulative 3 years target (FY09-11). 65 *2 Free cash flow (FCF) = cash flows from operating activities + cash flows from investing activities.
Slide 67: Lifestyle Company in the 21st Century
Lifestyle Company in the 21st Century IT revolution to all mankind and places 66
Slide 68: 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. 67
Slide 69: Definition of terms
(Definition of terms) - Referrals to ‘record high’ and ‘record high profit’ relate to the earnings results for FY2009 Apr-Sep indicating records since SOFTBANKCORP. applied consolidated accounting in FY1995. - Free cash flow (FCF) = cash flows from operating activities + cash flows from investing ac
Slide 70: FY2009/Q2 Appendix to the Earnings Results
FY2009/Q2 Appendix to the Earnings Results (Amounts less than one billion yen are omitted. / Net Sales to external customers） FY2007 FY2008 FY2009 Business segment unit Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Net sales bn JPY 389.0 419.8 403.1 406.8 370.6 399.4 374.6 409.9 405.0 422.3 Operating income bn JPY