Softbank Group Corp. · TSE:9984
Softbank — Q3 FY2007 Earnings Presentation
78 slides from Softbank's earnings presentation, Feb 8, 2007
Slide 1: Earnings Results for the Third Quarter Ended December 31, 2006
Earnings Results For the Third Quarter Ended December 31, 2006 (Q3/FY2007) February 8, 2007 SOFTBANK CORP. March 12, 2010 Version Due to protection of rights, some of the photos and images included at the time of publication have been modified or revised. “FY2007” and “FY07” refer to the fiscal year
Slide 2: Highlights
＜Highlights＞ 1. Good start for the Mobile business New price plan has been well received Good progress in subscriber acquisition Accelerated migration from 2G to 3G 2. Recognized largest income since formation （Operating income, Ordinary income, EBITDA) 2
Slide 3: Summary of Consolidated Earnings Results from Q1-3
Summary of Consolidated Earnings Results from Q1-3 (Cum. of 9 months) 3
Slide 4: Q3/FY2007 Summary of Consolidated Earnings Results
Q3/FY2007 Summary of Consolidated Earnings Results ＜Unit: bn JPY＞ Q1-3 Cum. of 9 months Q1-3/FY07 Q1-3 /FY06 Year on year (Apr 06 – Dec 06) (Apr 05 – Dec 05) Net Sales 1,822.3 810.2 +1,012.1 EBITDA 382.4 94.9 +287.4 Operating income 197.2 27.9 +169.3 Ordinary income 111.6 (2.2) +113.8 Income before
Slide 5: Consolidated Net Sales (Cum. of 9 months)
Consolidated Net Sales (Cum. of 9 months) 2,000 ＜Unit: bn JPY＞ 1,822.3 1,500 Mobile Communications 1,008.5 (SOFTBANK MOBILE) 1,000 810.2 Others 192.1 e-Commerce 178.3 Internet Culture 500 113.3 139.1 Fixed-line 257.6 247.7 Telecommunications (SOFTBANK TELECOM) 196.3 192.8 BB Infrastructure 0 FY06/Q1
Slide 6: Consolidated Net Sales (Cum. of 9 months) 1.8 tn JPY
Consolidated Net Sales (Cum. of 9 months) 2,000 ＜Unit: bn JPY＞ 1,822.3 1,800 1,600 1,400 1,200 1,000 800 810.2 Q1-3/ FY07 600 561.7 1.8 tn JPY 400 362.1 200 0 FY04 FY05 FY06 FY07 1-3Q 1-3Q 1-3Q 1-3Q 6
Slide 7: Consolidated EBITDA (Cum. of 9 months) 382.4bn JPY
Consolidated EBITDA (Cum. of 9 months) 400 382.4 ＜Unit: bn JPY＞ 350 300 250 200 Q1-3 FY07 150 100 94.9 382.4bn JPY 50 27.8 FY04 FY05 FY06 FY07 0 1-3Q 1-3Q 1-3Q 1-3Q -22.1 -50 （EBITDA： Operating income (Loss) + Depreciation and Amortization) *SOFTBANK MOBILE (former Vodafone K.K.) is consolidated fro
Slide 8: Consolidated Operating Income (Cum. of 9 months) 197.2bn JPY
Consolidated Operating Income (Cum. of 9 months) ＜Unit: bn JPY ＞ 197.2 200 150 100 Q1-3 FY07 50 27.9 197.2bn JPY FY04 FY05 FY06 FY07 0 1-3Q 1-3Q 1-3Q 1-3Q -14.3 -50 -46.0 8
Slide 9: Consolidated Ordinary Income (Cum. of 9 months) 111.6bn JPY
Consolidated Ordinary Income (Cum. of 9 months) ＜Unit: bn JPY ＞ 120 111.6 100 80 60 40 20 Q1-3 FY07 0 FY04 1-3Q FY05 1-3Q FY06 1-3Q FY07 1-3Q 111.6bn JPY -2.2 -20 -40 -33.9 -60 -62.2 -80 9
Slide 10: Consolidated Net Income (Cum. of 9 months) 21.9bn JPY
Consolidated Net Income (Cum. of 9 months) ＜Unit: bn JPY ＞ 40 21.9 20 17.8 0 FY04 FY05 FY06 FY07 1-3Q 1-3Q 1-3Q 1-3Q Q1-3 FY07 -20 -32.6 21.9bn JPY -40 -60 -80 -100 -93.6 10
Slide 11: Consolidated Non-operating income (Cum. of 9 months)
Consolidated Non-operating income (Cum. of 9 months) ＜Unit: bn JPY ＞ Q1-3/ FY07 Q1-3/ FY06 ＜Note＞ (Apr 06 – Dec 06) (Apr 05 – Dec 05) Interest income 3.0 1.1 Equity in earnings under the equity 5.2 6.2 method Vodafone acquisition Interest expense (53.5) (20.5) related (28.9) Commission on Others (Ne
Slide 12: Consolidated Net Income (Cum. of 9 months)
Consolidated Net Income (Cum. of 9 months) ＜Unit: bn JPY ＞ Q1-3/ FY07 Q1-3/ FY06 ＜Note＞ (Apr 06 – Dec 06) (Apr 05 – Dec 05) Ordinary Income 111.6 (2.2) Special Income, net 65.3 87.8 Income before income taxes and minority interest 176.9 85.5 Tax provision for Income taxes: Current 93.5 29.5 gains on
Slide 13: FY2007/Q3 Quarterly Consolidated Earnings Results
FY2007/Q3 Quarterly Consolidated Earnings Results 13
Slide 14: Q3/FY2007 Summary of Consolidated Earnings Results
Q3/FY2007 Summary of Consolidated Earnings Results ＜Unit: bn JPY ＞ ＜Quarterly＞ Q3/ FY07 Q3/ FY06 Year on year (Oct 06 – Dec 06) (Oct 05 – Dec 05) Net Sales 702.1 287.4 +414.7 EBITDA 154.0 44.7 +109.2 Operating Income 84.7 23.5 +61.2 Ordinary Income 48.9 11.2 +37.6 Income before income taxes and 58.0
Slide 15: Consolidated Net Sales (Quarterly)
Consolidated Net Sales (Quarterly) 702.1 ＜Unit: bn JPY ＞ 700 625.9 600 494.2 426.6 Mobile Communications 500 350.3 (SOFTBANK MOBILE) 400 231.5 300 287.4 298.4 Others 258.6 264.1 80.6 e-Commerce 68.4 55.8 61.1 61.2 200 58.5 65.1 Internet Culture 42.0 42.2 45.2 49.4 34.4 36.7 44.4 100 87.3 81.5 88.6 8
Slide 16: Consolidated EBITDA (Quarterly) 154bn JPY
Consolidated EBITDA (Quarterly) 154.0 ＜Unit: bn JPY ＞ 150 130 124.0 110 104.3 Mobile Communications (SOFTBANK MOBILE) 90 73.6 JPY 104bn 55.8 70 Q3 of FY07 54.9 50 44.7 50.4 49.9 30.7 48.5 154bn JPY 30 19.5 16.2 15.8 10 6.0 5.9 Largest since its FY041.4 0.1 FY05 FY06 FY07 -10 Q1 Q1 Q1 Q1 formation -7
Slide 17: Consolidated Operating Income (Quarterly) 84.7bn JPY
Consolidated Operating Income (Quarterly) 90 ＜Unit: bn JPY ＞ 84.7 80 70 58.1 60 54.3 50 40 34.3 Q3 of FY07 30 23.5 20 84.7bn JPY 10 7.5 Largest since its FY04 FY05 FY06 FY07 Q1 Q1 Q1 Q1 0 -3.8 -2.9 -3.1 formation -10 -6.6 -8.8 -7.5 -11.0 -15.1 -20 -24.1 -30 -33.7 -40 *SOFTBANK MOBILE (former Vodafon
Slide 18: Consolidated Operating Income (Quarterly) 84.7bn JPY
Consolidated Operating Income (Quarterly) ＜Unit: bn JPY ＞ 90 84.7 80 Mobile Communications 70 Impact of modem rental business sale 60 58.1 Mobile Communications 54.3 (SOFTBANK MOBILE) 50 29.3 +JPY 56.9bn 27.2 40 34.3 30 7.0 Q3 of FY07 23.5 20 7.5 7.6 27.328.3 28.9 28.3 84.7bn JPY 15.9 10 FY04 FY05 F
Slide 19: Consolidated Ordinary Income (Quarterly) 48.9bn JPY
Consolidated Ordinary Income (Quarterly) 48.9 ＜Unit: bn JPY ＞ 50 40 36.6 29.7 30 25.9 20 11.2 Q3 of FY07 10 0 FY04 Q1 FY05 Q1 FY06 Q1 FY07 Q1 48.9bn JPY -0.4 -10 -8.6 -9.6-11.6 -8.0 -11.3 Largest since its -20 -14.2 -13.0 formation -23.0 -30 -30.6 -32.1 -40 19
Slide 20: Consolidated Net Income (Quarterly) 7.4bn JPY
Consolidated Net Income (Quarterly) 40 39.7 ＜Unit: bn JPY ＞ 30 22 20 13 11.8 10 7.4 6.9 1.4 Q3 of FY07 FY04 FY05 FY06 FY07 0 Q1 Q1 Q1 Q1 -10 7.4bn JPY -13.4 -11.1 -20 -16.3 -17.8 -26.5 -30 -27.2 -34.7 -40 -42.6 -50 20
Slide 21: Consolidated Operating CF (Quarterly) 71.1bn JPY
Consolidated Operating CF (Quarterly) ＜Unit: bn JPY ＞ 122.4 120 100 80 71.1 64.6 60 61.9 Q3 of FY07 40 71.1bn JPY 20 13.8 6.6 0 FY04 FY05 FY06 FY07 Q1 Q1 Q1 Q1 0.2 -11.3 -20 -15.8 -11.9 -15.2 -18.7 -18.2 -25.4 -40 -37.8 21
Slide 22: Operating Income by Segment (Quarterly)
Operating Income by Segment (Quarterly) ＜Unit: bn JPY ＞ 84.7 90 Consolidated Operating Income 70 Mobile Communications 58.1 (SOFTBANK MOBILE) 54.3 50 34.3 BB Infrastructure 30 23.5 Internet Culture (Yahoo Japan Corporation) 7.5 e-Commerce 10 Q1/05 Q1/06 Q1/07 Fixed-line Telecommunications -2.9 -3.1
Slide 23: EBITDA by Segment (Quarterly)
EBITDA by Segment (Quarterly) ＜Unit: bn JPY ＞ 160 154.0 140 Consolidated EBITDA 124.0 120 104.3 100 Mobile Communications (SOFTBANK MOBILE) 80 BB Infrastructure Fixed-line 60 54.9 Telecommunications 44.7 (SOFTBANK TELECOM) 40 30.7 Internet Culture 20 15.8 16.219.5 (Yahoo Japan Corporation) 6.0 5.9 e
Slide 24: Consolidated Net Income (Quarterly)
Consolidated Net Income (Quarterly) ＜Unit: bn JPY ＞ Q3/FY07 Q3/FY06 ＜Notes＞ (Oct 06 – Dec 06) (Oct 05 – Dec 05) Ordinary Income 48.9 11.2 Special Income, net 9.0 48.4 Income before income taxes and minority interest 58.0 59.6 Mainly Yahoo Income taxes: Current 12.5 9.6 Japan Corporation Income taxes
Slide 25: Net Debt
Net Debt ＜Unit: bn JPY ＞ 2,500 Consolidated net debt 2,000 JPY2,069.0 bn (end of Dec) 1,500 SBM investment by SB & Yahoo Japan Corporation: 320.0bn JPY 1,000 SBM net debt (non-recourse): CB incl. WBS loan of 1,366.0bn JPY 531.6 454.6 500 395.4 0 05/MAR 06/MAR Other than SBM related net SBM related d
Slide 26: Completion of Vodafone acquisition financing: Total facility JPY1.45t
Completion of Vodafone acquisition financing Total facility JPY1.45t -Major participants- Class A Loan Joint book runner & Mandatory lead arranger Mizuho Corporate Bank, Ltd. ,Citibank, N. A., Deutsche Bank, The Royal Bank of Scotland, Shinsei Bank, Limited Class B2 Note Book Runner Joint Lead Manag
Slide 27: Mobile Communications Business
Mobile Communications Business 27
Slide 28: Spike in subscriber number (net addition)
Spike in subscriber number (net addition) [Monthly] (K) Jan 2007 net addition share 160 120 43% 80 Highest value ever Jan 2007 net addition 40 164,000 highest value in 3 years & 8 months 0 Apr Jan Jan 2005 2006 2007 -40 -40 Vodafone 28
Slide 29: Rapid growth in (net) subscriber number
Rapid growth in (net) subscriber number [Monthly] (K) 350 300 Net addition increases every month 250 200 150 100 50 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2006 2007 -50 *Source: Disclosed information from each company 29
Slide 30: Rapid growth in 3G subscriber number
Rapid growth in 3G subscriber number [Quarterly] (m) Cum. subscriber number 15.66 16 Migration to 3G is in rapid progress 12 End Jan 2007 3G subscriber number: 6.589m 8 2G 3G ratio: 42.1% (+12.3% points compared to end Sept.) 3G 4 0 2003 2004 2005 2006 Jan Q1 Q1 Q1 Q1 30
Slide 31: Rapid growth in 3G subscriber number
Rapid growth in 3G subscriber number [Quarterly] 3G Ratio approaching competitors (%) 100 75 End Jan 2007 【万回線】 3G ratio KDDI 50 42% 25 NTT DoCoMo 0 2002 2003 2004 2005 2006 *Source: Disclosed information from each company SOFTBANK MOBILE started 3G service in Dec 2002, KDDI in Apr 2002. 31
Slide 32: Progress in commitments
Progress in 4 commitments Expansion of net addition Rapid growth of 3G ratio 32
Slide 33: 1. 3G Handset Enrichment
—~= SoftBank 1. 3G Handset Enrichment 33
Slide 34: Handset satisfaction level is increasing rapidly
Handset satisfaction level is increasing rapidly (%) 100 Fall/Winter 06 80 60 Spring 06 Fall/Winter 05 Winter 04- Summer 05 40 20 Design Function Easy-to-use Size *Survey conducted by SOFTBANK MOBILE 34
Slide 35: "One-Seg" No.1
“One-Seg” No.1 LCD 2.6 inch LCD 3.0 inch LCD 3.0 inch Thickness 27mm Thickness 22mm Thickness 17.9mm Bluetooth® available HSDPA “3G High Speed” available 905SH 911SH 911T One-Seg actual sales One-Seg actual sales (5 consecutive months) (2 consecutive months) Launch after mid March Summer 2006 Fall/W
Slide 36: "Slim" No.1
“Slim” No.1 17mm Slim handset 705SH World slimmest*1 11.9mm 707SC W-CDMA World slimmest*2 8.4mm 708SC Summer 2006 Fall-Winter 2006/2007 Spring 2007 *1Among folding type 3G handsets, sold globally as of 10th Nov. 2006 (Researched by Samsung Electronics Co., Ltd.) *2W-CDMA handsets sold as of 25th Jan
Slide 37: Further evolution
Further evolution 2006 2007 Summer Fall Winter Spring One-Seg Further evolving launched Toward the next stage Slim Variety of slim handsets 17mm to be launched 705SH 37
Slide 38: Video
Video 38
Slide 39: 14 models, 58 colors
Spring 2007: Overwhelming handset line-up “Model” & “Color” to meet all possible customer preferences 14models , 58colors 39
Slide 40: Comparison with competitors (number of models)
Comparison with competitors (number of models)* SoftBank NTT DoCoMo au Number of models Announced for Spring 07 Number of models Number of models announced announced for Spring 06 exceeds competitors *SOFTBANK MOBILE estimate 40
Slide 41: Comparison with competitors (number of colors)
Comparison with competitors (number of colors)* SoftBank NTT DoCoMo au Number of models Announced for Spring 07 Number of colors announced Number of models far exceeds competitors announced for Spring 06 *SOFTBANK MOBILE estimate 41
Slide 42: 2. Enhancement of Sales Structure and Brand
2. Enhancement of Sales Structure and Brand 42
Slide 43: Aggressive publicity strategy
Aggressive publicity strategy Obtained high preference in CM survey* Contribute to brand image penetration In November, out of 4,398 commercials, achieved No.1! In December, out of 4,377 commercials, achieved No.2! Display prevented due to protection of rights. Source: CM DATABANK November: (Incredi
Slide 44: Significant improvement in shop presence
Significant improvement in shop presence • Strong relationship with mass appliance retailers • Increased availability of popular models Share in mass retailers increased dramatically Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented due t
Slide 45: Rapid growth in retail sales share to more than double
Mass appliance retailers* share of volume surged 40% 30% 20% Rapid growth in retail sales share to 10% more than double 0% Aug Sept Oct Nov Dec Jan 2006 *Mass appliance retailer share estimated by SOFTBANK MOBILE 45
Slide 46: More initiatives
More initiatives Pursuing greater user “satisfaction” Display prevented 1. Expand SOFTBANK Shops due to protection of rights. 2. Timely handset supply 3. Efficient shop operation New operation support system Tablet PC 46
Slide 47: SoftBank Harajuku: will open on Feb 10th
SoftBank Harajuku: will open on Feb 10th Flagship shop located in highly fashionable area Largest selling floor space* amongst carrier shops in Japan Display prevented due to protection of rights. Display prevented due to protection of rights. *SOFTBANK MOBILE estimate 47
Slide 48: "Fashion" promotion
“Fashion” promotion Special co-sponsor of Tokyo Girls Collection - biggest ever fashion festival! Collaboration with PANTONE® model 812SH Display prevented due to protection of rights. On March 3rd in Yokohama Arena About 60 top models will appear. 48
Slide 49: Initiatives in corporate sales
Initiatives in corporate sales Enhancement of corporate sales structure Enrichment of handsets for corporate users Aggressively pursue corporate sales 49
Slide 50: White Plan
New price plan White Plan Basic charge 980 yen/month On-net call Free (1:00 to 21:00) Calls other than the above 21 yen/30sec *All rates include tax 50
Slide 51: White Plan
New price plan White Plan The ultimate plan Easy-to-understand for everybody Sales Agents Users 51
Slide 52: Rapid increase in subscribers: In about 3 months 1.02m applications
New price plan Rapid increase in subscribers From Oct 26 2006 In about 3 months 1.02 m applications New: 490K Upgrade*: 530K From Jan 16 2007 In about 3 weeks 1.05 m applications White Plan New: 210K Upgrade*: 840K *including change of user information 52
Slide 53: White Plan exclusive discount service
White Plan exclusive discount service From March 1 2007 W White White Plan + 980 yen/month (Monthly basic charge 980 yen) On-net call Free (1:00 to 21:00) Calls other than the above 21 yen 10.5 yen/30sec *All rates include tax 53
Slide 54: Reasonable combination available for heavy users
Reasonable combination available for heavy users Talking without regard to time is possible + ¥980 ¥980 Display prevented W White due to protection of rights. White Plan *All rates include tax 54
Slide 55: Introduction of handset installment sales method
Introduction of handset installment sales method Goals of introduction 1. Normalize the handset sales model ¾ Correct unfairness among subscribers ¾ Ensure handset costs are recouped 2. Acquisition of long-tenure users ¾ Decrease in churn rate 3. Set attractive price plans ¾ Super Bonus Special Disc
Slide 56: Effects of selling handsets in installments
Effects of selling handsets in installments ¾ Longer handset usage period ¾ Lower churn rate Installment 26 months* sales Traditional Display prevented due to protection of rights. sales Churn Risk *For a 2-year plan 56
Slide 57: 3. 3G Network Enhancement
—~= SoftBank 3. 3G Network Enhancement o7
Slide 58: 3G network enhancement: satisfaction
3G network enhancement: satisfaction Network satisfaction 17 % improvement June 2006 figures used as reference value. The mobile that connects *Results of research consigned to a third-party June Sep Jan institution. 58
Slide 59: Enhancement of 3G network: base stations
Enhancement of 3G network: base stations （BS） 46,000 Steady construction of base 25,588 Property stations Secured Construction In Service 0 Q1 Q2 Q3 Q4 FY06 (scheduled) 59
Slide 60: 4. Enhance Content
—~= SoftBank 4. Enhance Content 60
Slide 61: Introduction of "Yahoo! Keitai"
Bring the “fun” of the Internet to mobile phones Introduction of “Yahoo! Keitai” Similar experience to a PC with a mobile 61
Slide 62: Introduction of "Yahoo! Keitai"
Introduction of “Yahoo! Keitai” •Rich variety of content Experience “fun” and “convenience” anytime, anywhere •Optimal search engine for mobile and PC Easy access to the Internet, and PC site searches 62
Slide 63: Surge in page view: 45 times
Surge in page view Compared to the Link to Yahoo! JAPAN end of June an set in top page increase of nearly 45 times *Page view of top page of Yahoo! JAPAN on mobile Till Sep 30th Yahoo! Mobile from Jan 10th Yahoo! Keitai 63
Slide 64: The Group's wide variety of revenue sources
The Group’s wide variety of revenue sources Revenue Continuing to expand the services we offer; not just limited to voice Content Data Voice Display prevented due to protection of rights. Display prevented due to protection of rights. Time 64
Slide 65: Promote various partnerships beyond our industry
Promote various partnerships beyond our industry SOFTBANK Group Various players Content Medical care Display prevented Display prevented due to protection of rights. due to protection of rights. Display prevented due to protection of rights. Sports Display prevented Business due to protection of rig
Slide 66: No.1 streaming portal "Yahoo! Streaming"
No.1 streaming portal “Yahoo! Streaming” Encourage consumer-generated transmission of information Distribution of blog parts from Dec Can introduce video in personal blog Display prevented Display prevented due to protection of rights. due to protection of rights. My Recommend function from Jan Re
Slide 67: Connecting content to ads
Connecting content to ads Demonstrate results of distributing promotions over the Internet Nov 17- 20 From Nov 24 Exclusive distribution of Nissin Foods Products original animation video Sales record of more than “FREEDOM ” 72 hours in advance of 50K release Nov 24 “FREEDOM1”DVD release Yahoo! JAPA
Slide 68: No.1 in number of unique users: 8.491 million
Yahoo! JAPAN streaming service* Shift in unique users (m) Yahoo! Japan Streaming Service 8 Company U Service G No.1 in number of unique users amongst national streaming services 6 4 8.491million End of Dec 2006 2 Source Research by NetRatings Japan Inc., access from homes * Yahoo! Streaming, Yahoo!
Slide 69: A global challenge
A global challenge Aggressive expansion in the service and content segments 9Business alliances with potent partners 9Expand our business model abroad News Corporation MySpace.com 69
Slide 70: Business model rollout overseas: auction
Business model rollout overseas: auction (million) Number of users 30 25 Taobao.com No.1 Over 30 million ! auction site in China 20 Auction site growth exceeds Yahoo! 15 JAPAN only two years after its launch 10 5 ＊Taobao.com：number of registered user 0 02/5 03/8 06/12 70
Slide 71: Business model rollout overseas: B2B e-commerce
Business model rollout overseas: B2B e-commerce (million) Number of users Alibaba.com Over 19 million No.1 Over 19 million users registered from over 200 countries and regions. 02/Q1 06/Q3 (May) 71
Slide 72: Present revenue & profit sources: Mainly from infrastructure business
Present revenue & profit sources: Mainly from infrastructure business Content Portal Infrastructure 72
Slide 73: Revenue & profit sources: Future
Revenue & profit sources: Future Increase revenue & profit through various content Content Portal Infrastructure 73
Slide 74: Make mobile in Japan more fun
Make mobile in Japan more fun 74
Slide 75: Make broadband in Japan more fun
Make broadband in Japan more fun 75
Slide 76: Lifestyle Company in the 21st Century
Lifestyle Company in the 21st Century Broadband available to all living people everywhere 76
Slide 77: 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. 77
Slide 78: 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