Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2006 Earnings Presentation
61 slides from Softbank's earnings presentation, Aug 10, 2005
Slide 1: Earnings Results for the First Quarter Ended June 30, 2005
Earnings Results for the First Quarter Ended June 30, 2005 (Q1/FY2006) August 10, 2005 SOFTBANK CORP.
Slide 2: Q1/FY06 Financial Highlights
Q1/FY06 Financial Highlights ¾To achieve a consolidated operating surplus after five years’ interval ¾Substantial growth in consolidated EBITDA ¾To recoup investments in the near future To increase enterprise value 2
Slide 3: Financials
= SoftBank Financials
Slide 4: Consolidated Quarterly Net Sales
Consolidated Quarterly Net Sales 300 (billions of yen) 275.2 258.6 258.0 21.4 e-Finance Seg. (*) 250 23.8 Others 69.2 58.5 200 e-Commerce Seg. 61.4 150 147.3 156.3 13.4 31.5 34.4 Internet Culture 14.4 26.8 Seg. 100 55.5 58.6 84.3 87.3 Fixed-line telecom 81.6 Seg. (JAPAN TELECOM & SOFTBANK IDC) 20.9
Slide 5: Consolidated Quarterly EBITDA
Consolidated Quarterly EBITDA FY03 FY04 FY05 FY06 (billions of yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 19.5 20 16.2 15.8 10 6.0 5.9 1.4 0.1 0 Q1 /FY06 ¥ 19.5 bil. -8.0 -7.0 -10 -14.5 -16.6 -20 -22.2 -26.2 -30 EBITDA：Operating Income (Loss) + Depreciation and Amortization 5
Slide 6: Consolidated Quarterly EBITDA (adjusted without e-Finance segment)
Consolidated Quarterly EBITDA (retroactively adjusted figures without e-Finance segment) FY03 FY04 FY05 FY06 (billions of yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 19.5 20 10 8.8 7.7 0.7 1.4 0 -1.6 -2.3 Q1 /FY06 ¥ 19.5 bil. -7.5 -7.8 -10 -13.8 -17.4 -20 -21.2 -25.3 -30 EBITDA：Operating Income (Los
Slide 7: Consolidated Quarterly Operating Income (Loss)
Consolidated Quarterly Operating Income (Loss) 10.0 Q1 /FY06 ¥(3.1) bil. (billions of yen) 5.0 FY03 FY04 FY05 FY06 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 0.0 -2.9 -5.0 -3.1 -3.8 -10.0 -6.6 -7.5 -8.8 -10.7 -11.0 Monthly Operating -15.0 -15.1 Income turned positive -20.0 in June 2005 : ¥0.5bil. -20.4
Slide 8: Consolidated Monthly Operating Income (Loss)
Consolidated Monthly Operating Income (Loss) 2.0 (billions of yen) 1.5 1.0 0.5 0.5 0.0 0.0 Monthly Operating -0.5 April May June Income turned positive -1.0 in June 2005 -1.5 -2.0 -2.5 -3.0 -3.5 -4.0 -3.7 -4.5 -5.0 8
Slide 9: Consolidated Quarterly Operating Income Excluding Otoku-Line
Consolidated Quarterly Operating Income (Loss) Excluding “Otoku-Line” FY03 FY04 FY05 FY06 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 (billions of yen) 20.0 19.1 15.0 12.9 9.9 10.0 5.0 0.0 -2.9 -5.0 -3.8 -6.6 Consolidated operating surplus -10.0 -10.7 -8.8 (excluding “Otoku-Line”) -15.0 -15.1 continues t
Slide 10: BB Business (ADSL) Quarterly Sales and Operating Income
BB Business (ADSL) Quarterly Sales and Operating Income (Loss) FY03 FY04 FY05 FY06 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 60 56.3 (billions of yen) 52.9 50.4 Sales 50 48.0 Operating Income 44.2 40 39.1 32.9 30 28.4 ADSL Quarterly 22.5 20 Operating Income 15.5 9.5 continues to increase 10 4.7 6.4 3.6
Slide 11: BB Business (ADSL) Quarterly EBITDA
BB Business (ADSL) Quarterly EBITDA FY03 FY04 FY05 FY06 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 9.9 (billions of yen) 10 8.3 1.9 0 ADSL EBITDA -6.3 -10 -8.0 increased -9.8 -12.0 -13.4 -14.3 -13.4 -20 -22.1 -23.2 ※ Includes Yahoo!Japan’s ISP revenue -30 -30.0 11
Slide 12: Bond Redemption Schedule
Bond Redemption Schedule (non-consolidated basis, SB and CB) (billions of yen) 2200.0 44.5 (Investment in Partnerships) 2000.0 57.5 (Private Equity Holdings) 1800.0 Highly liquid source oｆ 1600.0 redemption 1400.0 Listed ¥ 2.0 trillion shares* 1200.0 1678.1 Coverage Ratio 1000.0 x 5.8 800.0 Outstand
Slide 13: Issuance of Fukuoka Softbank Hawks Bond
Issuance of “Fukuoka Softbank Hawks Bond” ＜SOFTBANK Straight Bond Series 20 ＞ Issued Amount ¥12.5bil Term 3 years Interest Rate 1.41％ The first issuance in retail markets in four years. Broadens our investor base. 13
Slide 14: Business Highlights
Business Highlights 1. Infrastructure Business －Steady profit growth in the ADSL business －Enhancement of Otoku-line marketing structure －Activation of direct marketing for large enterprises 2. Business Structure Enhancement for Next Leap －Strengthening the telecommunication business structure －Evol
Slide 15: Yahoo! BB business
Yahoo! BB business 15
Slide 16: ADSL Business: No.1 in four areas
ADSL Business : No.1 in four areas ADSL No.1 IP telephony No.1 ADSL 4.93 mil. lines 4.67 mil. lines （as of July 2005） （as of July 2005） ADSL ISP No.1 Wireless LAN No.1 5.35mil. lines 1.16 mil. lines （as of July 2005） （as of July 2005） 16
Slide 17: BB Business (ADSL) Quarterly Sales and Operating Income
BB Business (ADSL) Quarterly Sales and Operating Income (Loss) FY03 FY04 FY05 FY06 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 60 56.3 (billions of yen) Sale s 52.9 50.4 50 48.0 Ope ratin g 44.2 In c o me 39.1 40 32.9 30 28.4 ADSL Quarterly 22.5 20 Operating Income 15.5 9.5 continues to increase 10 4.7 6
Slide 18: BB Business (ADSL) Quarterly EBITDA
BB Business (ADSL) Quarterly EBITDA FY03 FY04 FY05 FY06 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 9.9 (billions of yen) 10 8.3 1.9 0 ADSL EBITDA -6.3 -10 -8.0 increased -9.8 -12.0 -13.4 -14.3 -13.4 -20 -22.1 -23.2 ※ Includes Yahoo!Japan’s ISP revenue -30 -30.0 18
Slide 19: Yahoo! BB hikari
Yahoo! BB hikari Increase in No. of C/O ready for service 1600 Giga bit service IP telephony 1550 1500 Broadband Terrestrial TV Broadcast & VOD Broadcast 1450 1400 1350 1300 Expanding steadily 1250 with various services 1200 now available Dec'04 Mar'05 Jun'05 19
Slide 20: Otoku-line Business
Otoku-line Business = SoftBank 20
Slide 21: Otoku-line: Total number of lines connected
Otoku-line: Total number of lines connected （number of lines in increments of ten thousand ） 50 Lines connected 40 ：540,000 lines 30 20 10 0 Dec '04 Mar '05 Jun '05 21
Slide 22: Enhancement of Otoku-line marketing structure
Enhancement of Otoku-line marketing structure Business Partnership with “INVOICE INC.” Establishment of JAPAN TELECOM INVOICE Co., Ltd. 85.1% 14.9% ¾ Aggregate sales agents of “Otoku-line” service under JAPAN TELECOM INVOICE ¾ Outsourcing of marketing “Otoku-line” service ¾ Partial collection of “Ot
Slide 23: Otoku-line: Sales Structure by Customer Segment
Otoku-line: Sales Structure by Customer Segment Direct marketing by JAPAN Large TELECOM Enterprises Small/medium Marketing by sales agents, mainly JAPAN TELECOM size INVOICE Co., Ltd. (Including Enterprises consumers acquired via sales agencies.) Marketing by Consumers JAPAN TELECOM 23
Slide 24: Otoku-line: Activation of Direct Marketing for Large Enterprises
Otoku-line: Activation of Direct Marketing for Large Enterprises Development of direct marketing structure for large enterprises Newly-built service center for corporate customers → structural reform (from sales to service) Targets for Direct Marketing Large 9Sales by account managers Enterprises 9A
Slide 25: Otoku-line Central Offices in Service
Otoku-line Central Offices in Service （no. of central offices） （％） 2500 no. of central 100 offices coverage ratio 90 2000 80 70 No. of C/O：2,316 Coverage Ratio*：80％ 1500 60 50 1000 40 30 500 20 10 *coverage ratio in total subscribers lines 0 0 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 25
Slide 26: Strengthening the Telecommunication Business Structure
Strengthening the Telecommunication Business Structure 26
Slide 27: Telecommunication Business Reorganization by Business
Telecommunication Business ～ Reorganization by Business Broadband Fixed-line Data Center business Telecommunication business business Former JAPAN TELECOM Former JAPAN IDC INC. TELECOM IDC INC. （International （Data Center Telecommunication business） business） Consumers Corporate Customers Reorganiza
Slide 28: Unified organization management - blending of personnel
Unified organization management～ blending of personnel Integration of R&D, Corporate Sales, Consumer Sales brings more efficiency Softbank BB + JAPAN TELECOM + former JAPAN TELECOM IDC R&D Consumer Corporate Sales Sales Former JAPAN TELECOM IDC 28
Slide 29: Solid Customer Base
Solid Customer Base (Unit: million) Group total Corporate Voice Service － 1.50 1.50 Corporate Date Service 0.01 0.08 0.09 No. of Lines Consumer Voice Service 4.67 3.48 8.15 Consumer Date Service 4.93 1.23 6.16 Total 4.94 5.87(note) 10.81 Note: after elimination of 420,000 lines that overlapped betwe
Slide 30: JAPAN TELECOM: Focusing on Business Solutions for Corporate customers
JAPAN TELECOM : Focusing on Business Solutions for Corporate customers Transforming from a “Network Carrier” into a “Networking Partner” Japan Telecom is dedicated to proposing new life styles, work styles and business models for the network society of the 21st century and to making them a reality t
Slide 31: What JAPAN TELECOM is Aiming for
What JAPAN TELECOM is Aiming for: Japan Telecom provides solutions that add values to the world by connecting companies, people and their communities using the latest IT technology and networks. Affiliated Affiliated Company Company Community Community A A Community Community C C Supplier Supplier C
Slide 32: JAPAN TELECOM's Solution Portfolios
JAPAN TELECOM’s Solution Portfolios: Major Solution Items • Workstyle Solution • Conferencing Platform Affiliated Affiliated Company Company • Network Consulting Community Community A A Community Community C C • Customer Contact Center • Security Networking • • SecuritySupplier Computing Supplier Co
Slide 33: JAPAN TELECOM: Business Solutions for Corporate Customers
JAPAN TELECOM: Business Solutions for Corporate Customers Transforming from “providing Infrastructure” to “Proposing Business” Solutions for Financing Company Xdrive Storage SoftGrid Platform ASP Commox Solutions for Medical Institutions merchandise Sales Provision of services such as data Provision
Slide 34: Solution Case I
Solution Case I Long Term Comprehensive Partnership Agreement Fixed Lines：Data Service, Voice Telephony Service Equipment: Procurement, CPE service Consulting: Network Consultation Service Business Support: Support for intra-network related matters 34
Slide 35: Solution Case II
Solution Case II July 2005～ JT started a test trial delivering advertisement and allowing for content download to a commuter train via a wireless LAN for the first time in Japan.* →Feasibility test using a new advertising media *Field test continues at Keihin Tohoku Line of the JR East. The test sta
Slide 36: Evolution of the Business Model
Evolution of the Business Model 36
Slide 37: For the New Business Stage
Evolution of the Business Stage Model I Business start-up －customer base expansion Vertical －speedy development of service lineup integration II Enhancing profits －improving profitability by providing multiple services －sustain a low churn rate by providing Service bundled services diversification I
Slide 38: Stage I - Vertically Integrated Business Model
Stage I～Vertically Integrated Business Model Self-contained/vertically integrated model Full-service model provides for connection lines, ISP and content among the Softbank group backbone connection equipment portal content 38
Slide 39: Stage II - Service Diversification Business Model
Stage II ～“Service Diversification Business Model” ¾ Improving profitability by providing multiple services ¾ Sustainment of lower churn rate by providing bundled services New Service Online Game Wireless TV Package New Service BB SOFT Expansion of services BB SECURITY New Service VOD … and more! BB
Slide 40: Stage III - Platform Model 1
Stage III～Platform Model ① Cars = various content and services Road = Infrastructure Toll gate = Billing platform offers Basic platforms such as infrastructure and billing platform to be served by the Softbank Group Expansion of business opportunities by providing content & services inside and outsi
Slide 41: Stage III - Platform Model 2
Stage III～ Platform Model② ¾Provide various portals and content developed both by our Group and by numerous industry leading 3rd parties ¾Infrastructures and Platforms provided by SOFTBANK Content Various Content Various Services provided by 3rd Parties Portals Various Portals Platforms Billing/Auth
Slide 42: Stage III - Settlement Platform
Stage III～Settlement Platform ―sharing the settlement function among the Group ―cost reduction ―customer satisfaction 4.93 mil.* 5.42 mil.* 3.48 mil.* subcontracting Settlement Platform Contract integration System integration Business integration Handling cost reduction Capex. reduction Cutback, eff
Slide 43: Stage III - One Stop Service
Stage III～One Stop Service from infrastructure to content ― marketing of packaged / bundled services ― total customer service Invoice Sales Support Customers Improve convenience and satisfy customers → lowers churn rate→ increases lifetime value 43
Slide 44: Focus Areas
Focus Areas 44
Slide 45: IP Broadcast Services
IP Broadcast Services Promising multi channel broadcast & Video on Demand services Approx. 60% interested in IP Broadcast service* Intention to 57.3％ subscribe IP broadcast service 0% 50% 100% *Ratio for current nonuser of IP Broadcast Services 70% interested in VOD service* 68.7％ Content interested
Slide 46: Activation of BBTV Business
Activation of BBTV Business 7/1~ BBTV service available all over Japan Award-winning for “Good Design” ¾USERS available for BBTV Services ADSL: existing users & incoming users FTTH and fiber-optic service to housing complex ¾INTERFACE Improved for easy operation for all users Basic Channel Pack Basi
Slide 47: BBTV - Comparison with Competitors
BBTV ～Comparison with Competitors～ Broadcast & VOD available with ADSL and FTTH Competitive advantages in the number of VOD titles, service menus and prices KDDI OCN Sky SERVICES Hikari Theater PerfectTV！ Plus TV Kinds of Lines FTTH・ADSL FTTH FTTH ― No. of Basic 32ch Basic Pack All Channels to be in
Slide 48: IMX, Inc.
IMX, Inc. －First web-broadcast of Korean TV programs in Japan －”brokore”: Korean entertainment portal site －60% share in Korean TV programs broadcast in Japan SOFTBANK Group Ownership ratio: 26％ Inv. amount: ¥1.07 bill. (C) BOF Business Synergies - Foothold in Asian markets - Future promising conten
Slide 49: Approach to Mobile Business
Approach to Mobile Business 49
Slide 50: Approach to Entering the Mobile Business
Approach to Entering the Mobile Business 05’ Sept Nov. Dec. Accepting Assignment of Accepting applications for Comparative new mobile applications for MIC comparative judging carriers commercial license judging Comparative 1.7GHz Commercial judging application license application 事業法登録書 特定基地局 開設計画 事
Slide 51: Images of Mobile Business Development
Approach to Entering the Mobile Business ～Images of Mobile Business Development～ Launching Data Launching Voice Service Service Service Tokyo Metropolitan Areas Nationwide Area Aim to expand customer through leveraging of existing customer base. 51
Slide 52: Utilization of existing IP-based Backbone
Approach to Entering the Mobile Business ～utilization of existing IP-based Backbone Backbone Network with 80Gbps capacity Hokkaido Tohoku Hokuriku Shinietsu Chugoku Kyusyu Shikoku Kansai Tokai Kanto Okinawa 52
Slide 53: Handover experiment
Approach to Entering the Mobile Business ~Handover experiment~ <W-CDMA Networks> ＜Yahoo! BB ADSL/wireless-LAN Networks＞ VoIP Voice: Circuit switching All IP environment Video: IP-based Packet Switching Video IP Automatically Switching OUTSIDE At home/wireless-LAN area Succeeded in the Handover exper
Slide 54: Approach for the Mobile Contents Business 1
Approach for the Mobile Contents Business① 8/1~ “K-chan! HAWKS” started commercial service First trial in Japan of Live Baseball Services using Mobile devices* Monthly charges: ¥500 ¾6 images per second delivered in packet telecommunications ¾Online Archive & Live Broadcast ¾Fast-Forward/Rewind avai
Slide 55: Approach for the Mobile Contents Business 2
Approach for the Mobile Contents Business② Late August～ “HAWKS IC Tickets” starts in commercial Advantages for Users ¾Ticket reservations available anytime and anywhere 24 hours a day ¾Online payment ¾Easy confirmation of ticket availability Top page Ticket reservation pages and booking Advantages f
Slide 56: Approach for Mobile contents 3
Approach for Mobile contents ③ SOFTBANK Media & Marketing Corp. Deliver exclusive game images of 4 major football leagues in Europe to mobile handsets. BARCLAYS LIGA Serie A league BUNDESLIGA ENGLISH ESPANOLA （Italy） PREMIAR LEAGUE （Deutsch） (Spain） （England） You can enjoy watching sports “killer co
Slide 57: Approach for Mobile contents 4: GungHo and G-mode
Approach for Mobile contents④ GungHo Online Entertainment, Inc. Top shareholder, after capital increase, of the No.1 mobile game company “G-mode ＜Tie-up with G-mode＞ ¾Operation of Portal business for online games (Established a joint venture company） ¾Development of new games ¾Supplying mobile conte
Slide 58: SOFTBANK's Aim
music broadcast game SOFTBANK’s Aim sports publishing Platform/portal Infrastructure commerce Finace Business 58
Slide 59: Lifestyle Company in 21st century
Lifestyle Company in 21st century Amusement：Video on demand Online games Housework Business ：TV conference Mobile office Hotel/Travel/Airport School Healthcare：Home healthcare In transit Broadband to all living people everywhere 59
Slide 60: SOFTBANK's Fundamental Management Policy
SOFTBANK’s Fundamental Management Policy Endeavoring to benefit society and the economy by fostering the sharing of wisdom and knowledge gained through the IT revolution. 60
Slide 61: 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