Softbank Group Corp. · TSE:9984
Softbank — H1 FY2012 Earnings Presentation
128 slides from Softbank's earnings presentation, Oct 31, 2012
Slide 1: Earnings Results for the Six-month Period Ended September 30, 2012
Earnings Results for the Six-month Period Ended September 30, 2012 (April to September 2012) October 31, 2012 SOFTBANK CORP.
Slide 2: Consolidated Earnings Results Highlights
Consolidated Earnings Results Highlights 1 EBIT (operating income) exceeds JPY 400bn (H1) 2 Mobile business remains strong iPhone 5 sales keep momentum 2
Slide 3: Consolidated Earnings Results
Consolidated Earnings Results 3
Slide 4: Record high for 3 consecutive periods
(JPY bn) Net Sales 1,586.1 Record high for 1,535.6 3 consecutive periods 3% YoY increase 3 Telecommunications businesses (Mobile Communications, Broadband Infrastructure, Fixed-line Telecommunications) Internet Culture 0 Others 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1
Slide 5: Record high for 9 consecutive periods
EBITDA 591.9 Record high for (JPY bn) 533.1 9 consecutive periods 11% YoY increase 3 Telecommunications businesses (Mobile Communications, Broadband Infrastructure, Fixed-line Telecommunications) Internet Culture 0 Others 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 5
Slide 6: Closing in on DOCOMO
(JPY bn) EBITDA Closing in on DOCOMO 806.6 NTT DOCOMO 591.9 440.8 KDDI 0 2005 ’06 ’07 ’08 ’09 ’10 ’11 ’12 H1 (FY) H1 H1 H1 H1 H1 H1 H1 6 *Created by SOFTBANK CORP. based on respective companies‘ publicly available information.
Slide 7: Record high for 7 consecutive periods
EBIT (Operating Income) 402.7 Record high for (JPY bn) 373.2 7 consecutive periods 8% YoY increase 3 Telecommunications businesses (Mobile Communications, Broadband Infrastructure, Fixed-line Telecommunications) 0 Internet Culture Others 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 H
Slide 8: Closing in on DOCOMO
(JPY bn) EBIT (Operating Income) Closing in on DOCOMO 471.1 NTT DOCOMO 402.7 231.2 KDDI 0 2005 ’06 ’07 ’08 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 H1 H1 H1 8 *Created by SOFTBANK CORP. based on respective companies‘ publicly available information.
Slide 9: Only winner
EBIT (Operating Income) (YoY) +8% (FY12/H1) Only winner 0 SoftBank (7%) NTT DOCOMO (13%) 9 KDDI *Created by SOFTBANK CORP. based on respective companies‘ publicly available information.
Slide 10: No.1 in Japan
30% EBIT Margin (Operating Margin) 25% 25% 20% 21% NTT DOCOMO 15% No.1 10% 13% KDDI in Japan 5% ( QUICK ) 2006 ’07 ’08 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 H1 H1 10 *Created by SOFTBANK CORP. based on respective companies‘ publicly available information.
Slide 11: No.1 in the US & Japan
30% EBIT Margin (Operating Margin) 25% 25% 20% 20% AT&T 19% Verizon 15% No.1 in 10% the US & Japan 5% ( QUICK ) 2006 ’07 ’08 ’09 ’10 ’11 ’12 H1 H1 H1 H1 H1 H1 H1 (FY) 11 *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. *SoftBank: Apr. to Sept. AT&T and Verizo
Slide 12: Record high for 7 consecutive periods
Ordinary Income 363.0 Record high for 7 consecutive (JPY bn) 314.4 periods 15% YoY increase 0 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 12
Slide 13: Remains stable
Net Income (JPY bn) 217.2 17.1 Remains stable Impact of Renren Inc. IPO etc. 44.7 169.4 Impact of transferring Yahoo! Inc. shares 0 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 13
Slide 14: Summary of Consolidated Earnings Results
Summary of Consolidated Earnings Results (JPY bn) FY11/H1 FY12/H1 Change YoY (Apr. - Sept. 2011) (Apr. - Sept. 2012) Net Sales 1,535.6 1,586.1 50.4 103% EBITDA 533.1 591.9 58.8 111% EBIT 373.2 402.7 29.5 108% (Operating income) Ordinary Income 314.4 363.0 48.5 115% Net Income 217.2 169.4 (47.8) 78%
Slide 15: Record high for 4 consecutive periods
Operating Cash Flow 473.3 (JPY bn) Record high for 395.0 4 consecutive 315.3 349.3 periods 20% YoY increase 177.2 0 2008 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 15
Slide 16: Cash Flow
Cash Flow (JPY bn) FY11/H1 FY12/H1 (Apr. - Sept. 2011) (Apr. - Sept. 2012) Operating cash flow 395.0 473.3 Free cash flow 235.2 147.3 1) CAPEX outlays (215.8) (272.8) 2) Acquisition of ASKUL Corporation shares - (33.0) (by Yahoo Japan Corporation) 3) Sale of Yahoo! Inc. shares 57.1 - 16
Slide 17: Steady reduction
(JPY t) Net Interest-bearing Debt 2.1 1.8 Steady 1.5 reduction 0.7 0.6 0.2 Payment related to acquisition of preferred stock, etc. issued to Vodafone Group 0.4 0 ’08 ’09 ’10 ’11 ’12 Sept. 30, *Lease obligations are excluded. 17
Slide 18: Substantial reduction
Interest Expense (JPY bn) Substantial 57.0 55.3 54.7 40.7 reduction 17.8 2008 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 18
Slide 19: Significant improvement
25% Equity Ratio 20% 20% Significant 15% improvement 10% 9% 5% 0% 2008 ’09 ’10 ’11 ’12 Sept. 30, 19
Slide 20: Dividend policy remains unchanged
(JPY) Dividends per Share Dividend policy remains 40 40 unchanged Year-end dividend 20 Interim dividend 20 5 5 2.5 (FY) *The interim dividend amount and payout date will be resolved at 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 a separate future Board of Directors meeting. *Year-end dividend is subjec
Slide 21: Business in Japan
Business in Japan 21
Slide 22: SoftBank's iPhone Misunderstandings
SoftBank’s iPhone 5 2 Misunderstandings 22
Slide 23: Battery runs out faster on SoftBank LTE?
iPhone standby time on au’s LTE is approximately 260 hours, for SoftBank it’s 160 hours. K-tai Watch (Sept. 26, 2012) Misunderstanding 1 Battery runs out faster on SoftBank LTE? 23
Slide 24: Longer than au
Battery Level (%) (iPhone5 LTE connection) After optimization of 100 connection in LTE standby status (since Oct. 19) 75 SoftBank Longer than au au 50 25 0 elapsed time 0 50 100 150 200 250 (hours) 24 * Measured in LTE network (Tokyo) under the same level of the electric field intensity for the both
Slide 25: SoftBank's LTE only omni cell base stations?
SoftBank’s area covered by omni cells is small, so even with the same amount of base stations reception is bad. Interference occurs in overlapping areas and the speed drops. Weekly ASCII PLUS (Oct. 9, 2012) Misunderstanding 2 SoftBank’s LTE only omni cell base stations? 25
Slide 26: 97% of LTE base stations adopt sector type
Sector type Omni cell type 97% of LTE base stations adopt sector type (3% is omni cell type) 26 * Calculated by SOFTBANK CORP. based on active LTE base stations in Japan.
Slide 27: Clarify all misunderstandings
SoftBank’s iPhone 5 Clarify all misunderstandings 27
Slide 28: Outperformed au
Share of iPhone 5 Sales (weekly) 60% 59% SoftBank 55% iPhone 5 Outperformed au 50% 45% au 40% 41% 35% Oct. week 1 week 2 week 3 week 4 (Source) Survey on number of handset sold at major electronics retail stores (10/1-7) (10/8-14) (10/15-21) (10/22-27) executed by external research company. 28
Slide 29: Revenue = Subscribers × ARPU
Revenue Subscribers × ARPU 29
Slide 30: Overwhelmingly No.1
Net Subscriber Additions (FY12/H1) 1,510k Overwhelmingly 1,000k No.1 660k NTT DOCOMO au SoftBank 30 *Created by SOFTBANK CORP. based on respective companies‘ publicly available information.
Slide 31: Increasing trend
(JPY) 5,900 6,000 5,890 ARPU Increasing 5,500 5,000 NTT DOCOMO trend au *1 4,500 4,480 4,180 4,370 *2 4,240 4,000 *Excluding communication modules. Created by SOFTBANK CORP. based on respective companies’ publicly available information. *1 NTT DOCOMO FY12/Q2: Voice ARPU+Packet ARPU 3,500 excluding S
Slide 32: Steady growth 8% increase
Mobile Telecom Service Revenue (JPY bn) 769.2 Steady growth 711.8 625.3 517.1 554.1 8% increase 2008 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 32
Slide 33: 6x Since acquisition
Mobile EBIT (Operating Income) 6x (JPY bn) 266.3 250.0 Since acquisition 43.5 2002 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 33
Slide 34: Revenue = Subscribers × ARPU
Revenue Subscribers × ARPU 34
Slide 35: SoftBank is the Winner
SoftBank is the Winner Net Additions ARPU EBIT (Operating Income) 5,900 5,890 NTT DOCOMO 1,510k 6,000 471.1 5,500 NTT DOCOMO 402.7 1,000k au 5,000 KDDI 660k 4,480 *1 4,500 4,370 231.2 4,180 *2 4,240 4,000 SoftBank SoftBank au 0 NTT DOCOMO SoftBank 3,500 (FY) 2005 2006 2007 2008 2009 2010 2011 2012 2
Slide 36: By the Way...
By the Way... 36
Slide 37: Record high
WILLCOM Subscribers 5.03mil Record high 3.77mil May 2009 Dec. 2010 Sept. 2012 *PHS+3G 37 *Refer to note on slide 107.
Slide 38: High profitability
Fixed-line EBIT (Operating Income) (JPY bn) 46.9 54.1 High profitability 0 (48.6) 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 (FY) *Broadband Infrastructure + Fixed-line Telecommunications H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 38
Slide 39: Global No.1
Fixed-line EBIT (Operating Income) (FY12/H1) SoftBank 15.4% British 6.2% Telecom (12/Q1) AT&T 2.3% BCE -4.7% Global NTT -15.3% (12/Q1) No.1 *SoftBank: including Broadband Infrastructure segment. AT&T and BCE: Wireline segment, NTT: Regional communications business *Created by SOFTBANK CORP. based on
Slide 40: No.1 in profitability
Fixed-line EBIT (Operating) Margin 20% No.1 in profitability 7% 3% *SoftBank: Broadband Infrastructure + Fixed-line Telecommunications KDDI: Fixed-line Business NTT: Regional communications business NTT KDDI SoftBank *Created by SOFTBANK CORP. based on respective (FY11/H1) (FY11/H1) (FY12/H1) compan
Slide 41: Record high for 17 consecutive periods
Yahoo Japan EBIT (Operating Income) 85.4 (JPY bn) Record high for 17 consecutive periods 0 1996 ’98 ’00 ’02 ’04 ’06 ’08 ’10 ’12 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 41
Slide 42: Will you postpone the network enhancement because of the investment in Sprint?
Will you postpone the network enhancement because of the investment in Sprint? 42
Slide 43: Don't worry!
Don’t worry! 43
Slide 44: Progress of Network Improvement
Progress of Network Improvement 44
Slide 45: No. of Base Stations for Platinum Band
No. of Base Stations for Platinum Band Submitted plan 27k 16k Mar. 2013 Mar. 2014 45
Slide 46: Schedule accelerated
No. of Base Stations for Platinum Band Schedule To be developed Submitted plan accelerated 27k 16k exceeds 10k 46 Mar. 2012 Mar. 2013 Mar. 2014
Slide 47: Consolidated CAPEX (original plan)
Consolidated CAPEX (original plan) (JPY bn) 612.4 516.3 450.0 420.5 (FY) *FY2012 excludes Fukuoka Yahoo! JAPAN Dome 2010 ’11 ’12 ’13 (plan) related CAPEX (JPY 87.6bn) 47
Slide 48: Progress is ahead of schedule
Consolidated CAPEX (new plan) (JPY bn) 700.0 Progress is 550.0 ahead of 420.5 516.3 schedule (FY) *FY2012 excludes Fukuoka Yahoo! JAPAN Dome 2010 ’11 ’12 ’13 (plan) related CAPEX (JPY 87.6bn) 48
Slide 49: Progress on LTE
Progress on LTE 49
Slide 50: SoftBank's LTE has broad coverage?
SoftBank’s LTE has broad coverage? 50
Slide 51: LTE Available in all Tokyo Loop Line Stations
Ikebukuro Otsuka Sugamo Komagome Tabata Nishi-Nippori Nippori Uguisudani Ueno Okachimachi Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Mejiro Akihabara Y Y LTE Available in all Y Y Takadanobaba Tokyo Loop Line (Yamanote-line) Stations Kanda SoftBank research Oct. 31, 2012 Y Y Y Y Shin-Okubo Tokyo Y Y Y Y
Slide 52: List of Top 1,000 Japan Railway Companies' Stations by Commuter Numbers
List of Top 1,000 Japan Railway Companies’ Stations by Commuter Numbers 52 Japan Railway companies disclosed information.
Slide 53: SoftBank Broad coverage
Stations With iPhone 5 LTE (Top 1,000 Japan Railway Companies’ stations by commuter numbers) au SoftBank 542 stations 807 stations Broad coverage 53 SOFTBANK CORP. research (conducted from Oct. 25 to Oct. 30, 2012), research method: physically measured on the middle of the platform of each station.
Slide 54: SoftBank is fast
Stations With iPhone 5 LTE (Top 1,000 Japan Railway Companies’ stations by commuter numbers) 674 wins SoftBank is fast *Excluding 108 draws. 218 wins *SOFTBANK CORP. research (conducted from Oct. 25 to Oct. 30, 2012) physically measured on the middle of the platform of each station. au SoftBank Comp
Slide 55: SoftBank is fast
iPhone 5 LTE Speed Comparison (downlink) (Top 1,000 Japan Railway Companies’ stations by commuter numbers) 5.8Mbps SoftBank is fast 3.4Mbps *SOFTBANK CORP. research (conducted from Oct. 25 to Oct. 30, 2012) physically measured on the middle of the platform of each station. Comparison based on averag
Slide 56: Further enhancement of LTE
Frequency Available for iPhone 5 LTE Further enhancement of LTE 56
Slide 57: iPhone 5 LTE
SoftBank 2.1 GHz j iPhone 5 LTE pir 57
Slide 58: Improved LTE Connection
iPhone 5 LTE Improved LTE Connection 58
Slide 59: Forecast for Consolidated Results
Forecast for Consolidated Results 59
Slide 60: FY2012 Target: Exceed JPY 700bn
FY2012 Target Consolidated EBIT (Operating Income) (Japan) Exceed JPY 700bn + continuing revenue & profit increases 60
Slide 61: JPY 1t (Japan)
1t Consolidated EBIT (JPY) (Operating Income) FY2016 JPY 1t (Japan) 675.2bn 0 2004 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 (FY) (target) 61
Slide 62: Further Growth
Further Growth 62
Slide 63: SoftBank's Market
SoftBank’s Market SoftBank “YaHoo! JAPAN 63
Slide 64: SoftBank's Market: Japan to Asia
SoftBank’s Market Japan to Asia 64
Slide 65: Overwhelming customer base
Number of Users of the SoftBank Group 1.5bn Overwhelming customer base 0.6bn *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. *InMobi: number of reaches *This number may include accounts for customers 2005 ’06 ’07 ’08 ’09 ’10 ’11 (FY) using multiple services.
Slide 66: SoftBank's Market: Further growth
SoftBank’s Market Further growth 66
Slide 67: SoftBank / Sprint Strategic Partnership
Oct. 15, 2012 SoftBank / Sprint Strategic Partnership 67
Slide 68: Today, I will answer questions from all over the world.
Today, I will answer questions from all over the world. 68
Slide 69: Why the US?
Question 1 Why the US? 69
Slide 70: Aim for sustainable growth in a fast growing mobile market
Answer Aim for sustainable growth in a country with a fast growing mobile market. 70
Slide 71: Population increasing
Population Outlook 400mil 310mil Population increasing Source : United Nations “World Population Prospects, the 2010 Revision” Birth rate MEDIUM estimates used. (CY) 71 2011 ’20 ’30 ’40 ’50
Slide 72: Economic growth
Nominal GDP USD 38.3t Economic growth USD 15.1t Source: (2011) Ministry of Foreign Affairs of Japan, Economic Affairs Bureau, International Economy Division (from 2020) Goldman Sachs ‘Global Economics Paper No: 153‘ 2011 ’20 ’30 ’40 ’50 (CY) Mar. 28, 2007 72
Slide 73: Japan & the US are global leaders in LTE
LTE Subscribers (World) Japan & the US Japan are global leaders 13% in LTE US 56% Source: Wireless Intelligence (as of Mar. 31, 2012) Subscriber number of FDD-LTE, TD-LTE and AXGP. 73
Slide 74: Japan & the US are leaders in mobile data
Mobile Data Traffic Japan & the US are leaders in Japan mobile data 16% US 22% Source: Statistic information of CISCO VNI Mobile, 2011 Created by SOFTBANK CORP. based on the world’s mobile traffic data ratio by region in 2011. 74
Slide 75: Country Risk?
Country Risk? 75
Slide 76: Why Sprint?
Question 2 Why Sprint? 76
Slide 77: High Growth Potential
Answer High Growth Potential 77
Slide 78: 3 Areas of Anticipated Growth Potential
3 Areas of Anticipated Growth Potential 1. Revenue increase 2. Improves financial position & CAPEX for growth 3. Management efficiency 78
Slide 79: 3 Areas of Anticipated Growth Potential
3 Areas of Anticipated Growth Potential 1. Revenue increase 2. Improves financial position & CAPEX for growth 3. Management efficiency 79
Slide 80: Revenue = Subscribers × ARPU
Revenue Subscribers × ARPU 80
Slide 81: Total Subscribers at End of Period
(mil) Total Subscribers at Subscribers 60 End of Period 55.96 50 40 30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY2010 FY2011 FY2012 Source: Sprint’s publicly available information 81
Slide 82: Steady growth
(mil) Total Subscribers at Subscribers 60 End of Period 55.96 Nextel platform (to be shut down) 52.86 Steady 50 growth 40 Sprint platform 30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY2010 FY2011 FY2012 Source: Sprint’s publicly available information 82
Slide 83: In-line with market
Period Subscribers Changes Subscribers (period ended Sept. YoY) In-line with market ( ( 5.7% Sprint platform 5.1% 4.8% + Nextel platform *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. *Verizon:Retail Connections AT&T Verizon Sprint AT&T: Total Cellular/PCS
Slide 84: Period Subscribers Changes
Period Subscribers Changes Subscribers (period ended Sept. YoY) 14.0% No.1 (Sprint platform only) 5.7% 5.1% *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. *Verizon:Retail Connections Sprint AT&T: Total Cellular/PCS Customers 84 AT&T Verizon Platform Only Sp
Slide 85: Steady growth
65 (USD) Total Retail Postpaid ARPU ARPU USD 61.18 Steady growth 60 55 ( QUICK ) 50 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 (FY) 2010 2011 2012 Source: Sprint’s publicly available information 85
Slide 86: Total Retail Postpaid ARPU Change
Total Retail Postpaid ARPU Change (period ended Sept. YoY) ARPU 6.1% No.1 2.4% 2.6% *Created by SOFTBANK CORP. based on respective companies’ publicly available information. *Verizon: Calculated by SOFTBANK CORP. based on respective companies’s publicly AT&T Verizon Sprint available information AT&T
Slide 87: Steady growth
Sprint Platform (USD) Wireless Service Revenue Sales 7bn 6.9bn Steady growth 6bn 5.3bn 5bn Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Source: Sprint’s publicly available information 2010 2011 2012 87
Slide 88: In-line with market
Wireless Service Revenue Growth (YTD YoY) Sales In-line with 7.5% 7.1% market 4.4% ( Sprint platform + Nextel platform ( *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. *Verizon: Verizon Wireless Service Revenue AT&T Verizon Sprint AT&T: Wireless Segment Ser
Slide 89: Wireless Service Revenue Change
Wireless Service Revenue Change (YTD YoY) Sales 15.6% No.1 (Sprint platform only) 7.5% 4.4% *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. *Verizon: Verizon Wireless Service Revenue AT&T Verizon Sprint AT&T: Wireless Segment Service Revenue Platform Only Sp
Slide 90: Consolidated No.1
Consolidated Net Operating Revenues Change (YTD YoY) Sales 5.5% Consolidated No.1 4.1% 0.7% *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. AT&T Verizon Sprint 90
Slide 91: 3 Areas of Anticipated Growth Potential
3 Areas of Anticipated Growth Potential 1. Revenue increase 2. Improves financial position & CAPEX for growth 3. Management efficiency 91
Slide 92: Significant reduction
Net Debt JPY 1.2t (USD 15bn) Investment from SoftBank JPY 0.6t (USD 8bn) JPY 0.6t (USD 7bn) Significant reduction Before After *Pro forma Capital Increase Capital Increase *USD converted at USD= JPY 80 Source: Sprint’s publicly available information 92 (as of Sept. 30, 2012)
Slide 93: Tremendous improvement
Net Debt/EBITDA Multiple 3.13x 1.46x Tremendous improvement Before After *Pro forma *Created by SOFTBANK CORP. based on Sprint’s publicly available Capital Increase Capital Increase information. 93 (as of Sept. 30, 2012)
Slide 94: CAPEX for further growth
CAPEX (USD bn) 7.1 6.5 CAPEX for further growth 3.0 2.9 1.9 1.6 2006 ’07 ’08 ’09 ’10 ’11 (FY) Source: Sprint’s publicly available information 94
Slide 95: 3 Areas of Anticipated Growth Potential
3 Areas of Anticipated Growth Potential 1. Revenue increase 2. Improves financial position & CAPEX for growth 3. Management efficiency 95
Slide 96: No.1 in both Japan & the US
Mobile: EBITDA Margin 50% 50%SoftBank 48% Verizon 44% NTT DOCOMO 42% AT&T 40% 30% No.1 in both 27% Japan & the US 20% 16% Sprint 10% *Created by SOFTBANK CORP. based on respective companies’ publicly available information for Japanese companies, and Bloomberg information for US companies. *Fiscal ye
Slide 97: Toward turnaround
Mobile: EBITDA Margin 50% 50% 50% 38% 40% 40% 36% Toward turnaround 30% 30% 27% 20% 20% 10% 10% 16% 2002 ’04 ’06 ’08 ’10 ’12 2006 ’07 ’08 ’09 ’10 ’11 ’12 H1 Source: Sprint’s publicly available information YTD 97 *Mobile EBITDA Margin = Mobile EBITDA / Mobile Service Revenue
Slide 98: Sprint has tremendous loss?
Sprint Consolidated Results (July to Sept. 2012) Sprint has USD -231mil USD -767mil tremendous loss? Operating Loss Net Loss 98 (Source) Nikkei (Oct. 26, 2012) Source: Sprint’s publicly available information
Slide 99: Accelerated depreciation mainly due to shut down of Nextel platform
Sprint Consolidated Results (July to Sept. 2012) Accelerated depreciation USD -231mil USD -767mil mainly due to shut down of Nextel platform Impact of accelerated depreciation (397 million USD) Operating Loss Net Loss 99 Source: Sprint’s publicly available information
Slide 100: Profitable
Sprint Consolidated Results (July to Sept. 2012) USD 166mil Profitable USD -370mil (Before accelerated depreciation) Operating Income Net Loss *Calculated by SOFTBANK CORP. based Sprint’s publicly available information 100
Slide 101: Phases of the Sprint Turnaround
Phases of the Sprint Turnaround I. Recovery II. Investment III. Margin Expansion •Improve the brand •Build world-class network •Expect strong margin •Reverse subscriber platform improvement from trends •Eliminate duplicative Network Vision and •Begin growing revenue network cost structure continued
Slide 102: Actual Strength of SoftBank Shares?
Question 3 Actual Strength of SoftBank Shares? 102
Slide 103: Actual Strength of SoftBank Shares?
Actual Strength of SoftBank Shares? Vodafone Acquisition Loan EBIT (Operating Income) SoftBank Share (JPY) 3,500 JPY 1.3t JPY 402.7bn JPY 3,325 Sept. 18, 2012 3,000 2,500 JPY 2,508 Oct. 29, 2012 JPY 2,306 May 25, 2012 JPY 2,268 Oct. 15, 2012 JPY 0 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 2,000 2006
Slide 104: Target Price by Analysts
Target Price by Analysts Closing price (Oct. 30) JPY2,508 104
Slide 105: Target Price by Analysts
Target Price by Analysts (JPY) Buy 4,200 Nomura Securities Buy 4,170 Merrill Lynch Buy 4,000 Daiwa Securities Buy 4,000 HSBC Buy 3,800 Citi Group Buy 3,700 Credit Suisse Buy 3,500 JP Morgan Buy 3,500 SMBC NIKKO Buy 3,430 Mizuho Securities Buy 3,420 Morgan Stanley Buy 3,300 Macquarie Securities Buy 3
Slide 106: Analysts' Comments (excerpts)
Analysts’ Comments (excerpts) 1. Growth Expectation Turnaround of Sprint’s business & improved financial position Enhanced competitiveness in smartphone & LTE 2. Debt Level Not a meaningful concern. 3. Share Price Historical trading opportunity 106
Slide 107: Consolidated EBITDA JPY 1.2t
Consolidated EBITDA JPY 1.5t NTT DOCOMO JPY 1.2t JPY 1.0t KDDI *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. SoftBank: simple sum of SoftBank, eAccess, and WILLCOM. *SoftBank data includes WILLCOM and EMOBILE data. SOFTBANK is WILLCOM's sponsor in connecti
Slide 108: Surpass DOCOMO
Consolidated EBITDA JPY 1.6t JPY 1.5t NTT DOCOMO JPY 1.0t KDDI Surpass DOCOMO *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. SoftBank: simple sum of SoftBank, eAccess, WILLCOM and Sprint (Adjusted OIBDA). *SoftBank data includes WILLCOM, EMOBILE and Sprint
Slide 109: SoftBank's Enterprise Value
SoftBank’s Enterprise Value 109
Slide 110: Global No.3
Mobile: Sales (Jan. - June 2012) (JPY) China Mobile 3.3t Verizon 2.8t SoftBank Group SoftBank Sprint 2.5t AT&T 2.5t Vodafone 2.4t Global No.3 NTT DOCOMO 2.1t Deutsche Telekom 1.9t KDDI 1.3t *Created by SOFTBANK CORP. based on respective companies‘ publicly available information. 110 SoftBank: simple
Slide 111: Global No.5
Mobile EBITDA (JPY) China Mobile 3.1t Verizon 2.1t AT&T 1.7t 1.5t Global NTT DOCOMO SoftBank SoftBank Sprint 1.2t No.5 Group KDDI 0.7t Bharti Airtel 0.2t Source: based on respective companies’ publicly available information SoftBank Group and NTT DOCOMO: FY2012 forecasts, Others: FY2011 111 SoftBank
Slide 112: Global No.1 in growth
EBITDA CAGR (FY2005 - FY2011) SoftBank 47% Bharti Airtel 32% 59% America Movil 25% AT&T 14% SingTel Telefonica 6% 8% Global No.1 Vodafone 4% in growth Verizon 2% 112 *Created by SOFTBANK CORP. based on Bloomberg data.
Slide 113: But...
But... 113
Slide 114: Global No. 38?
Global Mobile Operators’ Market Cap Rank Company JPY t 1 China Mobile 17.6 2 AT&T 15.7 3 Vodafone 10.6 4 Verizon 10.1 5 America Movil 7.7 6 NTT DOCOMO 5.1 7 Telefonica 4.7 8 Telstra 4.2 9 Deutsche Telekom 3.9 Global No.38? 10 SingTel 3.4 38 SoftBank (telecom business) 1.1 *Created by SOFTBANK CORP.
Slide 115: EBITDA JPY 1t x 1.1
SoftBank’s Market Cap JPY 2.8t Internet Yahoo Japan JPY 0.67t companies Alibaba Group JPY 0.90t JPY 1.7t Others JPY 0.08t Telecom Business (FY2013 Analyst Estimate Average) Telecom business EBITDA JPY 1t x 1.1 JPY 1.1t *Created by SOFTBANK CORP. based on Bloomberg data 115 (as of Oct. 30, 2012).
Slide 116: Average 4.5x
Market Cap/EBITDA Multiple (times) SingTel Group*1 4.9 AT&T 4.5 Verizon *2 4.5 America Movil 4.4 *2 Vodafone Group 4.0 SoftBank (Telecom business) 1.1 Average *1 EBITDA (proportionate) of the affiliated companies added. 4.5x *2 EBITDA of Verizon Wireless, USD 26.4bn, (FY11 actual) x 45% (deducted fr
Slide 117: Why Expand the Business Base?
Question 4 Why Expand the Business Base? 117
Slide 118: Provide the best possible service by enhancing the management base
Answer Provide the best possible service by enhancing the management base and financial strength 118
Slide 119: Now is the time to capitalize the world's economies of scale
Change in the Competitive Market Place Galapagos phone Smartphone × × 2G/3G LTE Now is the time to capitalize the world’s economies of scale 119
Slide 120: To Customers in Japan and the US
To Customers in Japan and the US 1. Cutting-edge LTE network 2. Global smartphone 3. Innovative services Provide the world’s most-advanced mobile broadband 120
Slide 121: Lifestyle Innovation through Mobile Internet
Lifestyle Innovation through Mobile Internet 121
Slide 122: Information Revolution - Happiness for everyone
Information Revolution -Happiness for everyone 122
Slide 123: SoftBank
—m OOLftBank
Slide 124: Application of accounting standard for segments; definition of terms
1. Application of accounting standard for disclosure on segments The “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” and related “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” are applied fro
Slide 125: Cautionary Statement Regarding Forward Looking Statements
Cautionary Statement Regarding Forward Looking Statements This document includes “forward-looking statements” within the meaning of the securities laws. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” intend,” “expect,” “anticipate,” “believe,” “target,” “plan,” “providing gui
Slide 126: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation may contain certain “non-GAAP” financial measures. SoftBank uses certain non-GAAP performance measures and ratios in managing its business. SoftBank Non-GAAP financial information should be viewed in addition to, and not as an alternative for, the report
Slide 127: Cautionary Statement Regarding Forward Looking Statements
Cautionary Statement Regarding Forward Looking Statements This document includes “forward-looking statements” within the meaning of the securities laws. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” intend,” “expect,” “anticipate,” “believe,” “target,” “plan,” “providing gui
Slide 128: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation may contain certain “non-GAAP” financial measures. SoftBank uses certain non-GAAP performance measures and ratios in managing its business. SoftBank Non-GAAP financial information should be viewed in addition to, and not as an alternative for, the report