Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2008 Earnings Presentation
79 slides from Softbank's earnings presentation, Aug 5, 2008
Slide 1: Earnings Results for the First Quarter Ended June 30, 2008 (FY2008/Q1)
Earnings Results for the First Quarter Ended June 30, 2008 (FY2008/Q1) August 5, 2008 SOFTBANK CORP. 1 February 25, 2010 Version Due to protection of rights, some of the photos and images included at the time of publication have been modified or revised.
Slide 2: Highlights
<Highlights> 11 EBITDA, EBITDA, operating operating income, income, ordinary ordinary income income record record highs highs (YoY) (YoY) 2. 2. Mobile Mobile Business: Business: 1414 consecutive consecutive months months as as No.1 No.1 in in net net additions additions 3. 3. iPhone iPhone 3G 3G lau
Slide 3: FY08/Q1 Summary of Consolidated Earnings
FY08/Q1 Summary of Consolidated Earnings <bn JPY> FY08/Q1 FY07/Q1 YoY (Apr/08-Jun/08) (Apr/07-Jun/07) Net Sales 647.2 663.0 (15.8) EBITDA 161.4 149.7 +11.7 Operating income 85.0 78.7 +6.3 Ordinary income 54.2 51.1 +3.1 Income before income taxes and minority 57.3 58.4 (1.0) interest Net income 19.3
Slide 4: Consolidated Earnings Results
Consolidated Earnings Results 4
Slide 5: Net Sales (quarterly)
Net Sales (quarterly) <bn JPY> 700 663.0 647.2 600 500 494.2 Mobile Communications 389.0 370.6 400 231.5 Others 300 e-Commerce 55.8 58.2 59.6 Internet Culture 200 44.4 51.8 61.5 Fixed-line Telecommunications 100 81.8 77.8 78.1 62.7 64.3 58.7 Broadband Infrastructure 0 FY06/Q1 FY07/Q1 FY08/Q1 Note: O
Slide 6: Factors Contributing to the Decrease in Mobile Communications Net Sales
Factors Contributing to the Decrease in Mobile Communications Net Sales <m HS> Handsets Upgraded Decrease in 1.20 1.09 handsets sales 1.00 (approx. 13.9bn 0.80 0.72 JPY) 0.60 HS upgrades decreased by 34% 0.40 Operating income 0.20 improved due to 0.00 expansion of FY07/Q1 FY08/Q1 installment sales 6
Slide 7: EBITDA (quarterly)
EBITDA (quarterly) <bn JPY> 180 160 161.4 Record high YoY 149.7 140 Mobile Communications 120 104.3 99.5 100 92.4 e-Commerce 80 55.8 Internet Culture 60 33.0 Fixed-line Telecommunications 40 29.6 23.9 20 11.1 12.2 12.6 15.9 16.3 Broadband Infrastructure 0 11.8 FY06/Q1 FY07Q1 FY08/Q1 Others -20 Note:
Slide 8: Operating Income (quarterly)
Operating Income (quarterly) <bn JPY> 100 90 85.0 Record high YoY 80 78.7 70 Mobile Communications 44.2 60 54.3 43.5 50 e-Commerce 27.2 40 Internet Culture 30 30.5 Fixed-line Telecommunications 20 27.1 21.6 10 8.6 10.4 Broadband Infrastructure 0 5.4 FY06/Q1 FY07/Q1 FY08/Q1 Others -10 Note: Operating
Slide 9: Consolidated Ordinary Income (quarterly)
Consolidated Ordinary Income (quarterly) 60 <bn JPY> 54.2 51.1 50 Record high YoY 40 30 25.9 FY08/Q1 20 54.2bn JPY 10 0 FY06/Q1 FY07/Q1 FY08/Q1 Note: Operating results of SOFTBANK MOBILE Corp. were consolidated from May 1, 2006 9
Slide 10: Consolidated Net Income (quarterly)
Consolidated Net Income (quarterly) 30 <bn JPY> 25 25.1 20 19.3 FY08/Q1 16.1 15 6.8 19.3bn JPY 10 Temporary factors resulting from special income/loss (net) 12.5 and the release of income tax 5 9.0 payable at a subsidiary in U.S. 1.4 0 FY06/Q1 FY07/Q1 FY08/Q1 Note: Operating results of SOFTBANK MOBI
Slide 11: Consolidated Net Income (quarterly)
Consolidated Net Income (quarterly) <bn JPY> FY08/Q1 FY07/Q1 (Apr/08-Jun/08) (Apr/07-Jun/07) <Notes> Ordinary income 54.2 51.1 Gain on sale of investment securities: 2.4 Special income, net 3.0 7.2 dilution gain from changes in equity interest: 2.2 Income before income taxes and minority 57.3 58.4 i
Slide 12: Consolidated Cash Flow (quarterly)
Consolidated Cash Flow (quarterly) <bn JPY> FY08/Q1 Notes (Apr/08-Jun/08) Income tax paid (33.4) Operating cash Interest paid (27.2) 52.8 Increase in installment flow receivables (15.7) Purchase of Investing cash flow (90.7) tangible/intangible fixed assets (71.5) Financing cash Share buyback by sub
Slide 13: Operating Cash Flow (quarterly)
Operating Cash Flow (quarterly) 60 <bn JPY> 52.8 40 YoY 20 80.3bn JPY 0 improvement -20 -27.4 -40 FY07/Q1 FY08/Q1 Note: Operating results of SOFTBANK MOBILE Corp. were consolidated from May 1, 2006 13
Slide 14: Cash Position (quarterly)
Cash Position (quarterly) 700 <bn JPY> 604.9 600 119.0 525.8 500 100.0 Unused portion of credit line facility 400 322.5 485.9 425.9 300 30.0 Cash position 200 292.5 100 0 FY06/Q1 FY07/Q1 FY08/Q1 Note: Operating results of SOFTBANK MOBILE Corp. were consolidated from May 1, 2006 14
Slide 15: Capital Expenditure (acquisition base, quarterly)
Capital Expenditure (acquisition base, quarterly) 100 <bn JPY> 90 85.8 80 73.3 70 60 51.5 50 72.1 Mobile Communications 52.9 40 30 37.4 Others 20 Fixed-line Telecommunications 10 10.8 5.5 5.1 5.3 5.0 4.7 0 Broadband Infrastructure FY06/Q1 FY07/Q1 FY08/Q1 Note: amounts above include on and off-balanc
Slide 16: EBITDA-Capital Expenditure
EBITDA-Capital Expenditure (actual FCF) <bn JPY> 180 150 161.4 EBITDA 120 149.7 Capital Expenditure 90 109.9 60 104.3 30 63.9 Capability to generate 0 31.0 free cash flow -30 -73.3 -51.5 is steadily improving -85.8 -60 -90 FY06/Q1 FY07/Q1 FY08/Q1 Note: amounts above include on and off-balance lease
Slide 17: Interest-bearing Debt (quarterly)
Interest-bearing Debt (quarterly) 3,000 <bn JPY> 2,627.1 2,545.3 2,500 88.1 223.1 Securitization of installment receivables 2,000 (SOFTBANK MOBILE) 1,342.1 SBM loan 1,261.9 (WBS) 1,500 84.5 1,000 84.5 Vodafone subordinated loan 554.8 489.9 500 Loans from other financial institutions 557.4 485.7 Corp
Slide 18: Interest-bearing Debt/EBITDA Ratio (quarterly)
Interest-bearing Debt/EBITDA Ratio (quarterly) 10 <times> 8 6.7 6 4.8 Capability to 4.0 3.9 repay liabilities 4 is steadily 2 improving 0 FY05 FY06 FY07 FY08/Q1 Notes: Amount of interest-bearing debt before FY07 is calculated based on retroactive adjustments adding the cash receipts as collateral re
Slide 19: Overall Improvement in Financial Indexes
Overall Improvement in Financial Indexes FY08/Q1 FY07/Q1 Improvement (Apr/08-Jun/08) (Apr/07-Jun/07) EBITDA margin 24.9% 22.6% +2.3 (EBITDA/net sales) Equity ratio 9.0% 7.1% +1.9 (Total shareholders’ equity/total assets) D/E ratio 6.4 times 8.3 times +1.9 (Interest-bearing debt/total shareholders’ e
Slide 20: EBITDA Margin by Segment
EBITDA Margin by Segment 30% Broadband Infrastructure Mobile Communications 25% SOFTBANK consolidated 20% 15% Fixed-line Telecommunications 10% 5% 0% FY05 FY06 FY07 FY08/Q1 Note: EBITDA margin = EBITDA/Net sales 20
Slide 21: FY2008 1st Quarter Results
FY2008 1st Quarter Results 21
Slide 22: Strong New Acquisitions
Strong New Acquisitions (%) 100 3 Major Mobile Operators Net Adds Share (quarterly) Display prevented 80 due to protection of rights. SOFTBANK 60 40 NTT DoCoMo 20 No.1 in net adds for 0 KDDI 14 consecutive months -20 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY06 FY07 FY08 Source: Calculated by SOFTBANK based on t
Slide 23: No.1 for Consecutive Months
No.1 for 7 Consecutive Months (TVCM preference by Production and by Brand) Company Production Brand Among 1,217 Among 4,520 in total Among 3,184 brands in total companies in total Aug/07 1st 1st 1st Among 1,196 Among 4,559 in total Among 3,167 brands in total companies in total Sep/07 1st 1st 1st Am
Slide 24: Achieved No.1 in 14 Categories
First ever! Achieved No.1 in 14 Categories (among 15 categories) in June ‘Performer/Character’ ‘Persuasive’ ‘Honest’ 1st (Among 693 brands in total) 1st (Among 355 brands in total) 1st (Among 293 brands in total) ‘Humorous’ ‘Dull but lovable’ ‘Popular in general’ 1st (Among 423 brands in total) 1st
Slide 25: Cumulative Subscribers Expansion
Cumulative Subscribers Expansion (k) 22,000 Cumulative Subscribers Former Vodafone 20,000 19,110 Display prevented 18,000 due to protection of rights. 16,000 14,000 12,000 10,000 Dec Jun Dec Jun Dec Jun Dec Jun 05 06 07 08 25
Slide 26: Churn Rate Improvement
Churn Rate Improvement Display prevented (%) Churn Rate due to protection of rights. 1.8 1.6 1.4 FY08/Q1 churn rate 1.2 0.98% 1.0 0.8 0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY06 FY07 FY08 26
Slide 27: Churn Rate Improvement
Churn Rate Improvement Display prevented (%) Churn Rate due to protection of rights. 1.8 1.6 1.4 FY08/Q1 churn rate 1.2 0.98% 1.0 FY08/Q1 3G churn rate* 0.8 0.72% 0.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY06 FY07 FY08 *Postpaid churn rate 27
Slide 28: Growth in 3G Subscribers
Growth in 3G Subscribers (k) Number of Cumulative Subscribers 25,000 20,000 19,110 End of June, 2008 3G subscribers: 15.11mil 15,220 15,000 3G ratio : 79.1% 2G 2G 10,000 3G At the time of acquisition (end of Apr. 2006) 5,000 3G subscribers: 3.27mil 3G ratio: 21.5% 0 Mar Sep Mar Sep Mar Sep Mar Sep M
Slide 29: Average Payment Per Subscriber
Average Payment Per Subscriber (JPY) Data ARPU Voice ARPU Installment 6,000 5,590 5,700 5,580 5,430 5,480 5,530 5,520 5,540 5,570 20 220 480 5,000 730 1,000 1,230 1,390 4,000 3,000 4,230 4,320 4,230 3,830 3,590 3,340 3,040 2,710 2,530 Display prevented 2,000 due to protection of rights. 1,350 1,380
Slide 30: Shift From Voice to Data
Shift From Voice to Data Music Finance Auction ARPU News Shopping Data Data Data Game Video Voice SNS Voice Voice 2G 3G Beyond 3G Display prevented Display prevented due to protection of rights. due to protection of rights. 30
Slide 31: Downloads Music via Mobile
Downloads Music via Mobile Mobile downloads (m times) 150 Charged Music Content Distribution 11 times that Mobile of PC downloads 120 PC 90 60 Display prevented due to protection of rights. 30 0 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar FY05 FY06 FY07 Source: Recording Industry Association of Japan 31
Slide 32: SNS via Mobile
SNS via Mobile More than 60% (bn PV) Page Views of mixi of page views 15 Mobile accessed by Mobile 12 PC 9 6 Display prevented due to protection of rights. 3 0 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar FY05 FY06 FY07 Source: IR material publicized by mixi, inc. 32
Slide 33: Page Views Increased Times
Page Views Increased 100 Times (PV) Number of Page Views via Yahoo! Keitai Compare to e/o June 2006 x117 6/1 10/1 4/1 10/1 4/1 7/26 FY06 FY07 FY08 Note: Page views of Yahoo! JAPAN top page through SOFTBANK MOBILE Through Sep 30, 2006: Yahoo! Mobile Since Oct 1, 2006: Yahoo! Keitai 33
Slide 34: The Year of the Internet Machine
2008 The Year of the Internet Machine 34
Slide 35: Mobile Evolution History
Mobile Evolution History Display prevented due to protection of rights. Display prevented due to protection of rights. Internet Machine 3G 2G 2000 2003 2008 35
Slide 36: Communication Speed
Communication Speed Communication Speed (number of bits) x375 Display prevented due to protection of rights. 3.5G 3G 2G Display prevented due to protection of rights. 3.6 Megabit 384 Kilobit (Maximum speed for downlink) 9.6 Kilobit 2000 2003 2008 36
Slide 37: LCD Resolution
LCD Resolution Definition (number of dots) x24 Display prevented due to protection of rights. 3.5G 3G 2G Display prevented due to protection of rights. 410k dots* 76k dots 17k dots 2000 2003 2008 * Case for SoftBank 922SH 37
Slide 38: CPU Capability
CPU Capability CPU Capability (DMIPS) x24 Display prevented due to protection of rights. 3.5G 3G 2G Display prevented due to protection of rights. 712.5DMIPS 109.2DMIPS 29.7DMIPS 2000 2003 2008 38
Slide 39: Launched
Launched iPhone, iPod, and also Display prevented due to protection of rights. the Internet Accelerate the pace of Internet Machine adoption 39
Slide 40: The Best Handset iPhone 3G
The Best Handset iPhone 3G As of August 5, 2008 40
Slide 41: 1) Evolving OS is a First
1) Evolving OS is a First iPhone 2.0 OS update Never obsolete Display prevented due to protection of rights. Various applications 41
Slide 42: 1) Evolving OS is a First: Advanced functions
1) Evolving OS is a First Advanced functions Contact search Display prevented due to protection of rights. Push mail Location Information Service 42
Slide 43: 2) High Speed Internet
2) High Speed Internet Blazing fast download using 3G + Wi-Fi Display prevented due to protection of rights. 43
Slide 44: 3) Sync with Microsoft Exchange
3) Sync with Microsoft Exchange Push mail, calendar, and contact list Display prevented due to protection of rights. 44
Slide 45: 4) GPS Functionality
4) GPS Functionality Map synchronizes Display prevented with web and phone due to protection of rights. 45
Slide 46: 5) Downloads Applications Easily
5) Downloads Applications Easily App Store New applications added daily Display prevented due to protection of rights. Easy to download Universal platform 46
Slide 47: Ability to Use Hundreds of Applications
Ability to Use Hundreds of Applications Display prevented due to protection of rights. 47
Slide 48: Many Other Applications
Many Other Applications Display prevented due to protection of rights. 48
Slide 49: 6) Wide Range of Accessories
6) Wide Range of Accessories Display prevented due to protection of rights. 49
Slide 50: 7) Biggest Memory Ever
7) Biggest Memory Ever 8GB/16GB Display prevented due to protection of rights. 50
Slide 51: 8) Multi-touch Panel
8) Multi-touch Panel Software enables intuitive operation Display prevented due to protection of rights. 51
Slide 52: 9) Accelerometer
9) Accelerometer Wide variety of Display prevented games available due to protection of rights. 52
Slide 53: No. 1 Mobile Internet Company
No. 1 Mobile Internet Company 53
Slide 54: Mobile to Internet Machine
Mobile to Internet Machine Mobile (Voice Machine) Internet Machine Display prevented due to protection of rights. 54
Slide 55: Once, Black & White TV Was Mainstream
Once, Black & White TV Was Mainstream Penetration of Black & White TV (%) 100 Black & White TV 80 60 Display prevented 40 due to protection of rights. 20 0 1960 1965 1970 1975 Source: Consumers’ Behavior Survey by MIC 55
Slide 56: Now, Color TV is Prevalent
Now, Color TV is Prevalent (High Value-Add Product) (%) Penetration of Black & White vs Color TV 100 Color TV 80 60 40 Black & White TV Display prevented due to protection of rights. 20 0 1960 1965 1970 1975 Source: Consumers’ Behavior Survey by MIC 56
Slide 57: Now, Mobile is Mainly a Voice Machine
Now, Mobile is Mainly a Voice Machine (%) Mobile Penetration (Voice Machine)* 100 Voice Machine 80 60 Display prevented due to protection of rights. 40 20 0 1998 2008 *Mobile penetration up till 2008 is from the Information Communication Statistics Database (Communication/Subscribers numbers) by MIC
Slide 58: Internet Machine Adoption
Internet Machine Adoption (%) Mobile Penetration (Voice Machine) * 100 Internet Machine Penetration Display prevented Voice Machine due to protection of rights. 80 60 40 20 Internet Machine Display prevented due to protection of rights. 0 1998 2008 *Mobile penetration up till 2008 is from the Inform
Slide 59: Driven by Internet Companies
Driven by Internet Companies Apple Amazon eBay Beyond 3G NTT DoCoMo Display prevented due to protection of rights. 3G Google 2G KDDI Display prevented due to protection of rights. Internet company driven Phone company driven 59
Slide 60: World's No.2 Internet Company in Terms of EBITDA
World’s No.2 Internet Company in Terms of EBITDA (bn JPY) 800 EBITDA (FY2007) 653.6 626.7 600 Display prevented due to protection of rights. 400 278.7 200 146.3 100.0 0 Google SOFTBANK eBay Yahoo! Inc. Amazon Source: Reuter 1 dollar = 108 JPY 60
Slide 61: World's No.2 Internet Company in Terms of EBITDA
World’s No.2 Internet Company in Terms of EBITDA (bn JPY) 800 EBITDA Display prevented Google (US) due to protection of rights. 600 SOFTBANK (Japan) 400 200 eBay (US) Yahoo! (US) 0 Amazon (US) -200 Year Source: Reuter 1 dollar = 108 JPY 61
Slide 62: Google's Business Model
Google’s Business Model Music SNS Media Sports Business Video Games Commerce YouTube Platform/ Portal Google Infra 62
Slide 63: SOFTBANK's Business Model
SOFTBANK’s Business Model Music SNS Media Sports Business Video Games Commerce Platform/ Portal Infra 63
Slide 64: No. 1 Internet Company in Asia
No. 1 Internet Company in Asia 64
Slide 65: China's GDP Becoming the Largest in the World
China’s GDP Becoming the Largest in the World (bn JPY) World GDP China and India GDP 800 Forecast China growth is dramatic 600 U.S. 400 India Display prevented 200 due to protection of rights. Japan 0 (Year) 2006 2015 2025 2035 2045 Source: Goldman Sachs, Global Economics Paper No: 153, March 28, 20
Slide 66: The Internet Focus is Shifting to Asia
The Internet Focus is Shifting to Asia (2015) World Internet Population and Approx. 2.6bn people Comparison by Region Display prevented due to protection of rights. Others (1998) Asia Approx. 190m people 50% Asia Others 19 % USA 12 % USA 50 % Source: Euromonitor 66
Slide 67: No. 1 Internet Company in Asia
No. 1 Internet Company in Asia China Japan 67
Slide 68: Asia x Mobile
Entering the SOFTBANK Era Growth High Asia x Mobile Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented Display prevented due to protection of rights. Google due to protection of rights. Europe & US x PC Display prevented Display prevented
Slide 69: Mobile Internet No. 1, Internet in Asia No. 1
Mobile Internet No. 1 Internet in Asia No. 1 69
Slide 70: Three Announcements
iPhone 3G More Convenient Three Announcements 70
Slide 71: 1) Start Accepting Reservations From August 6th
1) Start Accepting Reservations From August 6th 2008 in stores that offer iPhone 3G Display prevented due to protection of rights. 71
Slide 72: 2) Unlimited Mail Storage Period
2) Unlimited Mail Storage Period* Before revision After revision 30 days Unlimited (Up to 5,000) *E mail(i) mail storage period 72
Slide 73: 3) Revision of Packet Flat-rate Full
3) Revision of Packet Flat-rate Full Price Before revision ¥5,985 Number of packets 73
Slide 74: 3) Revision of Packet Flat-rate Full
3) Revision of Packet Flat-rate Full Price Before revision ¥5,985 ¥1,695 After revision Number of packets 20,175 71,250 Note: For customers who have already subscribed to Packet Flat-rate Full the revised pricing will be automatically applied from the usage of August 2008. 74
Slide 75: 3) Monthly Minimum Charge
3) Monthly Minimum Charge Before After White Plan 980 980 Packet Flat-rate Full 5,985 1,695 S! Basic Pack 315 315 ¥7,280 ¥2,990 Note: For customers who have already subscribed to Packet Flat-rate Full the revised pricing will be automatically applied from the usage of August 2008. Packet Flat-rate F
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: www.softbank.co.jp
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 consider var
Slide 79: FY2008/Q1 Appendix to the Earnings Results
FY2008/Q1 Appendix to the Earnings Results (Amounts less than one billion yen are omitted. / Net Sales to external customers Business segment unit FY2006 FY2007 FY2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Net sales bn JPY 231.5 350.3 426.6 422.2 389.0 419.8 403.1 406.8 370.6 Operating income bn JPY 27.2 29.3