Softbank Group Corp. · TSE:9984
Softbank — Q3 FY2007 Earnings Presentation
75 slides from Softbank's earnings presentation, Feb 7, 2008
Slide 1: Earnings Results for the Third Quarter ended December 31, 2007
Earnings Results for the Third Quarter ended December 31,2007 (Q3/FY2007) February 7, 2008 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.
Slide 2: Highlights
<Highlights> 1. Consolidated earnings results: Q1-3 operating income increased by 32% (YoY) Q1-3 net income: 4.2 times (YoY) 2. Strong mobile operations: No.1 in net adds for 9 consecutive months 3. Mobile operations : Strategically launched several new services/price plans 2
Slide 3: FY2007/Q3 Summary of Consolidated Earnings
FY2007/Q3 Summary of Consolidated Earnings <bn JPY> Q1-3 Cum. of 9 months FY07/Q3 FY06/Q3 YoY (Apr – Dec 07) (Apr – Dec 06) Net Sales 2,058.7 1,822.3 +236.3 EBITDA 483.7 382.4 +101.3 Operating income 260.1 197.2 +62.9 Ordinary income 231.9 111.6 +120.3 Income before income taxes and 217.2 176.9 +40.
Slide 4: FY2007/Q3 Highlights
FY2007/Q3 Highlights Net Additions for 9 Months <k> 1,790 1,500 1,070 1,000 500 290 - 06 07 06 07 06 07 Q1-3 Q1-3 Q1-3 SBM NTT DoCoMo KDDI 4
Slide 5: FY2007/Q3 Highlights
FY2007/Q3 Highlights Net Additions for 9 Months <k> 1,790 1,700 1,500 1,370 1,070 +1.41m YoY 1,000 530 500 290 - 06 07 06 07 06 07 Q1-3 Q1-3 Q1-3 SBM NTT DoCoMo KDDI 5
Slide 6: FY2007/Q3 Highlights
FY2007/Q3 Highlights <bn JPY> 300 Operating Income (Q1-3) 250 197.2 200 150 100 50 0 FY2006/Q1-3 FY2007/Q1-3 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 6
Slide 7: FY2007/Q3 Highlights
FY2007/Q3 Highlights <bn JPY> 300 Operating Income (Q1-3) 260.1 250 197.2 200 Increased by 150 32% YoY 100 50 0 FY2006/Q1-3 FY2007/Q1-3 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 7
Slide 8: FY2007/Q3 Highlights
FY2007/Q3 Highlights Operating Income (Q1-3) YoY Movement 40% 32% SOFTBANK Increased by 20% 17% KDDI 32% YoY 0% -8% NTT DoCoMo -20% FY2006/Q1-3 FY2007/Q1-3 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 8
Slide 9: Consolidated Net Sales (9 months)
Consolidated Net Sales (9 months) <bn JPY> 2,058.7 2,000 1,822.3 1,500 FY07/Q1-3 2.0t JPY 1,000 Increased by 500 13% YoY 0 FY06 FY07 Q1-3 Q1-3 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 9
Slide 10: Net Sales by Segment (9 months)
Net Sales by Segment (9 months) <bn JPY> 2,058.7 2,000 1,822.3 1,500 Mobile Communications 1,212.0 (SOFTBANK MOBILE) 1,008.5 1,000 Others e-Commerce 178.3 184.0 Internet Culture (Yahoo Japan) 500 139.1 174.0 247.7 Fixed-line Telecommunications 236.2 (SOFTBANK TELECOM) 192.8 189.5 Broadband Infrastru
Slide 11: Consolidated EBITDA (9 months)
Consolidated EBITDA (9 months) <bn JPY> 483.7 450 382.4 350 FY07/Q1-3 483.7bn JPY 250 150 Increased by 26% YoY 50 FY06 FY07 -50 Q1-3 Q1-3 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 11
Slide 12: EBITDA by Segment (9 months)
EBITDA by Segment (9 months) <bn JPY> 483.7 450 382.4 Mobile Communications (SOFTBANK MOBILE 350 250 Broadband Infrastructure Fixed-line Telecommunications 150 (SOTBANK TELECOM) Internet Culture (Yahoo Japan) 50 e-Commerce Others FY06 FY07 -50 Q1-3 Q1-3 Note: Operating results of SOFTBANK MOBILE Cor
Slide 13: Consolidated Operating Income (9 months)
Consolidated Operating Income (9 months) <bn JPY> 260.1 250 FY07/Q1-3 197.2 200 260.1bn JPY 150 100 Increased by 50 32% YoY 0 FY06 FY07 Q1-3 Q1-3 -50 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 13
Slide 14: Operating income by segment (9 months)
Operating income by segment (9 months) <bn JPY> 260.1 250 197.2 Mobile Communications 200 (SOTBANK MOBILE) 150 Broadband Infrastructure Fixed-line Telecommunications 100 (SOFTBANK TELECOM) Internet Culture 50 (Yahoo Japan) e-Commerce 0 FY06 FY07 Others Q1-3 Q1-3 -50 Note: Operating results of SOFTBA
Slide 15: Consolidated Ordinary Income (9 months)
Consolidated Ordinary Income (9 months) <bn JPY> 250 231.9 Impact of IPO of 200 57.2 Alibaba.com Limited 150 FY07/Q1-3 111.6 231.9bn JPY 100 50 0 FY06 FY07 Q1-3 Q1-3 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 15
Slide 16: Consolidated Net Income (9 months)
Consolidated Net Income (9 months) 100 <bn JPY> 93.1 Impact of IPO of 80 Alibaba.com Limited 57.2 60 FY07/Q1-3 93.1bn JPY 40 20 21.9 x4.2 YoY 0 FY06 FY07 Q1-3 Q1-3 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 16
Slide 17: Consolidated Net Income (9 months)
Consolidated Net Income (9 months) <bn JPY> FY07/Q3 FY06/Q3 <Notes> (Apr -Dec07) (Apr -Dec06) Ordinary income 231.9 111.6 IPO ofLimited Alibaba.com +57.2 Special income, Special loss related net (14.7) 65.3 to Otoku Line: (26.2) Income before income taxes and minority 217.2 176.9 interests Income ta
Slide 18: Consolidated Cash Flow (9 months)
Consolidated Cash Flow (9 months) <bn JPY> FY07/Q3 Notes (Apr -Dec07) Income taxes paid (52.5) Decrease in A/P handset payments (416) Operating cashflow +57.2 Interest paid (76.9) Increase Installment receivables (240.4) Purchase of tangible/intangible fixed assets Investing cashflow (273.6) (283.7)
Slide 19: Cash Position
Cash Position <bn JPY> 700 Unused portion of credit line facility Cash position 600 185.0 500 39.0 400 300 401.7 468.9 200 100 0 End Dec 06 End Dec 07 19
Slide 20: Net Interest-bearing Debt
Net Interest-bearing Debt <bn JPY> 2,500 2,000 1,671.8 1,658.6 Investment by 1,500 SOFTBANK CORP. and Yahoo Japan in SBM: 320.0bn JPY 1,000 Mobile net interest- bearing debt (non- recourse) including 469.1 SBM loan balance of: 500 CB 397.1 1,295.0bn JPY 299.7 319.1 247.1 149.7 0 End Dec 05 End Dec 0
Slide 21: EBITDA Margin by Segment
EBITDA Margin by Segment 30% Broadband Infrastructure Mobile Communications SOFTBANK consolidation 15% Fixed-line Telecommunications 0% -15% FY2004 FY2005 FY2006 FY2007 Q1-3 Note: EBITDA margin Segment EBITDA/Segment net sales Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were co
Slide 22: EBITDA Margin Comparison
EBITDA Margin Comparison 40% NTT consolidation 30% KDDI 23.5% 20% 20.7% SOFTBANK 13.5% consolidation 10% 5.3% 0% FY2004 FY2005 FY2006 FY2007 Q1-3 Note: Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006 22
Slide 23: Net Interest-bearing Debt/EBITDA Ratio
Net Interest-bearing Debt/ EBITDA Ratio 20 <times> 19.4 15 Capability to repay liabilities steadily 10 improving 6.0 4.6 5 3.8 0 FY2004 FY2005 FY2006 FY2007* (Q1-3) Note: Annualized by multiplying the FY07/Q1-3 figures by 4/3 Lease obligations are not included in interest-bearing debt 23
Slide 24: Improvement Rate in Financial Indexes
Improvement Rate in Financial Indexes Right after Q3 acquisition of Improvement FY2007 Vodafone K.K. Rate (FY06/Q1) EBITDA margin 24.4%*1 21.1% 3.3% (EBITDA/net sales) Equity ratio (Total shareholders’ equity/ 8.7% 5.8% 2.9% total assets) ROE 31.9% *2 10.2% (Net income per share/ (FY06) 21.7% shareh
Slide 25: Mobile Communications Operations Continue Steady Growth
Mobile Communications Operations Continue Steady Growth 25
Slide 26: Expand Customer Base: No. 1 in Net Adds for 9 Consecutive Months
Expand Customer Base: No. 1 in Net Adds for 9 Consec. Months Jan 2008 net adds share 100% Net Addition Share NTT DoCoMo (Monthly) 7% KDDI 27% 80% 66% 60% SOFTBANK 40% KDDI 20% NTT DoCoMo 0% Apr Oct Apr Oct Apr Oct Source: Telecommunications Carriers Association (excl. EMOBILE) FY2005 FY2006 FY2007 -
Slide 27: Expand Customer Base: No. 1 in Net Adds for 9 Consecutive Months
Expand Customer Base: No. 1 in Net Adds for 9 Consec. Months Jan 2008 net adds share 100% Net Addition Share NTT DoCoMo (Quarterly) 7% KDDI 27% 80% 66% 60% SOFTBANK 40% KDDI 20% NTT DoCoMo 0% Vodafone 08 Source: Telecommunications Carriers Association Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Jan (excl. EMOB
Slide 28: Successively Enhance Brand Power Through Effective TVCM
Successively Enhance Brand Power Through Effective TVCM CM preference: won the triple crown 5 times! (Aug, Sep, Oct, Nov, Jan) Aug 2007 Sep 2007 Oct 2007 Nov 2007 Jan 2008 Company Among 1,217 Among 1,196 Among 1,219 Among 1,140 Among 1,276 companies in total companies in total companies in total com
Slide 29: Increasing Intent by Customers to Continue Use
Increasing Intent by Customers to Continue Use (%) 90 Intent to Continue Use MNP 86% launch 85 80 75 70 Jun Sep Dec Mar Jun Sep Dec Source research by an external institution FY2006 FY2007 29
Slide 30: Overtook Competitors in Customer Satisfaction Level After Switch-in
Overtook Competitors in Customer Satisfaction Level After Switch-in Satisfaction After Switch-in 80% SOFTBANK KDDI NTT DoCoMo Source Brand Research Institute, Inc. (2007/12/20) Research target Mobile phone users 70% between the age of 16 to 49 who have June December switched their operator 2007 30
Slide 31: Churn Rate Continues to Decrease
Churn Rate Continues to Decrease 4.0% 3G Churn Rate 3.0% 2.0% FY2007/Q3 1.0% 0.88% 0.0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY05 FY06 FY07 31
Slide 32: ARPU
ARPU (JPY) 6,000 5,870 5,930 5,840 5,600 5,590 5,700 5,560 5,210 5,000 5,000 4,800 4,520 4,000 4,540 4,540 4,510 4,260 4,230 4,320 4,230 3,830 3,590 3,340 3,040 3,000 Voice 2,000 1,000 Data 1,330 1,390 1,330 1,340 1,350 1,380 1,330 1,380 1,410 1,470 1,490 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY2005 FY
Slide 33: ARPU + Installment Payments (Reference)
ARPU+ Installment Payments (Reference) (JPY) 6,000 5,870 5,930 5,840 5,600 5,590 5,700 5,580 5,430 5,480 5,530 5,520 Installment 5,000 4,000 4,540 4,540 4,510 4,260 4,230 4,320 4,230 3,830 3,590 3,340 3,040 3,000 Voice 2,000 1,000 Data 1,330 1,390 1,330 1,340 1,350 1,380 1,330 1,380 1,410 1,470 1,49
Slide 34: Maximize Revenue Opportunities with Expanding Market Share
Maximize Revenue Opportunities with Expanding Market Share ARPU Current sales subscribers 34
Slide 35: Maximize Revenue Opportunities with Expanding Market Share
Maximize Revenue Opportunities with Expanding Market Share ARPU 1 Expand share subscribers 35
Slide 36: White Plan Student Discount
White Plan Student Discount Acquisition of potential long tenure, heavy users anticipated Basic charge 0 yen/month (3 years from new subscription date) Data communication 0 to 4,410 yen/month charge (3 years from new subscription date) S! Basic Pack: 315 yen/month Voice call charge Free up to 21:00
Slide 37: Expand Revenue per Subscriber
Expand Revenue per Subscriber ARPU 2 Expand ARPU 1 subscribers 37
Slide 38: Continue to Improve ARPU
Continue to Improve ARPU Increase data usage Handsets Services Display prevented due to protection of rights. 38
Slide 39: Increase Data ARPU
Increase Data ARPU Voice Voice Voice Data Data Data Beyond 2G 3G 3G 39
Slide 40: Greater Increase of 3G Subscribers
Greater Increase of 3G Subscribers (million) 20 Total Subscribers 17.81 18 16 14 12.76 12 10 End of Jan 2008 8 3G subscribers: 12.76m 6 3G ratio: 71.6% 4 2 3G 0 Mar Sep Mar Sep Mar Sep Mar Sep 2004 2005 2006 2007 40
Slide 41: Establish a Robust Data Use Environment
Establish a Robust Data Use Environment Enhance 3G High Speed capability by improving coverage and handset lineup 3G High Speed Coverage Area Providing service across the nation* *As of the end of Jan 2008 population coverage of 65.1% 41
Slide 42: Establish a Robust Data Use Environment
Establish a Robust Data Use Environment Enhance 3G High Speed capability by improving coverage and handset lineup 3G High Speed Coverage Area 3G High Speed Capable Handsets Providing service across the nation* 12 models 16 models** (out of the 2008 spring models) *As of the end of Jan 2008 populatio
Slide 43: Number of 3G High Speed Capable Handsets
Number of 3G High Speed Capable Handsets (Number of models) 30 28 SOFTBANK 20 10 4 0 FY2006 FY2007 •According to SOFTBANK as of February 8, 2008 43
Slide 44: Comparison of Number of Models (2008 spring models)
Comparison of Number of Models (2008 spring models) 20 (Number of models) 16 15 13 11 10 5 0 SOFTBANK NTT KDDI DoCoMo •According to SOFTBANK as of February 8, 2008 •Includes Disney Mobile ‘DM001SH’ •Models offered after February 2008 compared as ‘spring models’ •Data cards and corporate handsets are
Slide 45: Comparison of Number of One Seg Compatible Handsets
Comparison of Number of One Seg Compatible Handsets (2008 spring models) 15 (Number of models) 10 10 8 5 4 0 SOFTBANK NTT KDDI DoCoMo •According to SOFTBANK as of February 8, 2008 •Includes Disney Mobile ‘DM001SH’ •Models offered after February 2008 compared as ‘spring models’ •Data cards and corpor
Slide 46: Comparison of Number of Global Roaming Capable Handsets
Comparison of Number of Global Roaming Capable Handsets (2008 spring models) 10 (Number of models) 7 5 5 1 0 SOFTBANK NTT KDDI DoCoMo •According to SOFTBANK as of February 8, 2008 •Comparison of GSM capable handsets •Models offered after February 2008 compared as ‘spring models’ •Data cards and corp
Slide 47: Comparison of Number of OEL Handsets
Comparison of Number of OEL Handsets (2008 spring models) 10 (Number of models) 5 3 2 0 0 SOFTBANK NTT KDDI DoCoMo •According to SOFTBANK as of February 8, 2008 •Data cards and corporate handsets are excluded •Models offered after February 2008 compared as ‘spring models’ •KDDI aggregated based on c
Slide 48: Comparison of Number of Colors
Comparison of Number of Colors (2008 spring models) 60 57 (Number of colors) 38 40 34 20 0 SOFTBANK NTT KDDI DoCoMo •According to SOFTBANK as of February 8, 2008 •Comparison of GSM capable handsets •Models offered after February 2008 compared as ‘spring models’ •Data cards and corporate handsets are
Slide 49: Develop Handsets that Satisfy Users' Diversified Needs
Develop Handsets that Satisfy Users’ Diversified Needs Free Internet mind-set Touch sensor PREMIUM Smart phone Color variation Charake (character mobile) Internet For seniors Slim Display prevented due to protection of rights. One Seg Digital camera For kids For stock trading 49
Slide 50: Disney Mobile Presentation
The War Denep Company Presents ‘Dienepmobile
Slide 51: Disneymobile DM001SH
Denepmobile DMOO1SH “Dieneymobile
Slide 52: Welcome
Display prevented due to protection of rights. Welcome to ! 52
Slide 53: Display prevented due to protection of rights.
Display prevented due to protection of rights. 53
Slide 54: disney.ne.jp
Make your mail address Disney too disney.ne.jp Enjoy arranging mails with moving characters’ decorations いい天気♪ どこか行こうよ～ おやすみなさい メールありがとう Display prevented Display prevented Display prevented Display prevented due to protection of rights. due to protection of rights. due to protection of rights. due
Slide 55: Pictographs built into mobile for the first time
pictographs built into mobile for the first time MyPictograph Display prevented due to protection of rights. Disney Pictograph Display prevented due to protection of rights. 55
Slide 56: Totally customized from main menu to sending time
Totally customized from main menu to sending time [Main menu] [Wallpaper] [Send/receive mail] [Incoming call] Display prevented due to protection of rights.
Slide 57: In Japan SoftBank brings it to you
Die sNepmobile 2008.3. 1 In Japan = SoftBank brings it to you 57 ‘<Denepmobile
Slide 58: Please view a video clip of 2008 spring models
Please view a video clip of 2008 spring models 58
Slide 59: 2008 Year of the Internet Machine
2008 Year of the Internet Machine 59
Slide 60: Internet Connection Device Has Shifted from PC
Internet Connection Device Has Shifted from PC PC Display prevented Approx. due to protection of rights. 270m units/year* X 2 hours/day Internet *Source: IDC; data of 2007 60
Slide 61: Internet Connection Device Has Shifted from PC to Mobile
Internet Connection Device Has Shifted from PC to Mobile Mobile Approx. 1.1 bn/year* PC X Display prevented Approx. 24 hours/day due to protection of rights. 270m units/year* X 2 hours/day Internet *Source: IDC; data of 2007 61
Slide 62: Mobile Revolution: From Voice Machine to Internet Machine
Mobile Revolution From “Voice Machine” to “Internet Machine” NTT DoCoMo Microsoft KDDI Apple Google Display prevented due to protection of rights. Mainly driven by phone companies Mainly driven by Internet companies 2G 3G Beyond 3G 62
Slide 63: Only SOFTBANK Controls the Whole Vertical
Only SOFTBANK Controls the Whole Vertical SOFTBANK Google NTT Group Content YouTube Portal/ Google Search NTT DoCoMo Infrastructure NTT 63
Slide 64: Top 5 Market Capitalization Companies
Top 5 Market Capitalization Companies <tn JPY > 60 3 are Chinese 50 enterprises 40 30 20 10 0 PetroChina Exxon Mobil General Electric CHINA Mobile Industrial and Company Limited Corporation Company Limited Commercial Bank of China Limited Source: Calculated by SOFTBANK CORP. based on closing price a
Slide 65: SOFTBANK Group in Asia
— SoftBank SOFTBANK Group in Asia ¥ rl - ev ¥ oe E2™ ibaba Group LDAlipabe.coni 39 bail Swen OEE SK (+ all a oe > ¢ “Va, = SoftBank YAHOO! F JAPAN 65
Slide 66: Asia's No.1 Internet Company
Asia’s No.1 Internet Company 66
Slide 67: Asia's No.1 Internet Company
Asia’s No.1 Internet Company 67
Slide 68: Asia's No.1 Internet Company Mobile
Asia’s No.1 Internet Company Mobile 68
Slide 69: Asia's No.1 Internet Company Mobile
Asia’s No.1 Internet Company Mobile 69
Slide 70: SoftBank
= ooftBank
Slide 71: The Internet Company
== ooftBank The Internet Company =m OOLtBank
Slide 72: Lifestyle Company in the 21st Century
Lifestyle Company in the 21st Century Broadband available to everyone everywhere 72
Slide 73: 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 73
Slide 74: 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 75: FY2007/Q3 Appendix to the Earnings Result
FY2007/Q3 Appendix to the Earnings Result (Amounts less than one billion yen are omitted. / Net Sales to external customers ） FY2005 FY2006 FY2007 Business segment unit Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Net sales bn JPY 231.5 350.3 426.6 422.2 389.0 419.8 403.1 Operating income bn JPY 27.2 29.3 56.9