Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2008 Earnings Presentation
73 slides from Softbank's earnings presentation, Aug 8, 2007
Slide 1: Earnings Results for the First Quarter ended June 30, 2007
Earnings Results for the First Quarter ended June 30, 2007 (Q1/FY2008) August 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. “FY2008” and “FY08” refer to the fiscal year endin
Slide 2: Q1/FY2008 Summary of Consolidated Earnings Results
Q1/FY2008 Summary of Consolidated Earnings Results 2
Slide 3: Q1/FY2008 Summary of consolidated earnings results
Q1/FY2008 Summary of consolidated earnings results <unit: bn JPY> <Quarterly> Q1/FY08 Q1/FY07 Year on Year (Apr/07-Jun/07) (Apr/06-Jun/06) Net Sales 663.0 494.2 +168.8 EBITDA 149.7 104.3 +45.4 Operating income 78.7 54.3 +24.3 Ordinary income 51.1 25.9 +25.1 Income before income taxes and 58.4 29.3 +
Slide 4: Q1/FY2008 Highlight
Q1/FY2008 Highlight <unit: k> Quarterly net addition SoftBank NTT DoCoMo KDDI 530 530 520 520 500 Large increase 240 30 0 Q1/07 Q1/08 Q1/07 Q1/08 Q1/07 Q1/08 4
Slide 5: Q1/FY2008 Highlight
Q1/FY2008 Highlight <unit: bn JPY> Quarterly consolidated operating income 78.7 45% increase 54.3 50 Large increase YoY SOFTBANK +45% KDDI +16% NTT DoCoMo -25% 0 Q1/07 Q1/08 5
Slide 6: Consolidated net sales (Quarterly)
Consolidated net sales (Quarterly) <unit: bn JPY> 700 663.0 600 494.2 500 400 Q1/08 663.0bn JPY 300 258.6 200 Increased 34% YoY 100 0 Q1/06 Q1/07 Q1/08 *Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006. 6
Slide 7: Consolidated net sales (Quarterly)
Consolidated net sales (Quarterly) 700 663.0 <unit: bn JPY> 600 494.2 500 389.0 Mobile Communications (SOFTBANK MOBILE) 400 231.5 300 258.6 Others 58.2 e-Commerce 200 58.5 55.8 Internet Culture 34.4 44.4 51.8 100 87.3 81.8 77.8 Fixed-line Telecommunications (SOFTBANK TELECOM) 61.0 62.7 64.3 BB Infra
Slide 8: Consolidated EBITDA (Quarterly)
Consolidated EBITDA (Quarterly) <unit: bn JPY> 149.7 150 104.3 Mobile Communications 100 92.4 (SOFTBANK MOBILE) 92.4bn JPY 55.8 Q1/08 50 149.7bn JPY 48.5 57.3 19.5 Increased 44% YoY 0 Q1/06 Q1/07 Q1/08 EBITDA： Operating Income (loss) +depreciation and amortization, loss on disposal of fixed assets i
Slide 9: Consolidated operating income (Quarterly)
Consolidated operating income (Quarterly) <unit: bn JPY> 90 78.7 80 70 60 54.3 50 Q1/08 40 78.7bn JPY 30 20 10 -3.1 Increased 45% YoY 0 -10 Q1/06 Q1/07 Q1/08 *Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were consolidated from May 1, 2006. 9
Slide 10: Consolidated operating income (Quarterly)
Consolidated operating income (Quarterly) 90 <unit: bn JPY> 80 78.7 70 60 54.3 43.5 Mobile Communications 50 (SOFTBANK MOBILE) 43.5bn JPY 40 27.2 30 Q1/08 78.7bn JPY 20 27.0 35.2 10 Increased 45% YoY -3.1 0 Q1/06 Q1/07 Q1/08 -10 *Operating results of SOFTBANK MOBILE Corp. (former Vodafone K.K.) were
Slide 11: Consolidated ordinary income (Quarterly)
Consolidated ordinary income (Quarterly) <unit: bn JPY> 60 51.1 50 40 30 25.9 Q1/08 51.1bn JPY 20 10 Increased 97% YoY 0 Q1/06 Q1/07 Q1/08 -10 -13.0 -20 11
Slide 12: Consolidated net income (Quarterly)
Consolidated net income (Quarterly) <unit: bn JPY> 30 25.1 20 10 Q1/08 25.1bn JPY 1.4 0 Q1/06 Q1/07 Q1/08 -10 18X YoY -11.1 -20 12
Slide 13: Consolidated net income (Quarterly)
Consolidated net income (Quarterly) <unit: bn JPY> Q1/FY08 Q1/FY07 <Notes> (Apr/07-Jun/07) (Apr/06-Jun/06) Ordinary income 5 1 .1 25.9 Gain on sale of investment Special income, net 7.2 3.3 securities 4.6 Dilution gain from changes in equity interest 2.8 Income before income taxes and minority 58.4
Slide 14: Consolidated cashflow (Quarterly)
Consolidated cashflow (Quarterly) <unit: bn JPY> Q1/FY08 <Notes> (Apr/07-Jun/07) Corporate tax (29.7) Operating Interest paid (26.3) (27.4) Inventory increase (32.7) cashflow Installment receivables increase (75.7) Investing Purchase of property & equipment & (111.5) intangibles (92.9) cashflow Reve
Slide 15: EBITDA by segment (Quarterly)
EBITDA by segment (Quarterly) <unit: bn JPY> 160 149.7 140 120 104.3 Mobile Communications 100 (SOFTBANK MOBILE) 80 60 BB Infrastructure Fixed-line Telecommunications 40 (SOFTBANK TELECOM) 19.5 Internet Culture 20 (Yahoo Japan) e-Commerce 0 Others Q1/06 Q1/07 Q1/08 -20 15
Slide 16: Operating income by segment (Quarterly)
Operating income by segment (Quarterly) <unit: bn JPY> 90 78.7 Consolidated Operating income 70 54.3 Mobile Communications 50 (SOFTBANK MOBILE) BB Infrastructure 30 Internet Culture (Yahoo Japan) 10 e-Commerce -3.1 Fixed-line Telecommunications (SOFTBANK TELECOM) -10 Others -30 Q1/06 Q1/07 Q1/08 16
Slide 17: Cash position
Cash position <unit: bn JPY> 700 Unused portion of credit line facility Cash & cash equivalents 600 119.0 500 69.0 400 300 485.9 386.2 200 100 0 March/ 2007 June/ 2007 17
Slide 18: Net interest-bearing debt
Net interest-bearing debt <unit: bn JPY> 2,500 2,000 1,651.9 1,622.2 1,500 Investment by SOFTBANK and Yahoo Japan in SBM: 320.0 bn JPY 1,000 SBM Net interest- bearing debt (Non- 531.6 recourse) including 500 454.6 SBM loan balance of: 356.1 CB 389.0 1,342.1 bn JPY 0 Net interest- Net interest- Net i
Slide 19: Procurement through securitization of installment sales receivables
Procurement through securitization of installment sales receivables Amount 88.1bn JPY procured Procurement June 2007 time Moody’s: Aaa (program for institutional investors 65.1bn JPY Rating R&I : A (program for individual investors 23.0bn JPY) Applicable Receivables of installment sales of mobile ha
Slide 20: Ratings
Ratings JCR (AA-) AA /AA3 A+/A1 Mobile Communications business securitization ratings S&P (A) A/A2 (WBS structured rating (senior portion)) Moody’s (A3) A /A3 BBB+/Baa1 JCR (BBB) BBB/Baa2 BBB /Baa3 Jun 2007 S&P raised BB+/Ba1 BB/Ba2 Moody’s (Ba2) BB /Ba3 S&P (BB) B+/B1 2003 2004 2005 2006 2007 JAPAN
Slide 21: Business Progress
—~= SoftBank Business Progress 21
Slide 22: Net addition share
Net addition share 100% No. 1 in net addition share for 3 consecutive months 80% (May to July 2007) 60% SoftBank July 2007 net addition share 40% KDDI 16% 20% NTT DoCoMo 38% 45% 0% Vodafone April April April July 2005 2006 2007 -20% Source Telecommunications Carriers Association (Excluding EMOBILE)
Slide 23: Net addition
Net addition (k) 600 No. 1 in net additions for 500 3 consecutive months (May to July 2007) 400 300 SoftBank 225k 200 KDDI 191k 100 NTT DoCoMo 81k 0 Vodafone April April April July -100 2005 2006 2007 Source Telecommunications Carriers Association (Excluding EMOBILE) 23
Slide 24: Net addition (excl. prepaid)
Net addition (excl. prepaid) (k) 600 Overwhelming position 500 as No. 1 in net additions (May to July 2007) 400 300 SoftBank 256k 200 KDDI 182k 100 NTT DoCoMo 80k 0 Vodafone April April April July -100 2005 2006 2007 Source Telecommunications Carriers Association (Excluding EMOBILE) 24
Slide 25: Cumulative subscribers
Cumulative subscribers (m) 18 Shift to 3G is 16.67 16 15.11 14.98 15.27 accelerating further 14 12 2G 10 e/o July 2007 8 3G subscribers: 9.853m 6 3G ratio:59.1% 4 2 3G 0 April April April April 2004 2005 2006 2007 25
Slide 26: Reasons for being No.1 in net additions
Reasons for being No.1 in net additions Dramatic improvement in 4 areas Marketing (Price/ Brand) Content Handsets Network 26
Slide 27: Network: Base stations
Network: Base stations (BS) 46,000 1 August 2007: Achieved 46,000 BS 22,000 More than doubled after acquisition Q1 Q2 Q3 Q4 Q1 1 Aug FY07 FY08 27
Slide 28: Network: Towards perceived improvement
Network: Towards perceived improvement Users’ sense of improving network (during previous 2-3 months) With WithJune June2006 2006as as100: 100: Improved Improved by by 227% 7% !! 100 Increase in users’ sense of improving network Source: Research by an external institution June June 2006 2007 28
Slide 29: Handsets: Comparison of model variety
Handsets: Comparison of model variety (models) 30 SoftBank NTT DoCoMo KDDI 27 23 No. 1! 20 16 16 12 10 10 0 Mar to Aug Mar to Aug Mar to Aug Mar to Aug Mar to Aug Mar to Aug 2006 2007 2006 2007 2006 2007 29
Slide 30: Handsets: Comparison of color variety
Handsets: Comparison of color variety (colors) SoftBank NTT DoCoMo KDDI 100 99 80 Overwhelmingly 71 No. 1! 61 60 49 40 39 31 20 0 Mar to Aug Mar to Aug Mar to Aug Mar to Aug Mar to Aug Mar to Aug 2006 2007 2006 2007 2006 2007 30
Slide 31: Handsets: Last year's lineup
Handsets: Last year’s lineup (targeted layer) Last year options were limited 60’s and 2006 summer models (3G) over 50’s Sl i m seg s One- Busi nes 40’s c Musi 30’s 804NK 20’s 705SH 905SH 10’s 705T 31
Slide 32: Handsets: This summer's lineup
Handsets: This summer’s lineup (targeted layer) Lineup suits all generations 60’s and over Simp le 50’s GENT 812SH s se g c One- 40’s -sp e ation High d ows ® r di n W in Coo Slim 30’s 912T 20’s 814SH 815SH X01T 810P 814T 805SC 912SH FULLFACE X02HT Display prevented due to protection of rights. 913S
Slide 33: Handsets: Overwhelming thin & light
Handsets: Overwhelming “thin & light” 11 (mm) Summer 2007 models Thin 13 SoftBank NTT DoCoMo 15 au 17 150 130 110 90 (g) 19 Light 21 23 *excl. smart phones 25 33
Slide 34: Handsets: Launch of major summer model: 913SH
Handsets: Launch of major summer model: 913SH Full-screen style Launched on July 28! 34
Slide 35: Handsets: Launch of major summer model: 815T
Handsets: Launch of major summer model: 815T Launched today! Ultimate fashion mobile Display prevented due to protection of rights. ©1976, 2007 SANRIO CO., LTD. APPROVAL No.S8051713 PEANUTS (C) United Feature Syndicate, Inc. TV TOKYO Broadband Entertainment, Inc. 35
Slide 36: Content: Introduction of Yahoo! Keitai
Content: Introduction of Yahoo! Keitai The interface that approx. 50 million* users are familiar with (1) Search window (2) My Yahoo! Display prevented due to protection of rights. (3) Directory *Number of Yahoo! JAPAN’s unique customers, source: Press release of Yahoo Japan Corporation 36
Slide 37: Content: Access
Content: Access Page views Link to Yahoo! JAPAN set in top page Compared to the end of June 2006 growth is approx. 66 times *Page views of Yahoo! JAPAN’s top page through mobile devices Till Sep 30th: Yahoo! Mobile from Jan 10th: Yahoo! Keitai 37
Slide 38: Content: Improved accessibility
Content: Improved accessibility One click to the Internet! PC Display prevented Browser due to protection of rights. start-up Display prevented due to protection of rights. Click! Mobile Y! Button Display prevented due to protection of rights. Click! 38
Slide 39: Price Plan: Basic strategy
Price Plan: Basic strategy Installment sales method Handset =Low initial cost (New Super Bonus) Communication New price plans =Extremely reasonable White Plan / Double White 39
Slide 40: Price Plan: Penetration of installment sales
Price Plan: Penetration of installment sales New Super Bonus application (m) 6 5 (New Super Bonus) 4 3 6.30 million 2 1 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul *As of 7 August 2007 2006 2007 40
Slide 41: Price Plan: Strong support from customers
Price Plan: Strong support from customers (m) Application White White Plan Plan 6.90m White WhitePlan Plan Double Double White White Double DoubleWhite White 1.70m *As of 7August 2007 2007/1 2007/3 2007/8 41
Slide 42: Price Plan: Price image
Price Plan: Price image (%) Image of reasonable price 60 SoftBank NTT DoCoMo au 50 Leader in price image 40 30 20 10 Source: Research by an external institution 0 Jan Feb Mar Apr May Jun Jul 2007 42
Slide 43: Price Plan: Price experience
Price Plan: Price experience Price evaluation by users that changed operators, after Mobile Number Portability “Became more expensive” “Became “Became more expensive” “Became more expensive” “Became “No change” economical” economical” 40.6% 34.9% “Became economical” “No change” 74.6% “No change” Sof
Slide 44: Price Plan: Family subscriber ratio
Price Plan: Family subscriber ratio 70% joined White Plan 80% Family Discount 24 70% 60% 50% 40% 30% May 10 Announced the launch of Display prevented “White Plan Family Discount 24” due to protection of rights. 20% 10% 0% Jan Feb Mar Apr May Jun Jul 2007 44
Slide 45: Brand: Intention to subscribe
Brand: Intention to subscribe Candidate operator Up-down ratio with July 2006 as 100) SoftBank 100 au NTT DoCoMo Source: Research by an external institution 0 July 2006 June 2007 45
Slide 46: Sales structure: Expansion of shops
Sales structure: Expansion of shops (shops) 2,500 Number of SoftBank Shops 2,310 Increased by 2,000 approx. 25%! (Compared to April of previous year) 1,500 Display prevented due to protection of rights. 1,000 500 Display prevented due to protection of rights. 0 Apr 06 Jul 07 46
Slide 47: Sales structure: Expansion of counters
Sales structure : Expansion of counters (counters) 10,000 Approx. Shop counters 9,000 8,000 Increased by approx. 45%! (Compared to April of previous year) 6,000 4,000 Display prevented due to protection of rights. 2,000 Display prevented due to protection of rights. 0 Apr 06 Jul 07 47
Slide 48: Sales structure: Group synergy
Sales structure : Group synergy SoftBank HAWKS contribute to customer acquisitions 80% Net addition share in Kyushu region SoftBank 70% Overwhelmingly No.1 60% 67% share! (July 2007) 50% 40% Display prevented due to protection of rights. 30% KDDI 20% Display prevented due to protection of rights. 10
Slide 49: Results
Results —~= SoftBank 49
Slide 50: Significant improvement of brand image
Significant improvement of brand image (%) SoftBank users’ image of SoftBank 70 60 Improving Brand recognition 50 Worsening is improving 40 30 20 10 Source: Research by an external institution 0 Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- 06 06 07 07 07 07 07 07 50
Slide 51: Significant decrease in churn rate
Significant decrease in churn rate 4.0% 3G Churn rate 3.0% 2.0% Q1/2008 1.0% 1.07% 0.0% Q4/2006 Q4/2007 Q1/2008 51
Slide 52: ARPU
ARPU (JPY) 7,000 5,870 5,930 5,840 6,000 5,600 5,590 5,700 5,560 5,210 5,000 5,000 4,000 4,540 4,540 4,510 4,260 4,230 4,320 4,230 3,830 3,590 Voice 3,000 2,000 Data 1,000 1,330 1,390 1,330 1,340 1,350 1,380 1,330 1,380 1,410 0 Q1/06 Q2 Q3 Q4 Q1/07 Q2 Q3 Q4 Q1/08 52
Slide 53: Customer monthly charge (reference)
Customer monthly charge (reference) (including installment charge) (JPY) 7,000 5,870 5,930 5,840 6,000 5,600 5,590 5,700 5,580 5,430 5,480 5,000 4,000 4,540 4,540 4,510 4,260 4,230 4,320 4,230 Installment 3,830 3,590 charge 3,000 Voice 2,000 Data 1,000 1,330 1,390 1,330 1,340 1,350 1,380 1,330 1,380
Slide 54: MOU
MOU Q1/ 2008 Results Usage of new price plans is much higher than older plans Older plans White Plan Double White 54
Slide 55: Intention to continue using
Intention to continue using (%) 81% Intention to continue using increasing significantly 75 72 64 60 Source: Research by an external institution 2006/2 2006/11 2007/6 55
Slide 56: Phases from FY2008 on
Phases from FY2008 on Initial phase to growth phase Current position Harvesting stage •Stable growth expansion Growth stage •Revenue & profit growth •Customer base expansion •Launch new services Initial stage •Acquisition •Business restructuring •Concentrated investments FY2007 in 5 years in 10 year
Slide 57: Phase of FY2008
Phase of FY2008 Aim to maximize future revenue through expansion of customer base Revenue Service Service Customer base Scale 57
Slide 58: SOFTBANK's goal
SOFTBANK’s goal No. 1 in infrastructure, platform/portal, and content commerce business education game broadcast sports publish music Platform/ Portal Infrastructure 58
Slide 59: Content: Rights management business
Content Rights management business Providing popular content both nationally and overseas Football Fighting sports Display prevented due to protection of rights. Display prevented due to protection of rights. Movie Distribution rights for mobile and PC use, Broadcasting rights for overseas Distribut
Slide 60: Examples of rights management
Content Examples of rights management Obtain a wide range of rights and manage these globally Fighting sports event “Dynamite USA” (hosted by FEG USA) Business sponsor rights Display prevented due to protection of rights. PPV (Pay-Per-View) Fighting sports events which are among the world’s largest
Slide 61: Content Video business: Yahoo! Streaming
Content Video business: Yahoo! Streaming Number of unique users (m) 12 Users exceeded Video service on Yahoo! JAPAN* 10 11 million! 8 No.1 in Japan! 6 4 G service by U company 2 Source: Access from home, searched by NetRatings Japan Inc 0 * Yahoo! Streaming, Yahoo! Movie, Yahoo! News, etc. Dec Mar J
Slide 62: CM Museum
Content CM Museum Japan’s biggest Internet site specializing in TV commercials Service launched on July 31 <Advertising companies as of August 6> Artnature Inc. DAIKYO REALDO INCORPORATED S X L Co., Ltd. DAIKIN INDUSTRIES, LTD. Espritline Inc. Taisho Pharmaceutical Co., Ltd. EPSON SALES JAPAN CORPOR
Slide 63: Yahoo! Streaming (beta)
Content Yahoo! Streaming (beta) Introduce popular PC content to mobile in a series Add new category “Entertainment and Korea Entertainment news interview” on July 24! Display prevented Display prevented due to protection of rights. due to protection of rights. AP Entertainment news Entertainment Chi
Slide 64: Yahoo! Streaming X Fukuoka SoftBank HAWKS
Content Yahoo! Streaming X Fukuoka SoftBank HAWKS Streaming to both PC and mobile Display prevented due to protection of rights. Display prevented Display prevented due to protection of rights. due to protection of rights. Live broadcast of hosted games Distribute 1 minute digest of previous day’s h
Slide 65: Now:
Now: Content & services focused on PC, both in terms of quality and quantity Mobile Display prevented due to protection of rights. Display prevented due to protection of rights. PC 65
Slide 66: Future:
Future: Content & services will be provided seamlessly Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented due to protection of rights. 66
Slide 67: Future:
Future: SOFTBANK will leverage its strength to the maximum Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented due to protection of rights. 67
Slide 68: Lifestyle Company in the 21st Century
Lifestyle Company in the 21st Century Broadband available to all living people everywhere 68
Slide 69: Make mobile in Japan more fun
Make mobile in Japan more fun 69
Slide 70: Make broadband in Japan more fun
Make broadband in Japan more fun 70
Slide 71: 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 71
Slide 72: 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
Slide 73: 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 Operating income bn JPY 27.2 29.3 56.9 42.2 43.5 Mobile