Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2007 Earnings Presentation
57 slides from Softbank's earnings presentation, Aug 8, 2006
Slide 1: Earnings Results For the First Quarter Ended June 30, 2006
Earnings Results For the First Quarter Ended June 30, 2006 (Q1/FY2007) August 8, 2006 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. “FY2007” and “FY07” refer to the fiscal year endin
Slide 2: Highlights
<Highlights> ¾Consolidation of Vodafone K.K. (from May 1st) ¾Continued to Record Surplus 2
Slide 3: Q1/FY2007 Summary of Consolidated Earnings Results
Q1/FY2007 Summary of Consolidated Earnings Results <Quarter> <unit: b JPY> Q1/FY07 Q1/FY06 Year on year Net Sales 494.2 258.6 +235.5 EBITDA 104.3 19.5 +84.8 Operating income (loss) 54.3 (3.1) +57.5 Ordinary income (loss) 25.9 (13.0) +39.0 Income before income taxes and 29.3 0.7 +28.5 minority intere
Slide 4: Consolidated Net Sales (Quarterly)
Consolidated Net Sales (Quarterly) 500 494.2 <unit: b JPY> 450 Annualized net sales on a scale of 2 trillion JPY 400 231.5 Mobile communications 350 (Vodafone) 298.4 300 287.4 258.6 264.1 250 Others 80.6 68.4 58.5 65.1 55.8 e-Commerce 200 42.0 42.2 34.4 36.7 44.4 Internet Culture 150 (Yahoo! JAPAN)
Slide 5: Consolidated Operating Income (Quarterly)
Consolidated Operating Income 60.0 (Quarterly) 54.3 <unit: b JPY> 50.0 40.0 34.3 30.0 23.5 Q1/FY07 54.3b JPY 20.0 10.0 7.5 0.0 FY04 FY05 FY 06 FY07 Q1 Q1 Q1 Q1 Increased due to -3.8 -2.9 -3.1 -10.0 -6.6 -7.5 consolidation of -8.8 -11.0 Vodafone K.K. -20.0 -15.1 (2 months portion) -24.1 -30.0 5
Slide 6: Consolidated Operating Income (Quarterly) by segment
Consolidated Operating Income 60.0 (Quarterly) 54.3 <unit: b JPY> 50.0 Mobile Communications 40.0 Impact of sale of ADSL modem Mobile communications rental business 34.3 (Vodafone K.K.) 30.0 +27.2b JPY 23.5 27.9 27.3 20.0 Q1/FY07 54.3b JPY 15.9 10.0 7.5 FY04 FY05 FY 06 FY07 0.0 -0.8 Q1 Q1 Q1 Q1 -2.9
Slide 7: Consolidated EBITDA (Quarterly)
Consolidated EBITDA (Quarterly) <unit: b JPY> 120 104.3 100 80 Mobile communications 55.8 (Vodafone K.K.) +55.8b JPY 60 54.9 44.7 40 48.5 30.7 Q1/FY07 104.3b JPY 19.5 16.2 20 15.8 6.0 5.9 1.4 0.1 0 Q1 Q1 Q1 Q1 FY04 FY05 FY 06 FY07 -7.0 -20 -16.6 （EBITDA： Operating income (loss) + depreciation, amort
Slide 8: Consolidated Non-operating Income (expenses)
Consolidated Non-operating Income (expenses) (Quarterly) <unit: b JPY> Q1/FY07 Q1/FY06 <Note for FY07> Interest income 1.0 0.3 Equity in earnings under the equity method 9.0 1.6 SBI +9.1 SOFTBANK (4.4) Interest expense (14.6) (6.8) BB Mobile (6.2) Cost from structuring of Others (Net) (23.9) (4.9) L
Slide 9: Consolidated Ordinary Income (Quarterly)
Consolidated Ordinary Income 29.7 30 (Quarterly) 25.9 <unit: b JPY> 20 11.2 10 Q1/FY07 25.9b JPY 0 FY04 FY05 FY-0.4 06 FY07 Q1 Q1 Q1 Q1 -10 -8.6 -8.0 -9.6 -11.6 -11.3 -14.2 -13.0 Increased 39b JPY -20 year on year -23.0 -30 -30.6 -40 9
Slide 10: Consolidated Net Income (Quarterly)
Consolidated Net Income (Quarterly) <unit: b JPY> Q1/FY07 Q1/FY06 <note> Ordinary Income 25.9 (13.0) Special Income, net 3.3 13.7 Income before income taxes and minority 29.3 0.7 interest Primarily Yahoo! Income taxes: Current 10.1 8.2 JAPAN Primarily Vodafone Income taxes: Deferred 9.2 (2.7) K.K. P
Slide 11: Consolidated Net Income (Quarterly) Q1/FY07 1.4b JPY
Consolidated Net Income 40 (Quarterly) 39.7 <unit: b JPY> 30 22.0 20 11.8 10 6.9 Q1F/Y07 1.4b JPY 1.4 0 FY04 FY05 FY 06 FY07 Q1 Q1 Q1 Q1 -10 -11.1 -13.4 -20 -16.3 -17.8 Increased 12.5b JPY year on year -30 -26.5 -27.2 -34.7 -40 -42.6 -50 11
Slide 12: Consolidated Operating CF (Quarterly)
Consolidated Operating CF 70 (Quarterly) <unit: b JPY> 61.9 64.6 60 50 40 Royalty payment in advance from sales of the 30 modem rental business Q1/FY07 64.6b JPY 20 13.8 10 6.6 0.2 0 FY04 FY05 FY 06 FY07 Q1 Q1 Q1 Q1 -10 -11.3-11.9 Increased 82.8b JPY -20 -15.8 -18.7 -15.2 -18.2 year on year -30 -25.
Slide 13: Active Management to Achieve Profitability
Active Management Operating to Achieve Profitability Income Mobile communications (Q2/Q3) Proactive up-front investment for future growth ・MNP ・MNP related related cost cost ・Cost ・Cost for for brand brand change change ・Increase ・Increase the the No. No. of of base base station station Mobile Commu
Slide 14: SOFTBANK consolidated BS
SOFTBANK consolidated BS （End June 2006) Vodafone K.K.’s Asset and Liabilities are consolidated at fair value as of acquisition Total asset: 4trillion JPY <unit: b JPY> Current assets LBO Bridge Loan (Non-recourse) 851.8 Current Liabilities Vodafone portion 1,166.0 Non-current: 2,195.2 527.4b JPY Ta
Slide 15: Cash Position
Cash Position <unit: b JPY> 600 Unused Portion of Credit Line Facility Cash and Cash Equivalents 500 100.0 61.0 400 30.0 300 30.0 440.6 450.6 200 75.0 31.0 30.0 292.5 322.2 100 170.4 133.6 152.5 0 1 2 3 4 5 6 06 r-0 -0 -0 -0 -0 -0 - a ar ar ar ar ar un 15 M M M M M M J
Slide 16: Trends in Net Debt
Trends in Net Debt (Unit b yen) 2,500 Consolidate Net Debt 2,178.6 2,000 1,500 Vodafone’s Bonds:125b JPY Investment by SB and Yahoo! JAPAN : 320 b JPY 1,000 531.6 CB 454.6 500 LBO Bridge Loan : 1,166b JPY 134.8 ＋ (Non-recourse） 0 Mar.04 Mar.05 Mar.06 Jun.06 Net debt increased due to the acquisition
Slide 17: Vodafone Acquisition Financing (by BB Mobile)
Vodafone Acquisition Financing (by BB Mobile) Completed acquisition bridge financing (April 27th) LBO bridge loan facility agreement Facility size : 1.28t JPY Participating Financial Institutions: 17 Refinance targeted at the end of September Shift to long-term and diversified financing Syndicated l
Slide 18: (Subsequent Events) Sale of SBI Holdings Shares
(Subsequent Events) Ensure Financial Flexibility Sale of SBI Holdings Shares Sale proceeds Approx. 136.0 b JPY Gain on sale Approx. 65.0 b JPY Date of the sale August 1st and 2nd Ownership ratio 26.7% to 0% Reallocation of management resources following this Sale -Improve our financial stability -Co
Slide 19: Mobile Communications Business
Mobile Communications Business 19
Slide 20: Mobile Communications / Key Performance Indicator
Mobile Communications/ Key Performance Indicator Subscriber ARPU* (Quarter) 18 (m) 7,000 （JPY） *excludes termination fees and other fees 14.966 14.991 15.116 15.209 15.240 16 5,870 5,930 5,840 6,000 5,600 5,590 14 12 5,000 10 2G 11.524 4,000 12.798 12.172 8 13.667 13.237 3,000 6 3G proportion 24.4%
Slide 21: Progress on Four Commitments
Progress on Four Commitments 1. 3G Network Enhancement 2. 3G Handset Enrichment 3. Content Enhancement 4. Enhancement of Sales Structure and Branding 21
Slide 22: 1. 3G Network Enhancement
—~= SoftBank 1. 3G Network Enhancement 22
Slide 23: 3G Network Enhancement – Cover black spots
3G Network Enhancement – Cover black spots Setting up Base Stations steadily towards Mobile Number Portability Target within FY2007： 46k Base Stations No. of 3G Base Stations： 22,771 (as of the end of June) 05/3 06/3 06/6 07/3 Vodafone 23
Slide 24: 2. 3G Handset Enrichment
—~= SoftBank 2. 3G Handset Enrichment 24
Slide 25: 3G Handset Enrichment: 905SH
3G Handset Enrichment: 1 “905SH”, AQUOS handset sold primarily out of 5 “One-Segment” capable 3G handsets “One-segment” Handset Sales Ranking No.1* Vodafone 905SH New foothold for introduction of future flagship models * Based on June–July cumulative sales number (after the launch of the handset) So
Slide 26: Thinnest 3G handset, 705SH SLIMIA launched
3G Handset Enrichment: 2 Launched on June 14 Thinnest 3G handset made in Japan, 705SH SLIMIA launched Launch of Popular Handset Brisk Sales! Width 17mm Vodafone 705SH 26
Slide 27: 3. Content Enhancement
—~= SoftBank 3. Content Enhancement 27
Slide 28: Disney content distribution launched ahead of others
Disney content distribution launched ahead of others World’s first Disney Content Distribution - Launched on June 1 Disney Mobile Comics World first！ 9 E-Comics for mobile phones Display prevented Display prevented 9 Aladdin, Beauty and the Beast, Lion King due to protection of rights. due to protec
Slide 29: Provide easy access to Yahoo! - Step 1
Provide easy access to Yahoo! - Step 1 On July 4, “Yahoo! JAPAN” was relocated to the top of the Vodafone live! content page Direct access Display prevented due to protection of rights. Access to Yahoo! significantly increased! 29
Slide 30: Provide easy access to Yahoo! - Step 2
Provide easy access to Yahoo! - Step 2 Build-in Yahoo! Keitai Button (service to start from Oct. 1 onwards (scheduled)) Press here Yahoo! Keitai Button ・ ・・ etc. Access to a variety of services/content with a single touch of a button 30
Slide 31: 4. Enhancement of Sales Structure and Branding
4. Enhancement of Sales Structure and Branding 31
Slide 32: Change of Portal Site and Service Names
Change of Portal Site and Service Names On October 1, Vodafone mobile phones will become SOFTBANK mobile phones Vodafone Service name change SOFTBANK, SoftBank or S! Vodafone/ Vodafone live! Vodafone Portal site name change Yahoo! Keitai Vodafone live! 32
Slide 33: Enhancement of Sales Structure – Corporate Customers
Enhancement of Sales Structure – Corporate Customers Mobile Business Division was newly created as part of JAPAN TELECOM 1. Sales activities to JAPAN TELECOM’s corporate customers 2. Building FMC mobile JAPAN TELECOM Sales team* solutions for corporate Approx. 1,500 staff customers Vodafone Sales te
Slide 34: Enhancement of Sales Structure - Alliance
Enhancement of Sales Structure - Alliance Business Alliance with TOKAI Group 1. Collaboration in mobile communications business 2. Complementary networks 3. Collaboration in consumer broadband business TOKAI Group Sales strength (door-to-door, in-person sales) Comprehensive telecom Display prevented
Slide 35: No.1 IP Group Company
—~= SoftBank No.1 IP Group Company 35
Slide 36: Speed of Growth
Speed of Growth Vodafone K.K. Acquisition （No. of million lines） 25 20 Established a customer base of approx. 26 million 15 in approx. 4.5 years Acquisition 10 5 *The number of lines as of April 2006 includes Sept. 2001~ 15.22 million Vodafone K.K. lines as of the end of April 2006. 0 0 01/3 02/3 03
Slide 37: Took a lead over competitors with innovative technologies
Took a lead over competitors with innovative technologies Had already built a full-IP network by 2001 Internet Internet Connection Connection 37
Slide 38: Build further advanced network
Build further advanced network Integrate broadband, fixed-line and mobile networks Large/Mid Corporate user Other ISP Operators Corporate Mobile user Corporate user Leased line service Routing info. exchange service Relay point Relay point Relay point Base Stations Large relay point Large relay poin
Slide 39: Yahoo! JAPAN Growth by Broadband
Yahoo! JAPAN Growth by Broadband 【Trends in Page Views】 （PV in billions） 35 Monthly Page Views 30 Steadily expand due to broadband penetration 25 No.1 Portal 20 1.24b page views/day* 44.8m unique customers/month* 15 10 5 0 02/6 06/6 *Source：Yahoo! JAPAN’s web site 39
Slide 40: Validation of Internet Business Model
Validation of Internet Business Model Continuous revenue growth through additional services （Yen） 【Average revenue per user* (ADSL)】 4,500 ＜Launch of service＞ 04/10～ 4,000 （Start charging） 02/4～ 3,500 02/12～ 3,000 2,500 06/1～ Yahoo! ISP 2,000 BB Security 04/8～ BB Phone 1,500 call charge ADSL 45M 04/
Slide 41: Ability to create innovative services/content
Ability to create innovative services/content Growth, profitability, etc. Foresight into new services/technologies Develop/expand markets ? New mobile services ADSL E*TRADE No.1 Online Online Video securities Online No.1 games Portal No.1 No.1 Auction Software No.1 distribution No.1 Time 41
Slide 42: SOFTBANK's Enterprise Value:1
SOFTBANK’s Enterprise Value:1 Overseas development Vodafone K.K. Customer base Technology Content Human resources （Yahoo!, E*TRADE） Content （Know-how in Internet） Sales force Human resources Sales force （Mass retailers） Unrealized gain Unrealized gain Company performance Company performance Before t
Slide 43: SOFTBANK's Enterprise Value:2
SOFTBANK’s Enterprise Value:2 Alibaba、Taobao Vodafone Group Oversea development BB+Fixed+Mobile Customer base ＝26m Driving force World-strongest for growth Technology IP backbone 1) Profitability Creation of 2) Competitiveness Content IP-based content Know-how in telecom /Internet industry Human res
Slide 44: Challenge to become No.1 company
Challenge to become No.1 company NTT Mobile DoCoMo Communications Internet NTT Connection （Dial-Up・ISDN） （ADSL） ISP Nifty Narrowband Broadband Infrastructure (Hardware) plays a key role Content (Software) plays a key role 44
Slide 45: New evolution of the Internet
New evolution of the Internet ¾Service and entertainment conversion ¾Participation services 45
Slide 46: The Internet is shifting to a platform in daily life
The Internet is shifting from a communication tool to a platform in daily life Convenience Convenience in in daily daily life life Communication Communication // search search tool tool E*TRADE Converging convenience with entertainment Display prevented due to protection of rights. Entertainment Ent
Slide 47: New online entertainment concept – 11UP
New online entertainment concept – 11UP - Internet full of smiles, an exciting space! - “G-Planet concept” • Make the Internet an exciting entertainment platform rather than a technology-driven platform • E-commerce and auction services evolve to entertainment • Collaboration between CAMELOT* and th
Slide 48: G-Planet concept, first wave of titles: I LOVE GOLF!
“G-Planet concept”, the first wave of titles I LOVE GOLF! Aug 2006 Pre-launch test with limited users By end 2006 Full launch (planned) To be sold on Yahoo! Games Display prevented due to protection of rights. Display prevented due to protection of rights. A three-dimensional lobby at the club house
Slide 49: Massively Multiplayer Online Game
Massively Multiplayer Online Game World’s first MMO* action “Dynasty Warriors BB” Achieved through development capability of Koei and broadband performance of SOFTBANK Display prevented Display prevented due to protection of rights. due to protection of rights. Yahoo! BB’s exclusive application Enjo
Slide 50: Contest with Audience Participation – Yahoo! Streaming
Contest with Audience Participation – Yahoo! Streaming Internet Audience-screened beautiful girl in her first leading role in Beauty Contest a broadband drama. To be released on Yahoo! Streaming. Display prevented due to protection of rights. Applicants: 5,560 Total votes: 156,384 Lost Memories (ten
Slide 51: Entertainment with Audience Participation – Odds Park
Entertainment with Audience Participation – Odds Park Horse racing by the top 10 horses selected by audience voting “The 1st Odds Park Fan Selection in Kasamatsu” held on 7 July Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented due to pro
Slide 52: Citizen participating News Site - OhmyNews
Citizen participating News Site - OhmyNews “Japanese version of OhmyNews (tentative name)” having a strong position as new media to be launched initially on 28 August “Opening Preparation Blog” in place Application Application for for citizen citizen reporters reporters from from 21 21 July July Reg
Slide 53: SOFTBANK's Future Goal
—~= SoftBank SOFTBANK’s Future Goal 93
Slide 54: Strategy to achieve our goal
Strategy to achieve our goal No.1 in Infrastructure/Platform・Portal/Content Broadcast Finance Publication Business Commerce Game Sports Music Platform/Portal Infrastructure 54
Slide 55: Lifestyle Company in the 21st Century
Lifestyle Company in the 21st Century Display prevented due to protection of rights. Display prevented Display prevented due to protection of rights. due to protection of rights. Display prevented due to protection of rights. Amusement：Broadcast, Sports, Game Display prevented Housework：Auction, on-
Slide 56: 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. 56
Slide 57: 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