Softbank Group Corp. · TSE:9984
Softbank — 1H FY2007 Earnings Presentation
104 slides from Softbank's earnings presentation, Nov 8, 2007
Slide 1: Earnings Results for the Interim Period Ended September 30, 2007
Earnings Results for the Interim Period Ended September 30, 2007 Analyst Meeting November 8, 2007 SOFTBANK CORP.
Slide 2: 1H/FY2007 Summary of Consolidated Earnings Results
1H/FY2007 Summary of Consolidated Earnings Results <Highlights> 1. Consolidated earnings results: 1H operating income increased by 49% (YoY) 1H net income: 3.2 times (YoY) 2. Success in mobile operations: 1.14 million of net subscriber additions in 1H 3. Towards No.1 Internet company in Asia: IPO of
Slide 3: Content
Content Items Page Consolidated P/L Analysis 5 Consolidated B/S Analysis 18 Accounting Consolidated CF Analysis 26 CAPEX Status 28 Financial Activities 33 Finance Interest-bearing Debt Status 36 Investment Results 53 Broadband Infrastructure Segment 60 Fixed-line Telecommunications Segment 70 Operat
Slide 4: Accounting
Accounting Kazuko Kimiwada General Manager Accounting, Internal Control SOFTBANK CORP. 4
Slide 5: Consolidated P/L, B/S, CF Analysis and CAPEX Status
- Consolidated P/L Analysis - Consolidated B/S Analysis - Consolidated CF Analysis - CAPEX Status 5
Slide 6: Consolidated P/L summary
Consolidated P/L summary <PL-1> (m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Net Sales 494,231 625,941 1,120,173 702,195 721,850 2,544,219 663,084 701,660 38,575 1,364,745 244,571 Operating income 54,357 58,194 112,552 84,733 73,780 271,065 78,746 89,000 10,253 167,746 55,194 (Operati
Slide 7: Scope of consolidation/scope of equity method
Scope of consolidation/scope of equity method <PL-2> FY07/2Q Core Companies SOFTBANK MOBILE, SOFTBANK BB, SOFTBANK TELECOM, Consolidated subsidiaries 112 Yahoo Japan, Broadmedia(*1), SOFTBANK TECHNOLOGY, ITmedia, etc. Newly consolidated companies 2 Subsidiaries excluded from consolidation 8 Non-cons
Slide 8: Consolidated net sales
Consolidated net sales <PL-3> ¾ YoY increase thanks to firm trend of Mobile Communications segment (m JPY) 1,500,000 1,364,745 Mobile Communications 1,300,000 1,120,173 BB Infrastructure 1,100,000 Fixed-line Telecommunications 900,000 +22% Internet Culture 700,000 500,000 e-Commerce 300,000 Others 1
Slide 9: Consolidated operating income
Consolidated operating income <PL-4> ¾ YoY increase thanks to firm trend of Mobile Communications segment, achieve record high since establishment on interim basis (m JPY) 167,746 Mobile Communications 170,000 150,000 BB Infrastructure 130,000 Fixed-line 112,552 Telecommunications 110,000 Internet C
Slide 10: Consolidated EBITDA
Consolidated EBITDA <PL-5> ¾ 38% YoY increase thanks to firm trend of Mobile Communications segment, achieve record high since establishment on interim basis (m JPY) 400,000 Mobile Communications 314,272 BB Infrastructure 300,000 228,400 Fixed-line Telecommunications 200,000 Internet Culture e-Comme
Slide 11: Non-operating income/loss
Non-operating income/loss <PL-6> ¾ Increase in interest expense, however non-operating expenses level out (m JPY) 20,000 Interest income Other non-operating 0 income/expense (net) Foreign exchange gain/loss (20,000) Equity in earnings (loss) of affiliated companies (40,000) Financing related expense
Slide 12: Consolidated ordinary income/loss
Consolidated ordinary income/loss <PL-7> ¾ Substantial increase accompanying the growth in consolidated operating income and achieve record high since establishment on interim basis (m JPY) 120,000 111,165 100,000 80,000 62,690 60,000 +77% 40,000 20,000 0 06/1H 07/1H YoY - Fluctuation factors YoY +4
Slide 13: Special income/loss
Special income/loss <PL-8> ¾ Special income: unrealized appreciation on investments at subsidies in the U.S totaled JPY 14.1bn ¾ Special loss: valuation loss on investment securities totaled JPY 10.1bn (m JPY) 80,000 Special income 60,000 40,000 Special loss 20,000 0 Special income/ (20,000) loss 06
Slide 14: Consolidated net income/loss
Consolidated net income/loss <PL-9> ¾ Significant YoY increase in net income (m JPY) 50,000 46,462 40,000 30,000 20,000 14,439 +222% 10,000 0 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Income before income taxes and 29,302 89,596 118,898 58,024 31,650 208,573 58,403 64,5
Slide 15: Tax and other adjustments
Tax and other adjustments <PL-10> (m JPY) 150,000 Yahoo Japan Corporation 23,531 SOFTBANK Holdings Inc. (8,457) (reversal of income tax payable) 120,000 SBM use of deferred tax assets (loss carry-forwards) 27,609 SBM depreciation and amortization adjustments, etc 12,415 Income taxes; current 90,000
Slide 16: Effect of tax adjustments
Effect of tax adjustments <PL-11> ¾ Breakdown of tax expenses (1H/FY07) (m JPY) Item Amount % Outline 1 Income before income taxes and minority interests 122,930 100% Yahoo Japan Corporation 23,531 2 Income taxes; Current 16,808 SOFTBANK Holdings Inc. (8,457) SBM use of deferred tax assets (loss car
Slide 17: Status of loss carry-forwards
<PL-12> Status of loss carry-forwards (m JPY) Balance Company Name Expiry Date (end of Sep 2007) SOFTBANK MOBILE 131,394 Mar 2011 SOFTBANK BB 87,228 Mar 2011-Mar 2013 SOFTBANK TELECOM 80,724 Mar 2013-Mar 2015 SOFTBANK IDC 66,536 Mar 2009-Mar 2013 Others 218,199 Mar 2009-Mar 2015 Total 584,081 *Amoun
Slide 18: Consolidated P/L, B/S, CF Analysis and CAPEX Status
- Consolidated P/L Analysis - Consolidated B/S Analysis - Consolidated CF Analysis - CAPEX Status 18
Slide 19: Summary consolidated B/S
Summary consolidated B/S Current assets Current liabilities Long-term liabilities Fixed assets Equity Current assets Current liabilities (m JPY) SBM (m JPY) 1,445,045 1,500,000 1,500,000 1,247,433 1,142,903 1,110,276 1,000,000 870,905 1,000,000 677,817 480,452 500,755 500,000 500,000 569,616 574,140
Slide 20: Consolidated B/S analysis (1) Current assets
Current assets Current liabilities Consolidated B/S analysis (1) Current assets Long-term liabilities Fixed assets Equity (m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Current assets 1,247,433 1,445,045 197,611 SBM 677,817 870,905 19,087 Others 569,616 574,140 4,523 Cash and deposits 377,666 47
Slide 21: Consolidated B/S analysis (2) Tangible assets
Current assets Current liabilities Consolidated B/S analysis (2) Tangible assets Long-term liabilities Fixed assets Equity (m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Fixed assets 3,059,240 3,009,613 (49,627) SBM 2,000,516 1,987,553 (12,963) Others 1,058,724 1,022,060 (36,664) Property and eq
Slide 22: Consolidated B/S analysis (3) Intangible assets
Current assets Current liabilities Consolidated B/S analysis (3) Intangible assets Long-term liabilities Fixed assets Equity (m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Intangible assets, net 1,279,710 1,257,136 (22,574) SBM 1,155,239 1,132,415 (22,823) Others 124,471 124,720 248 Goodwill 1,0
Slide 23: Consolidated B/S analysis (4) Current liabilities
Current assets Current liabilities Consolidated B/S analysis (4) Current liabilities Long-term liabilities Fixed assets Equity (m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Current liabilities 1,142,903 1,110,276 (32,626) SBM 480,452 500,755 20,302 Others 662,450 609,520 (52,929) Accounts payab
Slide 24: Consolidated B/S analysis (5) Long-term liabilities
Current assets Current liabilities Consolidated B/S analysis (5) Long-term liabilities Long-term liabilities Fixed assets Equity (m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Long-term liabilities 2,451,712 2,550,550 98,838 SBM 1,562,942 1,712,678 149,736 Others 888,770 837,872 (50,898) Corpora
Slide 25: Consolidated B/S analysis (6) Equity
Current assets Current liabilities Consolidated B/S analysis (6) Equity Fixed assets Long-term liabilities Equity (m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Equity 716,237 797,752 81,514 Shareholders' equity 158,515 244,822 86,306 Common stock 163,309 187,315 24,005 Execution of stock subscr
Slide 26: Consolidated P/L, B/S, CF Analysis and CAPEX Status
- Consolidated P/L Analysis - Consolidated B/S Analysis - Consolidated CF Analysis - CAPEX Status 26
Slide 27: Consolidated cash flow main breakdown
27 <CF> *Significant items from the consolidated CF statement are shown here. SBM (20,000) Decrease in cash receipts as collateral Proceeds from sale and lease 220,816 back of equipment newly acquired series Unsecured 24th, 25th, 26th Straight Bond 44,819 Proceeds from exercise of Financing CF warra
Slide 28: Consolidated P/L, B/S, CF Analysis and CAPEX Status
- Consolidated P/L Analysis - Consolidated B/S Analysis - Consolidated CF Analysis - CAPEX Status 28
Slide 29: CAPEX (actual basis)
CAPEX (actual basis) <CAPEX-1> ¾ Mainly due to expansion of 3G base stations in mobile communications business 150,000 (m JPY) Mobile 124,934 Communications BB Infrastructure 103,512 100,000 88,052 85,355 Fixed-line Telecommunications 73,301 64,509 Internet Culture e-Commerce 50,000 Others 0 06/1Q 2
Slide 30: Depreciation and amortization (excl. amortization of goodwill)
Depreciation and amortization (excl. amortization of goodwill) <CAPEX-2> ¾ Consolidated basis depreciation and amortization in the range of JPY 50bn/Q (m JPY) 60,000 53,972 53,258 54,503 50,578 46,494 Mobile Communications 38,048 BB Infrastructure 40,000 Fixed-line Telecommunications Internet Cultur
Slide 31: Amortization of goodwill
Amortization of goodwill <CAPEX-3> ¾ Consolidated basis amortization of goodwill approx. JPY 14bn/Q (m JPY) 20,000 15,930 15,693 14,701 14,755 SOFTBANK 15,000 MOBILE 10,940 11,029 SOFTBANK 10,000 TELECOM Others 5,000 0 06/1Q 2Q 3Q 4Q 07/1Q 2Q (m JPY) FY2006 FY2007 Balance 1Q 2Q 1H 3Q 4Q Total 1Q 2Q
Slide 32: Finance
Finance Yoshimitsu Goto General Manager Finance, Group Management SOFTBANK CORP. 32
Slide 33: Financial activities, Interest-bearing debt status, Investment results
- Financial activities - Interest-bearing debt status - Investment results 33
Slide 34: Financial activities for 1H - 1
Financial activities for 1H - 1 <Financial activities-1> Month Content Apr-07 Procure JPY 20.0bn by issuing 24th Unsecured Straight Bond (3rd Fukuoka SoftBank HAWKS Bond) Listing of IT media Inc. on TSE Mothers market capitalization JPY 18.8bn as of the day of listing Apr 17 Jun-07 Procure JPY 88.1b
Slide 35: Financial activities for 1H - 2
Financial activities for 1H - 2 <Financial activities-2> Financial activities for 2Q Exercise of stock acquisition rights Number of exercised stock acquisition rights 80,000 Number of shares to be issued 24 million Cash proceeds JPY 44.0bn Exercise price per share JPY 1,837 Securitization of install
Slide 36: Financial activities, Interest-bearing debt status, Investment results
- Financial activities - Interest-bearing debt status - Investment results 36
Slide 37: Interest-bearing debt and net interest-bearing debt
Interest-bearing debt and net interest-bearing debt <Interest-bearing debt-1> ¾Net interest-bearing debt decreased to less than JPY 2,000bn (m JPY) Interest-bearing debt Securitization of installment receivables 3,000,000 Net interest-bearing debt Cash and cash equivalents 2,000,000 1,000,000 0 e/o
Slide 38: Interest-bearing debt and net interest-bearing debt (excl. mobile)
Interest-bearing debt and net interest-bearing debt (excl. mobile*) <Interest-bearing debt-2> ¾Interest-bearing debt (excl. mobile) repaid steadily (m JPY) 3,000,000 Interest-bearing debt (excl. mobile) Net interest-bearing debt (excl. mobile) Cash & cash equivalents (excl. mobile) 2,000,000 1,000,0
Slide 39: Interest-bearing debt status by item
Interest-bearing debt status by item <Interest-bearing debt-3> ¾SBM loan repaid steadily (m JPY) 4,000,000 Corporate bonds Long-term borrowings (other than SBM loan) Long-term borrowings (SBM loan) Short-term borrowings CP Financing from the securitization of installment sales receivables(long- term
Slide 40: Interest-bearing debt status details
Interest-bearing debt status details <Interest-bearing debt-4> ¾Existing debt repaid, while securitization of installment sales receivables continued (m JPY) Securitization of installment 2,500,000 2,497,179 2,476,351 sales receivables obligations 2,394,403 88,161 142,129 (SBM) 2,000,000 SBM Loan (W
Slide 41: SBM loan repayment status
SBM loan repayment status <Interest-bearing debt-5> ¾Repaid SBM loan steadily SBM loan repayment status e/o Nov 2006 e/o Sep 2007 e/o Oct 2007 (time of borrowing) SBM loan balance JPY 1,366.0bn JPY 1,311.4bn JPY 1,295.0bn Amount repaid - JPY 54.5bn JPY 70.9bn Mobile communications business leverage
Slide 42: Consolidated interest-bearing debt Short/long ratio
Consolidated interest-bearing debt Short/long ratio <Interest-bearing debt-6> ¾Maintain high long-term debt ratio Consolidated interest-bearing debt Consolidated interest-bearing debt (excl. mobile ) 100% 100% 90% 90% 80% 80% 70% Short-term 70% ratio Short-term 60% 89.9% 60% ratio 88.9% 86.7% 50% Lo
Slide 43: Cash position
Cash position <Interest-bearing debt-7> ¾Maintained sufficient cash position Unused portion of credit line facility (m JPY) Cash&cash equivalents 604,909 600,999 600,000 455,254 400,000 200,000 0 e/o Mar 07 e/o Jun 07 e/o Sep 07 (m JPY) FY2006 FY2007 e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep Q
Slide 44: Interest expense
Interest expense <Interest-bearing debt-8> ¾YoY interest expense increased due to procurement of SBM loan (m JPY) 60,000 55,374 50,000 40,000 32,545 30,000 20,000 10,000 0 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Interest expense 14,601 17,943 32,545 20,994 25,981 79,5
Slide 45: Shareholders' equity - equity ratio
Shareholders’ equity - equity ratio <Interest-bearing debt-9> ¾Equity ratio steadily improved due to accumulation of profit and the exercise of stock acquisition rights (m JPY) 2,000,000 30% Shareholders' equity 1,500,000 Equity ratio 20% 1,000,000 7.9% 6.6% 7.1% 10% 500,000 0 0% e/o Mar 07 e/o Jun
Slide 46: Pro-forma equity ratio including unrealized gain of listed shares
(Reference) pro-forma equity ratio including unrealized gain of <Interest-bearing debt-10> SOFTBANK held listed shares ¾Improving trend in pro-forma equity after consideration of ratio unrealized gain of Assumption SOFTBANK held listed shares (m JPY) Shareholders' equity (pro-forma) 2,000,000 Equity
Slide 47: Debt/Equity ratio - Net Debt/Equity ratio
Debt/Equity ratio - Net Debt/Equity ratio <Interest-bearing debt-11> ¾Steady improvement Debt/Equity ratio Net Debt/Equity ratio (times) (times) 14.0 D/E ratio 14.0 Net D/E ratio D/E ratio (excl. mobile) Net D/E ratio (excl. mobile) 12.0 10.8 12.0 9.6 9.5 10.0 9.2 10.0 8.5 8.5 7.9 7.7 8.0 7.0 8.0 7.
Slide 48: Major margins
Major margins <Interest-bearing debt-12> ¾Major margins improved dramatically EBITDA margin Operating margin Ordinary margin (bn JPY) 600 60% 300 30% 200 20% EBITDA Ordinary 50% Operating 25% 150 (loss) 15% (loss) income EBITDA margin income 400 40% 200 Operating 20% Ordinary margin 100 margin 8.1%
Slide 49: Status of lease financing
Status of lease financing <Interest-bearing debt-13> <m JPY> Finance leases without ownership transfer of leased assets to the lessees at the end of the lease period (off-balance) e/o Mar 2007 e/o Jun 2007 e/o Sep 2007 QoQ Due within one year 33,088 32,950 32,621 (328) Due after one year 165,966 162
Slide 50: SBM on-balance lease balance
SBM on-balance lease balance <Interest-bearing debt-14> ¾Execute lease related to 3G base stations (m JPY) 300,000 265,389 250,000 220,058 200,000 150,000 100,000 93,013 50,000 0 e/o Mar 07 e/o Jun 07 e/o Sep 07 (m JPY) FY2006 FY2007 e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep QoQ YoY Finance le
Slide 51: Corporate bond details (as of e/o Sep 2007)
Corporate bond details (as of e/o Sep 2007) <Interest-bearing debt-15> Interest Mar 07 Jun 07 Sep 07 Company Name Bond Issue date Maturity Date rate Collateral Change balance balance balance (%/year) 2nd series Unsecured Straight Bond (paid off) 1995/9/27 2007/9/27 3.90 None 23,900 23,900 0 (23,900)
Slide 52: Bond redemption schedule
Bond redemption schedule <Interest-bearing debt-16> JPY 23,900 million redeemed *2 (m JPY) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Others SOFTBANK Straight Bond 43,900 52,500 20,000 58,698 55,000 69,503 15,000 SOFTBANK TELECOM Straight Bond 45,000 15,000 SOFTBANK CB *1 50,000 50,000 50,000
Slide 53: Financial activities, Interest-bearing debt status, Investment results
- Financial activities - Interest-bearing debt status - Investment results 53
Slide 54: IPO of Alibaba.com Limited - Impact to SOFTBANK Group
IPO of Alibaba.com Limited <Investment results-1> <Impact to SOFTBANK Group> Alibaba.com Limited (listed company) ¾Market capitalization at time of IPO: approx. 1 trillion JPY (based on initial offering price*) ¾P/L impact due to this IPO: Record equity in earnings of affiliated companies (planned f
Slide 55: IPO of Alibaba.com Limited
IPO of Alibaba.com Limited <Investment results-2> Management/employees of Alibaba Group and other minority shareholders Yahoo! Inc. 33%*1 Alibaba Group Holding Limited*2 Nov 6, 2007 100%*1 listed on Hong Kong stock exchange (Yahoo China) (Alisoft) (Alipay) (Taobao) Alibaba.com Limited Search/ portal
Slide 56: Pro-forma Equity Ratio (after impact of unrealized capital gain)
Pro-forma Equity Ratio (after impact of unrealized capital gain) <Investment results-3> Alibaba.com Limited unrealized gain Pro-forma adjusted equity ratio 26.2% (after consideration of unrealized 23.5% capital gain*) 20% Equity ratio 7.9% 6.6% 0% End Mar 07 End Sep 07 * Calculated by offsetting the
Slide 57: FY2007 financial strategies
FY2007 financial strategies Completion of mobile business acquisition related financing Completion of equipment finance (lease finance) Start financing through securitization of mobile handset sales installment receivables Thorough acceleration of repayment of debt funding Early improvement of
Slide 58: Operation
Operation Kazuhiko Fujihara Senior Vice President, CFO, Director SOFTBANK MOBILE Corp. Senior Vice President & CFO, Director SOFTBANK BB Corp. Director SOFTBANK TELECOM Corp. 58
Slide 59: Actual overview of major telecommunication businesses
Actual overview of major 3 telecommunication businesses <m JPY> <Broadband Infrastructure Business> FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Net Sales 63,322 65,728 67,266 67,910 264,227 65,747 64,072 129,819 768 Operating income 5,479 6,189 7,747 7,393 26,809 8,665 10,320 18,986 7,317 EBITDA 11
Slide 60: Broadband, Fixed-line, Mobile Communications Businesses
- Broadband Infrastructure Business - Fixed-line Telecommunications Business - Mobile Communications Business 60
Slide 61: Summary - Broadband Infrastructure Business
Summary - Broadband Infrastructure Business - <BB-1> Yahoo! BB ADSL decrease in number of lines ¾ -104k lines YoY,-92k lines QoQ FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q QoQ YoY Yahoo! BB ADSL cumulative 5,089 5,146 5,161 5,164 ― 5,134 5,042 (92) (104) lines installed (k lines) Operating income signifi
Slide 62: Operating income/loss (Broadband Infrastructure Business)
Operating income/loss (Broadband Infrastructure Business) <BB-2> ¾ Sustain increasing income trend ( m JPY) 20,000 Impact of modem rental business sale 12,321 10,320 Operating income (loss) excl. impact of 9,361 8,665 10,000 modem rental business sale 5,479 7,747 7,393 Operating income (loss) (SB co
Slide 63: EBITDA (Broadband Infrastructure Business)
EBITDA (Broadband Infrastructure Business) <BB-3> ¾ Sustain increase in EBITDA (m JPY) 17,513 20,000 18,122 15,962 16,345 Impact of modem rental business 12,600 15,743 15,408 sale +4,856 11,850 +5,828 18,805 10,000 EBITDA excl. impact of modem 18,057 17,582 19,915 14,963 rental business sale 11,420
Slide 64: CAPEX on actual basis (Broadband Infrastructure Business)
CAPEX on actual basis (Broadband Infrastructure Business) <BB-4> ¾ Significant reduction in CAPEX CAPEX and depreciation and amortization CAPEX (quarterly trend) (yearly trend) (m JPY) (m JPY) 25,000 100,000 20,000 CAPEX 80,000 Depreciation & amortization 15,000 60,000 83,901 10,000 40,000 7,445 7,5
Slide 65: Number of lines and full charged users - ADSL
Number of lines and full charged users - ADSL - <BB-5> ¾ -104k lines YoY, -92k lines QoQ k lines) 6,000 5,089 5,146 5,161 5,164 5,134 5,042 5,007 5,049 Cumulative lines 4,889 4,972 5,000 4,776 installed 4,658 4,490 4,282 Full charged users 4,474 4,534 4,575 4,524 4,450 4,381 4,436 4,462 4,423 4,000
Slide 66: Product MIX - ADSL
Product MIX - ADSL - <BB-6> ¾ Increase of high speed and WLAN ratio YBB 50MR+WLAN 100% 100% 50M YBB 50MR 90% 90% ratio YBB 50M+WLAN 29% 80% 80% YBB 50M 70% 70% YBB 26M+WLAN 60% 60% YBB 26M 50% 50% YBB 12M+WLAN WLAN 40% 40% ratio YBB 12M 30% 30% 30% YBB 8M+WLAN YBB 8M 20% 20% YBB 8M (ADSL 10% 10% onl
Slide 67: ARPU (User payment base) - ADSL
ARPU (User payment base*) - ADSL - <BB-7> ¾ Slight decrease in ARPU (sustains JPY 4,300 level for 2 years) (JPY) 5,000 4,500 JPY 4,341 4,000 3,500 Yahoo ISP 3,000 BB security BB phone 2,500 WLAN Modem rental 2,000 revenue Basic charge 1,500 1,000 500 0 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q
Slide 68: ARPU (based on sales after modem rental business sell-off) - ADSL
ARPU (based on sales after modem rental business sell-off) - ADSL - <BB-8> ¾ Decrease in modem rental revenue, servicing fee received (JPY) 5,000 ARPU trend on user payment basis 4,500 Recognition of deferred gain on sale 4,000 Servicing fee ,etc. from modem operator 3,500 Yahoo ISP 3,000 BB securit
Slide 69: Churn rate - ADSL
Churn rate - ADSL - <BB-9> ¾ Sustaining low and stable trend in spite of seasonal factors 10.0% 8.0% Caused by one-off seasonal factors (moving, etc.) 6.0% 4.0% 2.0% 0.0% Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb M
Slide 70: Broadband, Fixed-line, Mobile Communications Businesses
- Broadband Infrastructure Business - Fixed-line Telecommunications Business - Mobile Communications Business 70
Slide 71: Summary - Fixed-line Telecommunications Business
Summary - Fixed-line Telecommunications Business - <Fixed-1> Expand corporate business base ¾ Increasing lines, mainly for Otoku Line FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q QoQ YoY Corporate voice lines (k lines) 1,345 1,561 1,672 1,736 ― 1,717 1,736 19 175 Otoku Line + MYLINE Income (loss) trend imp
Slide 72: Operating income/loss (Fixed-line Telecommunications Business)
Operating income/loss (Fixed-line Telecommunications Business) <Fixed-2> ¾ Achieved operating profitability on quarter (and interim) basis due to the enhancement of corporate line and efficient management (m JPY) 10,000 2,928 1,212 -111 460 0 -916 -656 -1,787 -2,603 -10,000 -12,209 -14,297 -14,089 -
Slide 73: EBITDA (Fixed-line Telecommunications Business)
EBITDA (Fixed-line Telecommunications Business) <Fixed-3> ¾ Improving trend in profitability due to the enhancement of corporate line and efficient management (m JPY) 20,000 14,201 12,643 11,104 10,758 11,351 10,248 9,177 10,000 8,939 16 0 -343 -1,898 -6,208 -10,000 04/3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q
Slide 74: CAPEX on actual basis (Fixed-line Telecommunications Business)
CAPEX on actual basis (Fixed-line Telecommunications Business) <Fixed-4> ¾ Significant reduction CAPEX and depreciation and amortization CAPEX (quarterly trend) (yearly trend) (m JPY) (m JPY) 50,000 200,000 CAPEX 40,000 Depreciation & 150,000 6 month amortization Oct-Mar 30,000 100,000 186,873 20,00
Slide 75: Net sales & operating expenses (SBTM consolidated)
Net sales & operating expenses (SBTM consolidated) <Fixed-5> ¾ Improve corporate business base steadily (bn JPY) 110 Corporate net sales Consumer net sales 100% Corporate ratio 100 86% 82% 83% 84% 85% 78% 80% 90 77% 75% 80% 73% 80 70 60% 60 50 40% 40 30 20 20% 10 0 0% 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 0
Slide 76: Number of Otoku Line/MYLINE users
Number of Otoku Line/MYLINE users <Fixed-6> ¾ Expanded corporate business base focusing on Otoku Line (k lines) 2,000 1,736 1,500 869 1,000 Corporate MYLINE Corporate Otoku Line 500 867 0 Jul Sep Dec Mar Jul Sep Dec Mar Jul Sep 2005 2006 2007 76
Slide 77: Number of lines - Otoku Line
Number of lines - Otoku Line - <Fixed-7> ¾ Number of Otoku Line lines steadily increasing (k lines) 1,400 1,315 Heisei Denden Large corporation 1,200 1,077 SME(excl.JTI) Corporate lines 1,000 SME(JTI) 867k Consumer (Corporate ratio: 66%) 800 683 600 400 200 0 JanFebMarAprMayJun JulAugSep Oct NovDecJ
Slide 78: ARPU - Otoku Line
ARPU - Otoku Line - <Fixed-8> ¾ Sustain firm trend in large corporations ARPU (JPY) Large corporations Total 12,000 10,000 8,000 6,000 4,000 2,000 0 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q 78
Slide 79: Broadband, Fixed-line, Mobile Communications Businesses
- Broadband Infrastructure Business - Fixed-line Telecommunications Business - Mobile Communications Business 79
Slide 80: Summary - Mobile Communications Business
Summary - Mobile Communications Business - <Mobile-1> Ref : Oct, 2007 Steady increase in cumulative subscribers No.1 in monthly net additions for 6 consecutive months ¾ No. 1 in net additions for 5 consecutive Net additions :158,600 months (May-Sep) Net addition share : 47.8% Cumulative sub: 17,211,
Slide 81: Operating income (SB consolidated / Mobile Communications)
Operating income (SB consolidated / Mobile Communications) <Mobile-2> ¾ Achieve significant YoY increase of operating income due to the increase of subscribers (m JPY) 120,000 100,000 94,219 5 months May-Sep 80,000 2Q 60,000 56,635 40,000 2Q 20,000 1Q 1Q 0 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 3Q
Slide 82: EBITDA (SB consolidated / Mobile Communications)
EBITDA (SB consolidated / Mobile Communications) <Mobile-3> ¾ Achieve significant YoY increase of operating income due to the increase of subscribers (m JPY) 240,000 196,521 200,000 5 months May-Sep 160,000 129,417 2Q 120,000 2Q 80,000 40,000 1Q 1Q 0 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Tot
Slide 83: Operating income (SBM consolidated)
Operating income (SBM consolidated) <Mobile-4> ¾ Combination of improving profitability and growth (m JPY) Net additions 97k 1,142k 100,000 85,446 80,000 49,464 2Q 60,000 40,000 2Q 20,000 1Q 1Q 0 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Operating income 31,162 18,301 50,667 3
Slide 84: EBITDA (SBM consolidated)
EBITDA (SBM consolidated) <Mobile-5> ¾ Combination of improving profitability and growth Net additions 97k 1,142k (m JPY) 200,000 192,474 158,204 160,000 2Q 120,000 2Q 80,000 40,000 1Q 1Q 0 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY EBITDA 83,866 74,338 103,187 88,673 350,064 9
Slide 85: CAPEX on actual basis (Mobile Communications)
¾CAPEX on actual basis (Mobile Communications) <Mobile-6> ¾ Accelerate CAPEX after acquisition CAPEX and depreciation and amortization CAPEX (quarterly trend) (yearly trend) (m JPY) (m JPY) 120,000 500,000 CAPEX (Forecast) 104,944 387,910 Depreciation & amortization 400,000 Carried over 90,000 to FY
Slide 86: 3G base stations
3G base stations <Mobile-7> (BS) 46,000 e/o Sep 2007: 47,439 BS achieved 22,000 Improved the network significantly in slightly more than one year 1Q 2Q 3Q 4Q 1Q 2Q FY06 FY07 86
Slide 87: Quarterly net additions
Quarterly net additions <Mobile-8> ¾ Over 500k net additions for 2 consecutive quarters (K) 700 612 600 531 500 412 400 FY07/2Q Net additions: 612,000 300 Net addition share :50.3% 190 200 107 125 93 100 65 67 37 25 30 0 -100 -74 -119 -200 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q Q Q Q Q /1 /1 /1 /1 04 05 06 0
Slide 88: Monthly net additions
Monthly net additions <Mobile-9> ¾ Over 100k net additions for 10 consecutive months (K) 250 225 No.1 for 205 198 200 189 6 consecutive 150 164 164 162 159 months! 128 120 Oct 2007 97 100 Net additions: 158,600 64 63 69 57 50 27 24 18 18 17 16 23 5 4 5 12 13 3 1 0 07 Dec 06 Dec Ju y Ju y Apr ay Apr
Slide 89: Monthly net additions (postpaid)
Monthly net additions (postpaid) <Mobile-10> ¾ Net additions approx. 200k (K) 300 257 250 240 235 224 204 200 195 200 179 150 143 Oct 2007 114 100 Net additions: 194,900 6356 70 71 36 50 25 27 32 35 45 17 21 20 10 9 10 7 (9)(6) 0 -J c 07 Dec ay n p Apr Ju y Mb No t n Ju y Apr Ocp Au l Mb No t n p Au
Slide 90: Monthly net addition
Monthly net addition <Mobile-11> ¾ No.1 in monthly net addition share Oct 2007 net addition share for 6 consecutive months NTT DoCoMo (K) 11.8% 600 SoftBank KDDI 40.4% 500 400 300 200 159 SoftBank 100 133 KDDI 39 NTT DoCoMo 0 -100 Se g Se g Se g M r A ly M pr M r A l A l Ju y Ju y ay Fe n n Mb n Mb
Slide 91: Cumulative 3G subscribers
Cumulative 3G subscribers <Mobile-12> ¾ Increased 1.75 million YoY, and achieved 17 million cumulative subscribers (e/o Sep 07) (K) 17,211 18,000 15,200 15,331 16,000 14,996 14,000 End Oct 07 3G subscribers 11,355k 12,000 3G ratio 66.0% 10,000 Ref. other operators End Oct 06 3G ratios: 8,000 3G subs
Slide 92: Installment sales receivables and Super Bonus ratio
<Mobile-13> Installment sales receivables and Super Bonus ratio ¾ Super Bonus subscribers exceed 8million (m JPY) 400,000 Installment sales receivables balance 100% 351,578 Super Bonus ratio 86% 87% 77% 80% 300,000 71% 253,000 60% 200,000 177,276 40% 64.8bn procured through 100,000 87,552 2nd securi
Slide 93: ARPU
ARPU <Mobile-14> ¾ Total ARPU decreased due to expansion of the Super Bonus special discounts (Increasing trend in data ARPU due to expansion of 3G) (JPY) 7,000 6,290 6,140 6,080 5,810 5,870 5,930 5,840 6,000 5,600 5,700 5,590 5,560 5,210 5,000 4,800 5,000 4,000 Voice 4,820 4,940 4,780 4,540 4,540 4
Slide 94: (Reference) ARPU + installment payments
(Reference) ARPU + installment payments <Mobile-15> ¾ ARPU on the previous page & installment payment trend levels out (JPY) 7,000 6,290 6,140 6,080 5,810 5,870 5,930 5,840 6,000 5,600 5,700 5,480 5,590 5,580 5,430 5,530 5,000 Install ment 4,000 4,820 4,940 4,780 4,490 4,540 4,540 4,510 4,260 4,230
Slide 95: Acquisition commission per gross addition
Acquisition commission per gross addition <Mobile-16> ¾ Acquisition commission decreased due to introduction of installment sales (JPY) 80,000 60,000 Introduced full-fledged New Super Bonus installment 44,900 46,100 44,900 45,600 44,400 sales in Oct 2006 43,800 40,000 30,700 31,400 29,000 20,000 22,
Slide 96: Churn rate
<Mobile-17> Churn rate ¾ Decrease due to penetration of installment sales 4.0% 3.0% SBM NTT DoCoMo au 2.00% 2.0% 1.59% 1.49% 1.27% 1.42% 1.21% 1.03% 0.95% 1.0% 1.08% 0.94% 0.81% 0.60% 0.0% 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 07/2Q
Slide 97: 3G churn rate
3G churn rate <Mobile-18> ¾ 3G churn rate improved significantly due to the penetration of installment sales 4.0% 3.0% Introduced full-fledged New Super Bonus installment sales in Oct 2006 2.0% 1.0% 1.05% 0.0% 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q
Slide 98: Upgrade rate
Upgrade rate <Mobile-19> ¾ Stable trend in upgrade rate after introduction of installment sales 5.0% Introduced full-fledged New Super Bonus installment sales in Oct 2006 4.0% 2.81% 2.67% 3.0% 2.53% 2.46% 2.0% 1.0% 0.0% 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q
Slide 99: APPENDICES
APPENDICES 99
Slide 100: Mobile Communications Business Financial Data
Mobile Communications Business Financial Data (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 232,467 351,991 430,328 427,252 1,442,040 391,668 422,841 814,509 230,050 Operating income 27,293 29,341 56,906 42,202 155,743 43,528 50,691 94,219 37,584 EBITDA 55,802 73,615 104,082 87,985
Slide 101: Broadband Infrastructure Business Financial Data
Broadband Infrastructure Business Financial Data (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 63,322 65,728 67,266 67,910 264,227 65,747 64,072 129,819 768 Operating income 5,479 6,189 7,747 7,393 26,809 8,665 10,320 18,986 7,317 EBITDA 11,850 12,600 15,408 15,743 55,601 15,962 17,
Slide 102: Fixed-line Telecommunications and Internet Culture Business Financial Data
Fixed-line Telecommunications Business Financial Data (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 88,673 93,276 93,712 98,466 374,129 90,486 90,986 181,473 (477) Operating (loss) income 1,212 (916) (2,603) (656) (2,965) (111) 460 349 53 EBITDA 12,643 10,248 8,939 10,758 42,588 11,
Slide 103: e-Commerce Business and Others Financial Data
e-Commerce Business Financial Data (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 59,142 65,037 65,369 82,021 271,570 61,660 63,812 125,473 1,293 Operating income 1,461 1,399 2,010 1,809 6,680 1,167 933 2,100 (759) EBITDA 1,995 1,978 1,535 2,256 7,764 1,442 1,207 2,650 (1,323) Operat
Slide 104: Forward-looking statements
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