Softbank Group Corp. · TSE:9984
Softbank — Q2 FY2007 Earnings Presentation
71 slides from Softbank's earnings presentation, Nov 8, 2006
Slide 1: Earnings Results for the Second Quarter Ended September 30, 2006
Earnings Results For the Second Quarter Ended September 30, 2006 (Q2/FY2007) November 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 ye
Slide 2: Highlights
<Highlights> 1. Full-fledged commencement of our mobile business -Launch of Mobile Number Portability 2. Highest profitability ever (Operating Income/ Ordinary Income/ EBITDA) 3. Schedule for completion of the Vodafone K.K. acquisition refinancing 2
Slide 3: FY2007/1H Interim Consolidated Earnings
FY2007/1H Interim Consolidated Earnings 3
Slide 4: 1H/FY2007 Summary of Consolidated Earning Results
1H/FY2007 Summary of Consolidated Earning Results <unit: bn JPY> <Interim> FY07/1H FY06/1H Year on year (Apr-Sept 2006) (Apr-Sept 2005) Net sales 1,120.1 522.7 +597.3 EBITDA 228.4 50.2 +178.2 Operating Income 112.5 4.4 +108.1 Ordinary Income 62.6 (13.4) +76.1 Income before income taxes and 118.8 25.
Slide 5: Consolidated Net Sales
Consolidated Net Sales <Interim> <unit: bn JPY> 1,200 1,120.1 1,000 Mobile 581.8 800 Communications （SOFTBANK MOBILE） 600 585.8 488.0 522.7 Others 149.0 123.6 117.0 e-Commerce 400 130.6 275.7 71.2 84.3 89.6 Internet Culture 58.3 (Yahoo Japan Corporation) 200 114.2 165.9 168.9 178.4 166.2 Fixed-line
Slide 6: Consolidated Operating Income
Consolidated Operating Income <Interim> <unit: bn JPY> 120 112.5 100 80 57.8 60 1H/FY07 40 JPY112.5bn 20 FY03 FY04 4.4 FY05 FY06 FY07 Largest ever 0 1H 1H 1H 1H 1H -6.7 -20 -15.5 -18.5 -40 -31.1 -39.3 -60 -60.7 -80 6
Slide 7: Consolidated Operating Income 1H/FY07
Consolidated Operating Income 112.5 <Interim> <unit: bn JPY> 110 Mobile Communications Impact of sale of ADSL 90 modem rental business 56.6 Mobile Communications (SB Mobile) +JPY56.6bn 70 57.8 50 14.6 43.2 1H/FY07 JPY112.5bn 30 57.8 4.4 10 FY03 1H FY04 1H FY05 1H FY06 1H FY07 1H Largest ever -10 -1.
Slide 8: Consolidated EBITDA
Consolidated EBITDA <Interim> <unit: bn JPY> 240 228.4 190 Mobile Communications (SB Mobile) 140 JPY129.4bn 99.6 90 50.2 32.0 98.9 1H/FY07 40 1.6 12.0 JPY228.4bn FY03 FY04 FY05 FY06 FY07 1H 1H 1H 1H 1H -10 -23.6 Largest ever -22.5 -60 -48.5 （EBITDA： Operating income (loss) + depreciation, amortizati
Slide 9: Consolidated Ordinary Income
Consolidated Ordinary Income 70 62.6 <Interim> <unit: bn JPY> 50 40.9 30 1H/FY07 10 JPY62.6bn FY03 FY04 FY05 FY06 FY07 1H 1H 1H 1H 1H Largest ever -10 -13.4 -18.2 -19.3 -30 -25.9 -50 -45.9 -53.6 -70 -63.8 9
Slide 10: Consolidated Net Income
Consolidated Net Income 61.7 <Interim> <unit: bn JPY> 60 40 20 14.4 1H/FY07 0 FY03 FY04 FY05 FY06 FY07 JPY14.4bn 1H 1H 1H 1H 1H -6.0 -4.1 -20 -29.7 -40 -44.1 -60 -55.8 -53.8 -80 -77.3 10
Slide 11: FY2007/Q2 Quarterly Consolidated Earnings
FY2007/Q2 Quarterly Consolidated Earnings 11
Slide 12: Q2/FY2007 Summary of Consolidated Earning Results
Q2/FY2007 Summary of Consolidated Earning Results <Quarterly> <unit: bn JPY> <Quarterly> FY07/Q2 FY06/Q2 Year on year (Jul-Sept 06) (Jul-Sept 05) Net sales 625.9 264.1 +361.7 EBITDA 124.0 30.7 +93.3 Operating 58.1 7.5 +50.6 income Ordinary income 36.6 (0.4) +37.1 Income before income taxes and 89.5
Slide 13: Consolidated Net Sales
Consolidated Net Sales 625.9 <Quarterly> <unit: bn JPY> 600 494.2 500 350.3 Mobile 400 communications 231.5 (SOFTBANK MOBILE) 287.4 298.4 300 264.1 258.6 Others 68.4 80.6 200 58.5 65.1 55.8 61.1 E-Commerce 42.0 42.2 45.2 Internet Culture 34.4 36.7 44.4 (Yahoo Japan Corporation) 87.3 81.5 88.6 89.7 8
Slide 14: Consolidated Operating Income
Consolidated Operating Income 58.1 <Quarterly> <unit: bn JPY> 60 54.3 50 40 34.3 30 23.5 Q2/FY07 20 58.1bn JPY 7.5 10 Largest ever FY04 FY05 FY06 FY07 0 Q1 Q1 Q1 Q1 -3.8-2.9 -3.1 -10 -6.6 -7.5 -8.8 -11.0 -15.1 -20 -24.1 -30 -33.7 -40 14
Slide 15: Consolidated Operating Income
Consolidated Operating Income 60 58.1 <Quarterly> <unit: bn JPY> 54.3 Mobile Communications 50 29.3 Mobile communications Impact of sale of ADSL modem rental business 27.2 (SOFTBANK MOBILE) 40 34.3 +29.3bn JPY 30 7.0 23.5 29.4 20 7.6 28.3 Q2/ FY07 10 7.5 27.3 58.1bn JPY 15.9 0 FY04 Q1 FY05 Q1 FY06 Q
Slide 16: Consolidated EBITDA
Consolidated EBITDA <Quarterly> <unit: bn JPY> 130 124.0 110 104.3 Mobile Communications 90 73.6 (SOFTBANK MOBILE) 55.8 73.6bn JPY 70 54.9 50 44.7 50.4 Q2/ FY07 30.7 48.5 30 19.5 16.2 124.0bn JPY 6.0 15.8 10 5.9 Largest ever 1.40.1 FY04 FY05 FY06 FY07 -10 Q1 -7.0 Q1 Q1 Q1 -16.6 （EBITDA： Operating in
Slide 17: Consolidated Non-operating Profit
Consolidated Non-operating Profit <Quarterly> <unit: bn JPY> Q2/FY07 Q2/FY06 <Note for FY07> Interest income 1.0 0.3 Equity in earnings under Excluding SBI from the equity method (1.0) 2.7 equity method (from Aug.) SOFTBANK (4.4) Interest expense (17.9) (6.9) BB Mobile (9.5) Others (Net) (3.5) (4.2)
Slide 18: Consolidated Ordinary Income
Consolidated Ordinary Income 40 36.6 <Quarterly> <unit: bn JPY> 29.7 30 25.9 20 11.2 Q2 /FY07 10 FY04 FY05 FY06 FY07 36.6bn JPY 0 Q1 Q1 Q1-0.4 Q1 Largest ever -10 -8.0 -8.6-9.6 -11.6 -11.3 -14.2 -13.0 -20 -23.0 -30 -30.6 -32.1 -40 18
Slide 19: Consolidated Net Income
Consolidated Net Income <Quarterly> <unit: bn JPY> Q2/FY07 Q2/FY06 <Note> Ordinary Income 36.6 (0.4) Gain on sales of SBI shares 64.5 Special Income, net 52.9 25.6 Loss on buyback of Euro bond (7.3) Income before income taxes and 89.5 25.1 minority interest Tax provision for gain on Income taxes: Cu
Slide 20: Consolidated Net Income
Consolidated Net Income 40 39.7 <Quarterly> <unit: bn JPY> 30 22.0 20 11.8 13.0 Q2/FY07 10 6.9 FY04 FY05 FY06 1.4 FY07 13.0b JPY 0 Q1 Q1 Q1 Q1 -10 -13.4 -11.1 -20 -16.3 -17.8 -26.5 -30 -27.2 -34.7 -40 -42.6 -50 20
Slide 21: Consolidated Operating CF
Consolidated Operating CF <Quarterly> <unit: bn JPY> 122.4 120 100 80 64.6 Q2/FY07 60 61.9 122.4bn JPY 40 Largest ever 20 13.8 6.6 FY04 FY05 FY06 FY07 0 Q1 Q1 Q1 Q1 0.2 -11.3-11.9 -20 -15.8 -15.2 -18.2 -18.7 -25.4 -40 -37.8 21
Slide 22: Operating Income by Segment
Operating Income by Segment <Quarterly> <unit: bn JPY> 58.1 60 54.3 Consolidated Operating Income 50 Mobile Communications (SOFTBANK MOBILE) 40 34.3 30 23.5 BB Infrastructure 20 Internet Culture (Yahoo Japan Corporation) 10 7.5 e-Commerce 0 Q1/FY05 Q1/FY06 Q1/FY07 -7.5 Fixed-line telecom -3.1 -10 -3
Slide 23: EBITDA by Segment
EBITDA by Segment 140 <Quarterly> <unit: bn JPY> 124.0 120 104.3 Consolidated EBITDA 100 Mobile Communications (SOFTBANK MOBILE) 80 60 54.9 BB Infrastructure 44.7 Fixed-line telecom 40 (SOFTBANK TELECOM) 30.7 Internet Culture (Yahoo Japan Corporation) 20 15.8 16.2 19.5 6.0 5.9 e-Commerce 0 Others Q1
Slide 24: Net Debt
Net Debt <unit: bn JPY> 2,500 Consolidated net debt(*1) JPY2,049.1bn （as of Sept 30） 2,000 SOFTBANK MOBILE 1,500 Bonds:JPY100bn Investment by SOFTBANK and Yahoo Japan Corporation: 1,000 JPY320bn CB 531.6 LBO bridge loan： 500 454.6 372.7 JPY1,173.8bn ＋ (Non-recourse) 0 05/Mar 06/Mar 06/Sep Net debt i
Slide 25: Expansion of investors' base
Secure financial flexibility (SOFTBANK CORP.) Issuance of Euro Notes Renewal of Commitment line Total of EUR500m * New JPY179.0bn issuance (Approx. facility (＋18.0bn year-on- JPY74.8bn) year) Price at 99.335% of par Participating 37 institutions issue financial (＋11 year-on-year) institution Coupon
Slide 26: Progress Status for Refinancing Vodafone K.K. Acquisition (1)
Progress Status for Refinancing Vodafone K.K. Acquisition (1) Received commitment of participation from financial institutions Planned aggregate principal： JPY1,450 bn Method： WBS (Whole Business Securitization) Execution date： End of November (planned) Class A Class B Breakdown JPY1,150bn JPY300bn
Slide 27: Progress Status for Refinancing Vodafone K.K. Acquisition (2)
Progress Status for Refinancing Vodafone K.K. Acquisition (2) Bridge loan Refinance facility Facility：JPY1.28t Total facility： JPY1.45t Maturity：End of March 2007 Final Legal Maturity：10 to 13 years SOFTBANK WBS Funding repay loan Lenders MOBILE/ Class A JPY1.15t （17 institutions） BB MOBILE Class B
Slide 28: Mobile communication business: Key data
Mobile communication business: Key data (Quarterly) Number of Subscribers ARPU＊ ＊Excluding cancellation fee （unit: million） 15.11 15.20 15.24 15.30 7,000 （unit: JPY） 16 14.96 14.99 5,870 5,930 5,840 6,000 5,600 5,590 5,700 12 5,000 10.74 2G 12.17 11.52 4,000 13.23 12.79 8 13.66 3G Subscriber 3,000 R
Slide 29: Progress on commitments: Speed, Innovation
Progress on 4 commitments - Speed - Innovation 29
Slide 30: 1. 3G Network expansion
—~= SoftBank 1. 3G Network expansion 30
Slide 31: 3G Network expansion: Base station
3G Network expansion: Base station Target as of Mar. 07: 46k BS End of Sept 06 Number of 3G BS: 24,539 BS (Compared to June end: ＋1,768 BS) Population coverage: 99.97％ 05/3 06/3 06/9 07/3 Vodafone 31
Slide 32: Solve coverage issues: Improve customer satisfaction
Solve coverage issues: Improve customer satisfaction Network satisfaction* Improved 9 points Along with BS expansion (June 06 as a benchmark) 100 *Research conducted by outsourced third party 06/6 06/7 06/8 06/9 06/10 32
Slide 33: Better coverage of residential areas
Better coverage of residential areas Improve coverage around most frequently used residential areas to meet user demand Install home antennas free of charge*1 Outside of house Indoor Display prevented due to protection of rights. Display prevented due to protection of rights. Before installation Aft
Slide 34: HSDPA high speed service
HSDPA high speed service Expanding coverage area for mobile broadband Roll out beginning with government-designated cities Launched HSDPA handset/Datacard Number of BS: over 3,000 (as of Oct. 06) SoftBank X01HT SoftBank C01SI Scheduled roll out nationwide to major cities 34
Slide 35: 2. 3G Handset Enrichment
—~= SoftBank 2. 3G Handset Enrichment 35
Slide 36: Expand handset line-up: Slimness, Color, Camera
Expand handset line-up: “Slimness” “Color” & “Camera” 706SC （Samsung） 910SH （SHARP） Slimness Color Camera Japan’s thinnest*1 Biggest color 5M pixel 12.3mm selection: 65*2 3x optical zoom *1 Among folding type 3G handsets, sold in Japan as of 28th Sept. 2006. *2 Number of color variations launched on
Slide 37: Rollout of characteristic handset: Slimness
Rollout of characteristic handset: Slimness “705SH(SLIMIA)”: *1sales No.1 for 2 consecutive months among all models New launch of additional thin models 706SC 705SC 705P 705N Japan thinnest*2 World thinnest*3 12.3ｍｍ 12.9ｍｍ 14.8ｍｍ 16ｍｍ Launched Launched Launched Plan to on 10/27 on 10/14 on 10/7 laun
Slide 38: Expand handset line-up: Handset & Color
Expand handset line-up: Handset & Color ＜Trend of Launched number of handsets＞ （No. of models） （No. of colors） 70 14 Significantly expand the 60 number of handsets and colors, 12 as well as handset vendors 50 No. of handsets 10 No. of colors 8 40 15 models 65 Colors To be launched 30 6 this year (In
Slide 39: Expand handset line-up: Number of models
Expand handset line-up: Number of models*1 12 15*2 SoftBank NTT DoCoMo 8 au Number of fall/winter 06 models scheduled to launch in CY2006 8 7 11 Overwhelm competitors with Number of handsets launched at the same time last year our handset line-up *1 Company’s estimate based on materials released by
Slide 40: Expand handset line-up: Number of colors
Expand handset line-up: Number of colors*1 37 65*2 SoftBank NTT DoCoMo 29 au Number of colors of fall/winter 06 models scheduled to launch in CY2006 16 18 34 Respond to users’ preferences with Number of handset colors multiple color variations launched at the same time last year *1 Company’s estimat
Slide 41: 3. Enhance content
—~= SoftBank 3. Enhance content 41
Slide 42: Introduction of Yahoo! Keitai
Introduction of Yahoo! Keitai Yahoo! JAPAN’s PC site is available through your mobile device Easier access to the Internet Mobile site PC site Display prevented due to protection of rights. Display prevented due to protection of rights. Number of search queries in Oct. Number of top page views in Oc
Slide 43: Dramatic increase in search traffic
Dramatic increase in search traffic No. of total search queries Introduction of No. of average search queries/day Yahoo! Keitai No. of avg. search queries/ day Increased approx. 3 times! (compared with Sept.) Oct 05 Oct 06 Vodafone Live! 43
Slide 44: Dramatic increase in page views (total)
Dramatic increase in page views (total) Introduction of Yahoo! Keitai Placed link to “Yahoo! JAPAN” on the top page Yahoo! Keitai No. of total page views/day Increased more than 8 times! (Compared with the end of Jun) 4/1 7/1 10/31 44
Slide 45: Dramatic increase in page views (Top page)
Dramatic increase in page views (Top page) Introduction of Yahoo! Keitai Placed link to No. of top page views/day “Yahoo! JAPAN” on the top page Increased more than 34 times! (Compared with the end of June) 4/1 7/1 10/31 45
Slide 46: Roll out Internet service to mobile
Roll out Internet service to mobile Software service on the Internet :Yahoo! mocoa Fixed line (PC) Mobile Display prevented due to protection of rights. Permanent address Display prevented Easy to manage due to protection of rights. Large storage Display prevented due to protection of rights. OK to
Slide 47: Roll out ASP service from Yahoo! BB experience to mobile
Roll out ASP service from Yahoo! BB experience to mobile Launch “Mobile security” service Display prevented due to protection of rights. Display prevented due to protection of rights. （SoftBank X01HT*1） Exceeded 500k Download ratio: approx. 40%*2 of billing customers Provide software service to mobi
Slide 48: More Internet to mobile
More Internet to mobile Evolution of communication S! Town Hot status Find friends who have common interests Know friends’ status Display prevented Display prevented due to protection of rights. due to protection of rights. Enjoy chatting or mini games Select appropriate at virtual town way to commu
Slide 49: 4. Enhance Sales Structure and Brand
4. Enhance Sales Structure and Brand 49
Slide 50: Introduce New Price Plans
Introduce New Price Plans “Incredible Discounts”＝Gold Plan + New Super Bonus Gold Plan Orange Plan Blue Plan Easier to switch from other carriers Easier-to-understand price plans Reset the mobile market 50
Slide 51: Subscription status in October
Subscription status in October Net additions： 23,800 MNP port-in: 31,100 MNP port-out: 55,000 Gross adds (other than MNP): 192,100 Churn (other than MNP): 144,400 51
Slide 52: Subscription status in November
Subscription status in November (from November 1 to November 7) Net additions： 28,000 MNP port-in: 36,400 MNP port-out: 43,500 Gross adds (other than MNP): 62,800 Churn (other than MNP): 27,700 52
Slide 53: SOFTBANK's Business strategy
SOFTBANK’s Business strategy 53
Slide 54: Mobile + PC = SoftBank
—~= SoftBank Mobile + PC = SoftBank 04
Slide 55: Realize true FMC
Realize true FMC From infrastructure to portal/content Broadband content Other telecommunication Common Portal Linked ID Platform Charge/billing/authentication/settlement carriers Broadband infrastructure Only SOFTBANK can provide true FMC services 55
Slide 56: What true FMC will bring
What true FMC will bring User-centric services Fun Fun activities for PC such as videos, online games and SNS will be brought to mobile phone users. Convenience Low cost Convenient PC use such as an easy Same content provided to PC to navigate portal for your mobile. users available to mobile Abilit
Slide 57: Mobile phone will become a lifestyle platform
Mobile phone will become a lifestyle platform Broadband Value added Display prevented due to protection of rights. Lifestyle Platform PC Mobile time Communication means 57
Slide 58: Improve profitability
Improve profitability Average revenue per user (ARPU) Lifestyle ・music ・broadcast ARPU ・game headroom ・sports ・media ・commerce ・finance …and more! data voice Aim to improve profitability by proposing new lifestyles to users 58
Slide 59: Provide lifestyle changes for users
Provide lifestyle changes for users Business development from the point of view of service/content Display prevented due to protection of rights. Mobile Display prevented Display prevented due to protection of rights. due to protection of rights. Community Shopping Display prevented Display prevente
Slide 60: Stepping stone to broadband content: Video services, SNS
Stepping stone to broadband content －Video services －SNS 60
Slide 61: Evolution of Yahoo! Streaming
Evolution of Yahoo! Streaming Expand functions centering on interactivity Sept 06 Oct 06 ◆User review ◆Blog search function Display prevented due to protection of rights. Display prevented Display prevented due to protection of rights. due to protection of rights. July 06 May 06 ◆Recommendation func
Slide 62: Video service on Yahoo! JAPAN
Video service on Yahoo! JAPAN （ million） 【Unique user trend】 8 Video service on Yahoo! JAPAN* G service by U company 7 No.1 unique user 6 base for video service 5 4 8.259 million (as of the end of Sept 06) 3 2 Source： Access from home, researched by NetRatings Japan, Inc. 1 *Yahoo! Streaming, Yahoo!
Slide 63: Take competitive lead in multicast system
Take competitive lead in multicast system Common streaming (OLM) * video video streaming transit streaming transit server server Backbone Backbone Small traffic Big traffic Access NW Access NW Significant reduction in redundant traffic and infrastructure costs by using P2P technology 63 *Distributio
Slide 64: Establishment of MySpace Japan K.K
Establishment of MySpace Japan K.K Bring the world’s largest social networking service to Japan News Corporation Worldwide 50％ 50％ Know-how of comprehensive Internet media company Display prevented due to protection of rights. MySpace Japan K.K CEO ： Makoto Koyama Capital： 590 million yen Roll out s
Slide 65: World's largest SNS
World’s largest SNS ＜http://jp.myspace.com＞ Japanese version (beta version) of “MySpace” starts Services for OK to all the world customize (7 (7 countries, countries, 44 languages) languages) design Display prevented OK OK toto post post OK to due to protection of rights. text, text, images, images,
Slide 66: Registered user trend
Registered user trend (m users) Astonishing growth myspace.com 120 in less than 3 years after start 100 125 m users (Oct.) 80 60 Domestic site M: 40 5 million users (July) 20 0 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 66
Slide 67: Global partnership
Global partnership Partner with the world’s prominent companies in a wide range of fields Internet Vodafone Media News Corporation Media Telecom MySpace.com SNS E-commerce 67
Slide 68: SOFTBANK's future goal
SOFTBANK’s future goal Infrastructure/Platform・Portal/Contents No.1 publication broadcast commerce business music game sports finance Platform/Portal Infrastructure 68
Slide 69: Lifestyle Company for the 21st Century
Lifestyle Company for the 21st Century Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented due to protection of rights. Display prevented Amusement: Broadcasts, due to protection of rights. sports, games Housework: Auctions, Display prevent
Slide 70: 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. 70
Slide 71: 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