Half Year 2024 KDDI Corp Earnings Call

November 2, 2023

I'm, the communications AVO, which moved to 3960 <unk> up 30 in quarter on quarter.

Two grow the communications business further we are hunting attractiveness of au first it is a you money activity plans look at the left to place <unk> has been offering telecommunications plus value added services set plans tailored to customer needs ahead of peers.

Moving to the right from the first of September we launch day your money activity plan, which is an industry first it set plan of telecommunications plus finance.

One out of three unlimited Mac subscribers have chosen this plan and it's off to a good start compared with the company plan.

The second endeavor to enhance the attractiveness of a U is to increase on like content for smartphones. The left shows that increased online content, such as sports and live content cultivate smartphone viewing.

We have a worry free unlimited plan to meet their needs.

The right indicates that we utilize our strengths in partnering going hunting free sports distribution.

High School Baseball games called Virtual High School Baseball games were distributed covering all the games from regional preliminaries, making the record number of viewers starting from this October we launched distribution of high school football and high School Voluble games.

We're moving toward an exciting future for everyone through sports.

That's why UQM mobile many choose medium and large capacity plans as data usage increases.

The left shows a double digit growth of the monthly data usage to the right shows the launch of three new plants of Youku Mobile aim June.

These plans have been well accepted and recently about 70% of customers have chosen cominco me or talk of Docker, that's large and medium capacity plans are.

Very good results.

Next.

Five gene network that suppose K G D S mission to connect.

The left indicates how areas expanded along customers lifeline, we are connecting the everyday.

Do you have.

The end of October the area expanded 47 routes and rail rate on 384 commercial areas in particular five G is available at all Yeah Menotti line stations with the with the number one communication speed. According to a survey.

The rideshare is our initiatives to improve quality, we have been utilizing quality data for each device.

Or each handset.

Using a variety of data, we automatically collect and analyze data and implemented measures and execute rapid quality improvement will continue to promote area expansion alone customers lifeline onto refine communication quality.

We are leveraging starlink.

Connecting the unconnected.

The left indicates that we are utilizing starlink for <unk> base stations, creating on a real while connecting the extraordinary including mountains festivals under time of disasters moving to the right in August this year, we concluded a new business alliance with Spacex for satellite.

And smartphone direct communication service development, we aim to begin sending and receiving messages in 'twenty 'twenty four connecting where ever you see the sky.

Next let me focus on K D D I gripped our financial business.

As you can see E. K G. D. I group is offering a full range of financial services in support of our customers. The right shows that our customer base in key services has been steadily growing where the au pay card members exceeding 9 million in October.

In addition.

Are you paying members reached $33 seven 3 million.

And just September a huge open bank accounts expanded to 5.45 million and a couple of consequence used accounts, reaching 161 million.

Next about of a financial or business performance. The left shows finance related value added ARPA revenue, which was up 13, 4% year on year contributing to the increase of value added ARPA revenues. The center is first half operating income of Au financial holdings, which in.

Greed stood at 92.9% year on year, excluding the accounting changes in the previous time.

Our significant growth.

Moving to the right transaction volume of a settlement in loans steadily increased to 19, 3% year on year.

You touched it.

Next is credit cards and banks that drive the growth of the financial business left side. The number of au pay gold card members, which will be the future growth driver grew significantly to 970000 members as of the end of September which is up by 54.

<unk> year on year and it exceeded 1 million. This October right side mortgage loan balance was 2.3 trillion yen up 56, 2% year on year attracted interest rates led to high customer satisfaction. In addition, the preferential interest rate discount eligibility expansion.

Ended within the K DDI group to offer set discount with J com net and television from September and Ctc's Cormophyte Hickory from November 1st.

Toward further growth in the financial business, we will leverage synergies with telecom to expand our financial customer base left side financial services collaboration is accelerating with au money activity plan.

Since the launch of the plan the over the counter subscription rate has increased to respectively. As you can see here right side.

We will leverage these synergies with telecom to further expand our financial services customer base.

T D D I groups strategy for its financial business is a virtuous circle of telecom and finance from the left we aim to increase <unk> and reduce churn rate in the telecom business by promoting the attractiveness of.

<unk> through the au money activity plan and other programs. Furthermore, we will leverage this telecom customer base to accelerate the growth of the financial business of the Au financial group.

Next let me explain Dx and Alex.

First is the business segment results left side operating income for the first half increased by five 7% year on year in line with our expectation next core, especially Iot drove growth and existing telecom business also saw an increase in mobile communications.

Revenue the impact of fuel price hikes that partially affected the first half compared to the previous year is expected to be gone in the second half right side, we are aiming for double digit year on year growth on a full year basis with business growth centered on next core, including Iot and Datacenters and M&A effect.

<unk>.

Next let me touch on one of Kt dice strengths Iot left side, the number of Iot connections exceeded 37 million for K D D I and $6 million for Silicon in October for a total of 43 million.

In.

Right side.

Connected cars are driving this growth.

We now offer more than 22 million connections globally.

We are pleased to announce that we will be expanding this service to overseas automakers and also decided to establish a new company for our overseas connected business for further growth.

In the connected car business, where high market growth as expected. We aim to further expand globally on the strengths of our high quality communication infrastructure, which is chosen by many customers.

The datacenter business is also performing well with its strength.

Connectivity datacenter.

Left side.

Data center business revenues continue to grow strongly at a CAGR of 24%.

Telehealth, which operates KDD ice data center business is the world number one telecom carrier in terms of the number of connections as you see in this bar graph.

Right side.

We are leveraging this connectivity strength to further expand our global deployment in North America. We have successfully completed the acquisition and transfer of Canada's number one connectivity datacenter.

And in Europe, we opened new facilities in Frankfurt.

And terrorists in October to meet growing demand.

One of key D. D is a unique dx strength is the utilization of group assets.

In addition to Knowhow cultivated in the telecom operations, such as IV platforms and management.

<unk> has a variety of group capabilities that support data utilization let.

Let me introduce a case study on company a in the real estate industry on the left by integrating customer Ids that were different for each business and building a data utilization infrastructure, we are contributing to the marketing sophistication and the identification of new customer needs.

As we compete with <unk> and other companies.

<unk> is receiving recognition for strength of group collaboration and is contributing to the Dx of the customers' business.

We are also promoting carbon neutrality through our business left side.

We are switching to renewable energy and conserving energy at our data centers as part of our own efforts.

We will accelerate our efforts with the goal of achieving carbon neutrality at all data centers by 2026 right.

Bright side.

We will also support our customers' carbon neutrality by utilizing Dx K D. D. I Green digital solution provides one stop support from visualization of emissions the planning and implementation of reduction measures through partner collaborations.

Next is our <unk> initiative alpha use.

Left side.

Since the launch of Alpha you in March net averse for each use case has an emerging one after another and needs are extending.

Sales to corporations has been particularly strong growing approximately five times year on year.

To see domain also has over 1000 distributors.

In this environment, we extend expanded Alpha <unk> service, which is now in full swing to accelerate the creator economy.

Also you place offers a new shopping experience through a virtual store that combines the best of both real store and the Internet lower right Alpha you met averse added a Colorado, Okay function Alpha you live all support Cree.

Later as by streaming artists performances and songs to the World.

Furthermore, by utilizing generative AI, we will create a creator economy full of more diverse content.

Generative AI will be utilized to strengthen the foundation for Dx and Alex growth left side, we will first promote the internal use of K D. D I AI chat to enhance our operations.

Upper right in September we announced our collaboration with Azure Open AI service and AWS for business development of generative AI based on the user experiences and use cases of 10000 K D. D. I employees, we will support the social implementation of generative AI lower right we will.

Also accelerate our human resource strategy, along with business streamlining in addition to shifting human resources. The Dx Nellix areas, we will expand with three in AI training to strengthen human resource development that support growth.

Next is and WC Barcelona, 2024, K D D. I will exhibit for the first time next February.

The sufficient theme is enhancing the power to connect.

We are preparing our business field under the theme of the power to connect which is part of our vision.

There are fewer Japanese exhibitors.

In M. WC, so we will work with Docomo.

To exhibit in EMEA WC to raise Japan's presence.

The specifics of our exhibit will be announced in the future.

Lastly, today's summary.

Regarding consolidated results, both revenues and income increased in the first half and we are progressing steadily towards the full year forecast, while rock tenn roaming revenue declined income increased thanks to growth in communications ARPA revenues and focus areas.

Towards sustainable growth, we will promote efforts to grow our communications ARPA revenues and focused areas.

Communications, our Blu revenues rebounded and initiatives for growth, including Au money activity plan are progressing we are promoting five G area development, along customers lifeline and further refining our communication quality.

In financial services, we are expanding our financial customer base through synergy with telecom business and full lineup services, we are strengthening Dx and Alex efforts to solve issues faced by our customers and society. In addition, we will accelerate business development and human resource strategy by promoting the use of generative AI.

Within the company.

This concludes my explanation of second quarter results.

Thank you very much.

Let me take a few moments after this to once again share our thought.

On the NTT law and how it should be implemented.

Regarding the discussion on the review of the NTT Law L. D. P is currently discussing it in the project team on the future of the Act Nippon Telegraph and telephone Corporation NTT in the special Mission comp Committee on financial resources for defense related expenses and <unk>.

I see in information and Communications Council.

As we have said at each hearing we think it is necessary to review N E. T law in line with the times for example, the provisions such as the obligation to disclose research results authorization. The company name change and the director appointment on the other hand, we oppose the abolition of NTT law, which jeopardizes the public interests in <unk>.

Believe that careful policy discussions should take place on the following three reasons. The first is to ensure fair competition between NTT group and other operators to prevent further integration and unification of NTT group.

We think this is important the second is to protect the existing 60 million users to ensure the obligation to provide services nationwide. The third is to ensure the government control over our communications that are high public interest to protect NTT special assets by foreign investment regulations.

If these are not maintained we are very concerned about the impact on the national interests and People's lives.

In addition on October 19th 180 entities, including telecommunication operators and local governments submitted a jointly signed request to the L. D P and the minister of internal Affairs and communications to oppose the abolition of NTT law. This 180 includes.

Parties from various regions in Japan, including many cable Tvs. This many people or parties are concerned that the integration and unification of NTT group will undermine a fair competitive environment.

Considering the situation and the public interests, we call for more careful policy discussions.

This concludes my explanation.

Thank you very much for your kind attention.

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Half Year 2024 KDDI Corp Earnings Call

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