Unknown Executive: From now, we would like to start the press conference on the financial results for the 3 months ended June 30, 2026, of NTT Inc. Thank you very much for gathering despite your very busy schedule. I will be serving as MC from Public Relations Department, NTT Inc. My name is [ Ichihashi ]. Let me introduce the attendees today. At the beginning, President and CEO, Representative member of the Board, Akira Shimada; Senior Vice President, Head of Finance and Accounting, Toshihiko Nakamura; Senior Vice President, Head of Corporate Strategy Planning, Akitoshi Hattori. These are the 3 members. As for the materials for today, they are uploaded on our official website at 1:30 p.m. We will start the conference. Shimada-san, the floor is yours.
Akira Shimada: Thank you very much for sparing your precious time out of your busy schedule to attend this meeting. And this is Shimada, President. First and foremost, our deepest sympathies go out to everyone affected by the recent Kumamoto earthquake and their families. We are fully committed to restoring services and supporting recovery efforts as quickly as possible, working in close cooperation with telecom companies and local governments to restore communication infrastructure and assist affected areas. Well, although mobile services were disrupted in 2 municipalities, they were restored within approximately 2 days. During this period, we worked to maintain connectivity through measures such as the rapid implementation of Japan roaming. We are also continuing to provide support at evacuation shelters through the Tsunagu-Kaeru project collaborating with telecom companies and battery manufacturers. We remain dedicated to contributing to the earliest possible recovery and reconstruction. Now I will proceed with the explanation of our financial results of the first quarter of this fiscal year. Overview of consolidated financial results, increase in both revenues and income year-on-year. Operating revenues reached new record high levels. Operating revenues increased by JPY 355.7 billion to JPY 3,617.7 billion, driven by the DATA Group overseas and the domestic business growth as well as the Smart Life business will increase centering around the finance of DOCOMO. And out of this increase, foreign currency impact, positive JPY 75 billion. Profit despite the costs related to DOCOMO's customer base enhancement and network quality improvement, growth in Smart Life business profit and business growth of DATA Group, it increased and EBITDA increased by JPY 34.8 billion to JPY 836.2 billion. Operating profit was up JPY 20 billion year-on-year and was JPY 425.1 billion. To achieve full year plan, we are committed to work to expand enterprise business, both at home and abroad and expand Smart Life business. Net profit was driven by the increase in operating profit and others and JPY 274.8 billion, up JPY 15.1 billion. By segment, in all of the segments delivered growth both in revenues and profit. Integrated ICT business segment, despite the cost spent for reinforcing customer base and improving network quality, as a result of customer base enhancement initiative and others, while Smart Life business expansion resulted in increase in revenues and profit Y-o-Y. And as a result of customer base enhancement initiative, MNP performed strongly and improved from the previous year. DOCOMO MAX have been -- was selling well and resulted in ARPU improvement and the rate of decline in mobile communication services revenue decreased steadily against the previous year. And we aim for the turnaround to increase revenue year-on-year. Global Solutions business segment. In addition to business growth in Japan and overseas increased due to foreign exchange impact, both revenues and profit increased year-on-year. Regional Communications segment. And though legacy business revenues declined, increase in Hikari business revenues resulted in increase in revenue year-on-year and profit remained at almost the same level as that of last year. Net increase in Hikari service was almost at the same level as that of the previous year. And others, real estate and energy, growth in real estate business of Urban Solutions led to increase in revenue and profit year-on-year. Next, I would like to move on to explain 4 topics, starting from the global expansion of IOWN to further drive IOWN business, with the support of government, we accelerate service deployment globally in Chile. Survey and demonstration to advance Remote operations of heavy machinery through IOWN APN have begun at CODELCO-operated copper mines to solve issues such as working environment improvement. In India, a feasibility study aimed at improving energy efficiency of data centers in India through the deployment of switches incorporating Photonic-Electric Convergence devices PEC-2 has begun to achieve power-saving large-scale distributed processing with financial institutions and other partners. Going forward, we will continue to expand use cases in various countries and industries, steadily promoting steps to social implementation of Photonic-Electric Convergence devices and accelerate global expansion. Next, I will explain launch of distributed GPU demonstration environment using IOWN. We launched the GPU over APN Testbed, a nationwide distributed GPU demonstration environment using IOWN APN in July, enabling customers to experience the use of distributed GPU resources, low latency, high-volume connectivity and distributed GPU resources across 8 nationwide locations enable verification of advanced AI load, including distributed AI training, distributed AI inference and high-volume data transfer between sites. Through provision of real-world environment, we will accelerate the realization of AIOWN through customer co-creation, generating new use cases and practical expertise. Thirdly, I will explain the initiatives for sustainable operation of social infrastructure. In social infrastructure, including water, wastewater and waste management, aging infrastructure and labor shortages are getting serious and new mechanisms for sustainable operation is expected. To solve this issue, NTT will promote operational efficiency through DX at water and wastewater treatment plants through business alliance with METAWATER. At this juncture, we acquired METAWATER shares to build long-term collaborative relationship. Furthermore, building on this initiative, we will aim for the achievement of cross-sector wide area social infrastructure management services through deployment in areas such as renewable energy, road and disaster resilience and contribute to building sustainable social infrastructure along with the municipalities and communities. The progress under medium-term management strategy since May is as shown here. That concludes my explanation. Thank you very much for your attention.
Unknown Executive: We now like to take questions from the members of the press. First of all, we would like to start by inviting questions from the present here at the venue. [Operator Instructions] We like to take questions. And from me on the left side in the second row and the reporter in gray suit.
Yasuhiro Kobayashi: Kobayashi from Yomiuri Shimbun. DOCOMO Financial Group it was launched in July. And in this particular quarter financial results and DOCOMO finances have really greatly contributed to the business performance. And so what is the expectation to this particular service?
Akira Shimada: Thank you for the question. As Kobayashi-san has just mentioned, and as of the July 1, DOCOMO Financial Group was launched. And banking, securities, loans, insurance, all these were the so-called across the financial sector, comprehensive services are now being available. And with this, making it a very big starting point and end point could also be combined together and to really offer a very robust and strong well financial services. And so we have come to a stage whereby we will be able to build even a more reinforced financial platform. And the major one is the banking arm. And DOCOMO SMTB is sort of the name. But it is named under the DOCOMO and this banking function is drawing much attention and expectation. And so well, there are approximately 2,000 DOCOMO shops. And currently, as of the end of August, 200 shops will be able to really provide support to the opening of the bank accounts as well as securities. And so other than the DOCOMO shops, we will have 80 shops, which would be able to really offer the support. And by the end of this year, and we would like to really have the facilities amounting to 1,000 to really provide the various support for this financial sort of functions. And then we are really going to have the 50% of them to be able to provide the support from demand really outlets. And so that is what we would like to really see achieved by the end of this fiscal year. The next question, please.
Unknown Executive: The person at the back row [indiscernible] from Sankei Shimbun.
Unknown Attendee: I have 2 questions related to the response to Kumamoto earthquake. As for the damage in fixed line in East and West, there seems to be some damage in the DOCOMO business. And also in the mobile phone business compared to the past, it was a rather minor damage. It's not possible to have the simple comparison. But what was the factor for mitigating the disaster impact? And now collaborating with the 4 companies, I believe you had a good benefit of Japan Roaming. And what went smooth? And did you have any challenges?
Akira Shimada: Thank you for the question. This was seismic scale of 7. And with respect to DOCOMO, there were impacts in 2 cities. We partially use Starlink and over 2 days, we were able to recover at an early stage, just spending 2 days. And also in inter-prefectural network and extra-prefectural network, we have operations, and that is related to the cables on the bridges, but the bridge was damaged. And as a result of that, the connection was cut. And now we are diverting to ensure the connectivity. So in terms of the communications, we do not have any issue on the fixed line. So from that perspective, at an early stage, we were able to provide services. Compared to Noto Peninsula earthquake, it was Peninsula. So in order to recover -- to secure the routes for recovery, there were challenges. But this time, in order to recover and restore the environment, the conditions were better. Along with that, Japan Roaming, each company is using Japan Roaming. So we were able to extend support and with the connectivity project, we did coordinate which areas to support, and we have divided the responsibilities amongst the 4 companies, which ensured efficient support. Along with that, mobile battery with the support of the battery manufacturers, at an early stage, we were able to provide mobile batteries. So from that perspective, broad area support structure was ensured, which was good for the company. This is all -- this should work well. And this earthquake, we would like to reflect and we would like to prepare for the other earthquake that may arise in the future. We would like to move on.
Unknown Executive: Just in front of us, Shimizu from NIKKEI.
Kosuke Shimizu: And in July, and well you are really going to have this -- have the issuance of the foreign currency denominated bonds of JPY 1.6 trillion. I think, when I really met in May and we had this downgrade in our S&P and also, well, in terms of your business strategy, what would be the sort of the potential impact from the rate hike? S&P downgrade. As for that...
Akira Shimada: Originally, making NTT DATA, a wholly owned subsidiary company, we were expecting this. It's not that well, we were taken by surprise, but Moody's and other 2 rating agencies in Japan, they are maintaining the same rating. And so not virtually or substantially, there is not much of the impact. And the rate -- interest rate and 0.1% or so, it's not really up to 0.1%. That is the level of the impact. And so very moderate impact. And basically speaking, we can say that we are free from the impact. And BBB, even with that, because the outlook is stable. So going forward, for the CapEx in our businesses in the future, and also the equity participation or the investment, there is no particular issues related to this in this context. Did I answer your question?
Unknown Attendee: [ Miyoshi ] from NHK. I have 2 questions. The first question. Is mobile communication service revenues. You were able to shorten the level of decrease in revenue, and you have announced a new plan. With respect to the rate plan, a revision of the existing plan? Are you planning to have any plan for revenue increase? That is the first question.
Akira Shimada: Mobile communication service revenue, thanks to your support, consumer communications last year was roughly JPY 14 billion plus reduction in revenue. But this year, this will be explained by DOCOMO, but it was JPY 1.4 billion decrease in revenue, about 1/10. So we believe that this has bottomed. So from that perspective, ARPU is increasing. And this time, we saw the increase by JPY 70 and MNP is also working positively. And with 3G suspension, this is impacting. But overall, we are seeing the recovery. But on the other hand, as you said, labor cost and expenses, they are increasing overall. So as DOCOMO at certain timing, cost should be borne and also, there is still 20% increase, and there is a decrease of the capital expenditure for traffic. So we just need to make sure to cover that, and that should be reviewed further by DOCOMO. ahamo, 30 gigabyte and there is addition of 10 gigabyte to 30 gigabyte. And this is from a marketing perspective. And since there is a heightened need from the perspective of the customers, once they use and we wanted to wait and see what the reactions are from the customers. So we would like to make sure to see that in the future.
Unknown Attendee: And I have another question. I'm sorry to ask about the competitors. SoftBank will make the investment to Seven & i and PayPay and ID integration will be promoted. With respect to telecommunication operators, points, payment, strengthening of the collaboration is in progress. And once again, for you to differentiate, what are your strength? You mentioned about DOCOMO Financial Group. But once again, what will be the uniqueness or the differences in order to expand your ecosystem?
Akira Shimada: With respect to the convenience stores, we are, in principle, open to them with Seven & i, we have a close collaboration to do business. So from that perspective, for example, Lawson, when KDDI made the investment, this was the case. But if you think about the convenience of the customers, all of a sudden unable to pay in d-barai may not be good for the stores. So up to now, Seven & i and d POINT, Lawson and FamilyMart. It's possible to accumulate and also use d POINT, but that was not the case for 7-Eleven. So with the capital partnership with SoftBank, from customers' perspective, it will be helpful if d POINT can continue to be used from the perspective of the customers. From ID and a marketing perspective, DOCOMO itself has alignment with customers and a marketing company called CARTA. So Seven & i collaboration will be SoftBank, PayPay. And other than that, there is even more extensive collaboration. So I don't find any impact.
Unknown Executive: Next, at this point in time, we would like to take questions from journalists online. [Operator Instructions] Are there any questions? Well, at this juncture, we don't seem to have questions from journalists participating online. So we would like to go back to the venue and those of the media reporters at the venue, if you have any questions, please.
Yuka Nakao: Nakao from Kyodo Tsushin. And I have 2 questions. The first question, a very detailed question. And earlier, Shimada-san at the outset, DOCOMO Financial Group and the DOCOMO shops, which are going to be able to really support the financial, then you're really going to increase this number up to 1,000 by the end of this year or fiscal year -- by the end of fiscal year. And also, I think, well, you are really going to accelerate achievement of this kind of target number. And are there any background factors to support that? And also there are any -- what was the sort of the leadership being played by the holding side? So that is the very first question.
Akira Shimada: I'd like to really respond to this part. And DOCOMO, well, they were not really saying that they are really going to move slowly in any way, but the -- when the -- and the press conference was made for this financial group, and they were really well talking about what they would like to really well achieve. It's not that we have pushed them to work faster, but that was really well being the case.
Yuka Nakao: Sorry, I was not really confirming very well in advance. And so on a different note and economic policy promoted by Takaichi administration and this time around. And in terms of the growth strategy and basic policy and all these government-related policies have been formulated. And so AI and IT and space and so very well proactive investment is going to be made. That was really decided by the government. And also, I think is the expansion monetary sort of policy, it will be adopted. And also, we have seen quite a big sort of movement in terms of the weaker yen. And so that is the sort of the movement in the market. And so vis-a-vis the general policy of the administration, what is your take on that? And also in addition to that, because of the rate hike, well, probably the funding might become more difficult. And so as for the interest rate, any request or demand that you have for the current administration?
Akira Shimada: First of all, and what is being promoted by the Takaichi administration and 17 core areas. And so we are to be really engaged and because once again, well, in order for Japan to really revive, I think these are really essential in our view. And in that context, and we are really well called and we have given the opportunity to really explain on our part. And also mainly AI was the main topic. And so the network to really well connect this AI through APN and to really support that, well, you may need to have the distributed sort of the power supply. And well, on the other hand, in terms of economic security perspective and marine cables, well, both in Japan and also the overseas, well, we may have to really pay attention and make efforts to that. And so these are the challenges. And we hope that the government is going to take the leadership. And we, on our part, would like to be engaged in a sufficient manner. And so first of all, from all the way, we have the APN also between data centers, we do have all these installed. And all the way to the outside of Tokyo in the outlying regions, we may really have to have all these being well installed. And so well, I think something that should be really looked at from the legal perspective. And also, we have to take care of that and to really provide the sort of the system or organization whereby we will be able to provide the adequate support. And I think that will serve as the platform and foundation for further growth. And so in terms of the industrial policy, well, we -- I think it is really important for the infrastructure to be developed. Now as for the monetary policy, I am not in a position to say anything about that. But if the inflation should be well controlled and then, well, it is a common sense that rates should be well hiked. And for a private company, it is better to see lower interest. But inflation is more -- even more scary. And so we would leave the judgment to be made by the regulator. And so that inflation would not be accelerated. And also the foreign currency exchange rates will hopefully to be stabilized. And so it would not really be volatile and fluctuating too much. Did it answer to your question? Any other question, please?
Unknown Executive: The person to the left, the third row.
Unknown Attendee: My name is Suzuki. And this is a question about DOCOMO FG. And when I heard from President, Hiroi, securing deposit was difficult. And after acquiring Net Bank, enterprise sales was required and the group asset was required. For example, group employees and the sales resources of the group to be utilized. So can you speak about the progress around those topics?
Akira Shimada: Yes. Yes, competition over deposit. Now we are in the world with interest rates. So not just the Net Banks, but mega banks and other banks are competing amongst each other to secure deposit. Given the circumstances. DOCOMO no Ginko is trying to secure deposit in this competition so that there will be another business growth. To all the group employees, we can ask to join this financial group, but we cannot mandatorily ask them to open the accounts. So we need to make sure to have our cohesiveness in order to advertise this financial group. And if they can open account and if they can open account for securities, that will be helpful. Thank you.
Unknown Executive: Any other questions? Well, we have received a question in chat. So I would like to read a question. Mishima-san from [indiscernible]. And semiconductor, procurement, it will take longer. And also, what is your view as to the soaring price of semiconductor?
Akira Shimada: And we are not directly procuring semiconductor. And well, as the sort of parts and components of devices or semiconductor is being used. And so from the device vendors from the earlier stage, well, there is some request for the potential procurement, an innovative device might see some impact and optical-related parts and components. And they are really asking us to really place orders early on. And so we are aware of that. So that we will not cause any inconveniences to our customers and also to not to lower the quality of services. And so there are some cases whereby we are really well start placing orders and procuring earlier. And so the prolonged sort of the situation, we are going to respond to that. And also as for the soaring prices, well, it depends on the market. And so we will be procuring at the market price. And so thank you.
Unknown Executive: [indiscernible] first, please.
Unknown Attendee: I'm sorry to ask for the second time. When you talked about the financial results at the beginning, you mentioned that there was increase of revenue due to the exchange rate. From your management perspective, depreciation or appreciation of the yen by JPY 1, what is the impact to the management of the company? That's the first question. And I should have asked this question earlier. DOCOMO's domestic share is now 33% also. And you mentioned that the mobile revenue of DOCOMO is now bottoming. And what is your expectation for DOCOMO?
Akira Shimada: Yes, for the exchange rate impact, I would like to ask the finance responsible person to respond. And speaking about market share, we mentioned 35% as the target, but that was a message for not going any further down. So in other words, we want to increase if possible. So we said that 35% last time. So we hope it will increase. But on the other hand, if we include MVNO, we have been able to secure to a certain level. So we should be able to keep that. And with respect to domestic share, we do not want to go any further down. So we would like to make sure to hold. And please convey this to Maeda-san, the next speaker.
Akitoshi Hattori: So if I may add on the impact of the exchange rate now with NTT Group, overseas revenue is roughly JPY 3 trillion per annum. And for example, the exchange rate is between JPY 150 to JPY 160 with JPY 1 fluctuation, there will be roughly JPY 20 billion impact and the profit is roughly 1/10 of that amount. That is all from me.
Unknown Executive: The person in white shirt.
Unknown Attendee: [ Kashima ] from [ Kyodo Tsushin. ] And so I'd like to really ask a question related to Kumamoto. So there has been much of the impact. And so there is -- are you really going to review the BCP? And as for the unwinding of metal?
Akira Shimada: If there are any possible postponement. And as for the metal, I don't think there is going to be any impact. And as for the BCP and whether we are really going to revisit BCP or not, constantly, we are reviewing. And so this time, those affected. And so what was in shortage because of the Kumamoto earthquake. And so at this point in time, we have not yet really reflect the lesson on ourselves yet. And so this is something we do every time. constantly, if there is any disaster and if there is any incident, every time, we are revisiting the plan. So that's what we have been doing.
Unknown Executive: In the interest of time, the next question will be the last question. [Operator Instructions] Since there is no further questions, with this, we would like to conclude the press conference of NTT Inc. We would like to move on to NTT DOCOMO Group conference. Please wait while being seated. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]