Q&A for 1Q of FY2015.3

Yes, last fiscal year we committed to achieving double-digit profit growth over the upcoming three years. Last year, we surpassed the level we had committed to, and business is moving along steadily this year, too. Naturally, we will also commit to next year.
The question of most concern for us is how we will sustain growth after the fiscal year ending March 31, 2017. Top management has been debating this question of where we go from here since the fiscal year ended March 31, 2014. One answer that has come out of these discussions is to move into the domestic offline market.
I believe that "au WALLET" is one tool for accomplishing this goal. Offline business will contribute to profits, but we also intend for it to generate an economic cycle wherein online and offline businesses repeat, back and forth. In addition to our points of contact with customers in the online world, we think that adding ID will strengthen our business, including in the offline world.
In the first quarter, we announced an initiative in Myanmar that we have been involved in for some time. Going forward, we should be able to unveil a number of things that we are working on.
In the current fiscal year, we are targeting a new stage of business. We have already turned around the trend on au ARPU, and sales of tablets as second devices are growing beyond our expectations, so the domestic telecommunications business is firmly positive. We also aim to become involved in new businesses and are targeting further expansion. At this point, we cannot provide specific figures.

Other companies are announcing their net additions and their MNP net additions, so KDDI's are considered to be poor. That is not the case at all.
In the telecommunications business overall, au net additions and MNP net additions got a major boost in 4Q of last year. By comparison, the figures for April and May show that the overall market size is smaller. Looking at this on a competitive basis, though, the au share of the overall communications market, as described by au net additions and MNP net additions, has not changed. In June and July, figures for total unit sales and net additions have been recovering, so the market isn't just shrinking. In the second half, the telecommunications industry holds numerous events where handset sales are high. We will introduce new models and launch a strategy for the year-end shopping season. By stepping up our activities on a number of fronts in the second half, we expect to meet our targets, unrevised.

Unless something truly unexpected occurs, we are not planning to revise our results forecast at the first half.

On average, smartphone customers use a little less than 3GB of data per month. If we were to introduce a minimum rate plan with 2GB as the maximum, customers would incur surcharges, so their rates would be high. Also, the average amount of data used is increasing every month as the smartphone user base expands. For these reasons, we do not consider there to be a risk of income being pushed down due to downgrades.
Our new Data Freedom Rate Plan allows customers to select the plan that suits them best, based on their amount of data use. For the late majority, selecting the entry plan eases the transition from feature phone to smartphone, so the Data Freedom Rate Plan should contribute to increases in au ARPU.
Meanwhile, existing smartphone users and heavy users will need to take a number of factors into consideration when deciding what entry point is most appropriate. This domain opens up a huge number of possibilities, and going forward we plan to run campaigns on this theme.

The profile of "au WALLET" applicants is nothing unusual. We are getting applications from people across a wide range of ages. In 1Q, launch-related expenses were approximately ¥4.0 billion. We are looking at the current fiscal year as the start toward a new phase in our business. Guidance would be that while maintaining our profit base we will aggressively launch "au WALLET" in the aim of contributing to profits next fiscal year and the year after that.
With regard to current conditions, after running campaigns that take an approach that goes via online, the rate of "au WALLET" use has risen, and we have the distinct sense that "au WALLET" has the potential to create new contact points with customers offline. We plan to continue with campaigns for the next year or so, to expand the offline/online economic cycle.

We are firmly opposed to NTT's approach, which is currently a focus of discussion by a committee at the Ministry of Internal Affairs and Communications.

We have entered into a nondisclosure agreement on this topic, so we cannot discuss the details, but over a 10-year period we expect to invest ¥200 billion. We expect half that amount, or ¥100 billion, to be in reinvested funds that the business generates. On our consolidated P/L statement, we expect the business to begin contributing to profits from around the second year. We have adopted an investment scheme that involves relatively little danger, and there is less risk than some outsiders seem to think.

Our business plan is as I have just explained. There is no change in our belief that this is an attractive market, including peripheral businesses. If the business is proceeding in a positive direction, increased investment and expanded operations are possibilities.

We have not decided timing for discontinuing our current rate plan.
With regard to selling plans, we believe that the late majority will see our new rate plan as more attractive. Conversely, early adopters tend to hardly use voice services at all. Many people are currently enrolled on our existing rate plan, and we do not plan to force them to change to a new plan. We want au to be an environment that allows freedom of choice, so we will promote plans designed to match users' needs.

From talking to people at shops and in sales, I understand that this is an advantage, but at this point I do not know for certain that it is.