Q&A for 3Q of FY2015.3

In the medium-term management plan that we unveiled last fiscal year, we committed to achieving 10% growth in operating income. We reached that level of growth in the previous fiscal year, and I believe we will again in the current fiscal year. To reach 10% growth in operating income next year as well, we will have to boost sales. au ARPU slackened a little during the third quarter, but we will continue working to increase it. If these efforts are insufficient, we will combine them with cost-reduction initiatives to ensure that we meet our 10% operating income growth target.

We had anticipated that competitors would launch bundled optical service discounts. We have been promoting au Smart Value to our customers to counter this. We are also increasing the applicable scope for au Smart Value and working to steadily increase penetration among our customers. We recognize that achieving growth will be difficult unless we approach au customers who are using the FLET'S service and increase the number of new customers.
In response to your question about how we will respond to other companies offering bundled optical service discounts, first we would say that the structure of our service bundle differs from that offered by NTT DOCOMO. For this reason, we do not expect to see any sudden impact.
When launching au Smart Value, we spent more than half a year conducting research. We learned that customers are focused primarily on smartphones. We therefore decided to adopt a simple approach, making discounts apply to individual smartphone customers. We believe that our competitive edge derives from the fact that our services are simple and easy to understand. We plan to continue making steady progress on initiatives that take advantage of our three years of experience in this area.
SoftBank's offering is very similar to ours, but our offering is advantageous to smartphone customers with low data usage and customers with feature phones (those who meet discount criteria). SoftBank is making a major push for customers whose data usage is extremely high, but we believe that there are actually very few customers in this category. At present, we do not anticipate much impact. If that situation changes going forward, we will mount a firm response.

The reason for the slowdown in au ARPU growth is that the number of people making the shift from feature phones to smartphones is leveling off. That being said, the third quarter marked the launch of the iPhone6/plus. We probably overemphasized our efforts to hold on to iPhone customers at the expense of encouraging customers to shift from feature phones to smartphones.
Another factor was the impact of a slight increase in the number of customers taking advantage of the 2GB unlimited flat-rate data service plan. Until December, fewer than 40% of customers on the unlimited flat-rate data plan used 5GB or more. We made a comeback in this area in December, and we are currently stepping up our efforts in areas where we have strong penetration, such as with customers taking advantage of the Student Discount. We appear likely to be recovering. We will need to maintain unflagging efforts to bolster au ARPU.
Regarding the increase in the number of subscribers, we are beginning to see the effects of a shrinking MNP market. We intend to keep working to increase smartphone penetration among customers who have been reluctant to make the shift by providing attractive services.
We will provide more detailed explanations about our plans from next fiscal year onward around the time our next medium-term management plan commences.

Any impact on income and expenses should not affect our plans. We see this move as an effort to promote retention and encourage handset upgrades.