Performance Highlights and Q&A for the First Half of the Fiscal Year Ending March 2025

Whether it's KYOCERA or TOYOTA MOTOR, the stance towards cross shareholdings is becoming more severe. TOYOTA MOTOR has not made any further requests at this time. KYOCERA is also selling one third of our shares in this instance, so in five years the level of our shareholding ratio will be around 10%.
We would like both companies to retain as much as possible, so we will continue to make requests them to retain their shares by insisting synergies with our company.
From next fiscal year onwards, we have set a target of 1.5 times the Earnings Per Share for the FY26-03 and we would like to design a policy that includes the repurchase of treasury stock as one of the elements of this.
We have disclosed our cash allocation plan up to FY26-03, and when we look at the approximately 3 trillion yen in operating cash flow over the next two years, we have approximately 1.3 trillion yen for capital expenditure, approximately 200 billion yen for strategic business investment, and approximately 1.5 trillion yen for other uses. The composition of the remaining amount is approximately 300 billion yen in dividends each year, and other uses such as the acquisition of the other treasury stock or the cross shareholdings, etc. I hope you got my message.

Competition in the medium-capacity range is becoming a little more intense. We have taken steps to keep rates the same for 33GB, without bundling with fixed line unlike other companies. We have also introduced a strong plan for povo that costs around 1,980 yen per month, and we are thinking of fighting firmly in the competition in the medium-capacity range. We expect that migrating from lower-priced plans will have a positive impact on ARPU.
In addition, as a new experience with povo's Data Oasis, you can get 100MB every time you go to LAWSON, so we will actively drive forward so that it can be used not only by au users, but also as a second SIM for customers of other companies.
The Ponta Pass has been very successful since it was launched. The most significant effect has been that the au Smart Pass, which had previously seemed like a service for au users, has been taken as an open service, and we have started to get new subscriptions through the LAWSON channel. There are many benefits offered from LAWSON and the LAWSON's franchisees have started selling the Ponta Pass in the stores, so we expect this to have a significant effect in the second half of the year. The current number of members is about 15 million, but our goal is to increase this to 20 million, and we will be focusing our efforts on this in the future.
The number of daily active users of the Ponta Pass has increased by 1.5 times, and the number of customers sent to LAWSON has increased by 2.5 times. We believe that, as Lawson's daily sales increase, having customers use the Ponta Pass will contribute to an increase in our company's revenue. We also believe that by encouraging UQ mobile customers to choose Ponta Pass in conjunction with the new UQ mobile plan, we will see positive results in terms of both Communications ARPU and value-added ARPU, and we will be focusing our efforts in this area. From the beginning of new year, we will be using various media, including TV commercials, to promote Ponta Pass and the convenience of LAWSON.

UQ mobile's new plan offers 33GB as part of a campaign. Other companies have also started new plans in the medium-capacity range, but we would like to recommend it because UQ mobile's original appeal, such as the ability to carry over remained data and the 10-minute flat-rate call plan, is superior to other companies.
In addition, we believe that migrating to the new plan will have a positive impact on ARPU revenue, as it will directly lead to an increase in ARPU while UQ mobile's subscriptions increase.

We are responding to the current situation with hard operations, but we are also considering strengthening the au flat-rate plan again. By boosting attractiveness of au plan, we hope to migrate customers to the unlimited data plan after they have used up to 30GB on UQ mobile.

Our brand strategy is different from that of other companies. povo is not seen as being associated with au or UQ mobile. The reason for this is that povo is designed with a focus on the web, and it is not handled at au stores at all. povo's user interface is very good, and the strategy of utilizing this at new sales channel LAWSON is very different from that of other companies. The idea is that au and UQ mobile will be handled at au stores, and while highlighting the characteristics of the brand, we will promote to migrate as much as possible to au, and from the outside, we will have people come to UQ mobile.

We want povo to be used as a second SIM for various carriers. It's a second SIM, but the network is the best you can experience, and you can enjoy the quality without any worries. We also want to develop povo so that it can be changed from a second SIM to a main SIM.
The increasing attractiveness of au needs to be continued. We have a history of providing value to customers through bundling, such as au Money Activity Plan, and we want to continue to develop plans that can be set with various partners and deliver them to customers.

We are trying to achieve three main points. The first is to continue to follow the cash allocation policy up to the FY26-03 term. The second is that we are working seriously within the company to achieve 1.5 times EPS growth in the next term. The third is to flexibly consider a total return ratio of up to 100%. If you solve these, you will be able to understand how much shareholder returns are.

Regarding Multi-Brand Communications ARPU revenues, there was a decrease of around 10 yen in Multi-Brand Communications ARPU, and the number of IDs decreased slightly due to more SIMs being sold than expected, as well as the rollout of competitive measures by each company.
In order to increase ARPU revenues in the future, we expect that the subscription structure will improve due to the new UQ mobile rate plans, and we will focus on this to increase our competitiveness.
Regarding the flat-rate plan for au, we will operate it in a way that maximizes revenue from the overall rate plan mix, and we hope to return to our initial target of 14 billion yen.
The reason why the second quarter is looking a little weak is that it was affected by the launch of the new UQ mobile rate plan in June last year. We also hope to increase the number of Multi-Brand IDs through the new UQ mobile rate plan and au measures.

We think that expanding from 20GB to 30GB is a turning point for medium-capacity rate plans. On the other hand, au customers' recent traffic is expanding by about 18 points YOY, and UQ mobile customers' traffic is expanding by about 6 points, so we think that customers will migrate to the unlimited usage plan when considering customer usability.
We want customers to subscribe for au plans with various value-added features, so we have no plans to increase the capacity of the medium-capacity range any further.

We took the opposite strategy to NTT Docomo, replacing the 4G network with 5G and then overlaying Sub6 on top of that. This strategy is working well. After making significant improvements to the existing 5G frequency band, we were able to install a far greater number of Sub6 base stations than other carriers, and we were also able to expand our network thanks to SKY Perfect JSAT moving satellite interference by end of last March. I think NTT Docomo would have a hard time if they had to redo their network strategy once again.
In addition, although SoftBank has applied for Sub6, only NTT Docomo and our company currently have two blocks of Sub6, so we have an advantage. The newly acquired frequency blocks are quite far apart, so they cannot be covered by a single piece of equipment. Our company has blocks of Sub6 frequencies that are very close together, so the efficiency of our capital expenditure is very high. Furthermore, with the addition of D2C (direct telecommunications with satellites), when these factors are combined, our network superiority is considerable.

As we covered the establishment guidelines by the end of the previous fiscal year, capital expenditure hit peak last year and then will decline slightly.

I cannot give you specific figures for the second half outlook, but it will be around 10 billion yen plus a little extra, as announced at the beginning of the term.

As announced on September 18, we are working on retail-tech, including signage and restocking of the back yard. We are also working on being involved in the renewal of LAWSON's systems. Overall, our work with Lawson is going very well, and we have multiple projects underway, so I think we will be able share good news in the future.