CEO Message

Since the company's founding, our mission has been to achieve a truly connected society. Our business is intrinsically public and directly connected to customers' lives.
Throughout FY22.3, the COVID-19 pandemic has driven rapid digital shifts in all areas, increasing the importance of the role of telecommunications. Meanwhile, the government upholds the "The Vision for a Digital Garden City Nation" to promote regional vitalization through digitalization. As a result, our daily lives and businesses are increasingly digitalized. We support people's new lifestyles and promote efforts toward creating a resilient future society that achieves both economic progress and the resolution of social issues.
To achieve our ideal future society while accommodating changes in the business environment, we set out a new vision, "KDDI VISION 2030: The creation of a society in which anyone can make their dreams a reality by enhancing the power to connect," and established new materiality that holistically cover social issues and the level of importance in the KDDI Group's management from a long-term perspective.
Taking these into account, our new Mid-Term Management Strategy (FY23.3 to FY25.3) places "Sustainability Management," which aims for sustainable growth of society and the enhancement of corporate value together with our partners, at the core and promotes "Business Strategy" and "Strengthening of Management."
We positioned our Business Strategy as the "Satellite Growth Strategy" to clearly demonstrate the new growth achieved by deepening the existing business- es and maximizing synergies in the related business areas. We will evolve our "Power to Connect" by leveraging the characteristics of 5G and aim for an era in which new values will be generated as a result of the "blending" of telecommunications into all kinds of scenes. Throughout the mid-term, we will engage in the 5G-driven evolution of our telecommunications business, the expansion of focus areas centered around telecommunications, and the enhancement of the underlying management foundation.
Here, I reflect on FY22.3 and the previous Mid-Term Management Strategy and then explain the newly established Mid-Term Management Strategy.

Looking Back on the Previous Mid-Term Management Strategy (FY20.3-FY22.3)

Throughout the previous mid-term from FY20.3 to FY22.3, KDDI achieved both sustainable profit growth and enhanced shareholder returns.
The operating revenue and income of the growth fields, Life Design Domain and Business Services segments, steadily increased to reach our goals on the operational scale. Furthermore, we achieved a dividend payout ratio of over 40% and 5% growth in CAGR for EPS.
As a result of the implementation of our business strategies with the integration of telecommunications and life design, we succeeded in achieving continued growth even with the competitive environment of the telecommunications industry undergoing significant change.

With new telecommunications providers entering the market and competition heating up, services and pricing plans are diversifying, and the telecommunications industry itself is undergoing significant changes.
Under such environment, we have strived to offer pricing plans that meet various needs and diverse lifestyles through our multi-brand strategy. The featured brands are "au" providing unlimited use without anxiety, "UQ mobile" with simple and secure pricing, and "povo" in which users can choose services freely (called "toppings") they need. As a result, we gained momentum, as shown by the net increase in the total number of multi-brand IDs throughout the fiscal year.
For 5G, under the slogan Zutto, Motto, Tsunagu Zo, au (Connecting more and always with au), we aim to build a comfortable and reliable network in railways, shopping centers, and other focus areas, based on extensive cover places frequented by customers. Cumulative 5G unit sales reached 8 million units and are still steadily growing. We are committed to providing 5G experiences to more and more customers.

We achieved double-digit growth in operating income for both Life Design Domain and Business Services segment.

KDDI VISION 2030

Sustainability Management and Medium-Term Targets

Business Strategy/Satellite Growth Strategy

In our Business Strategy, we have positioned our business growth strategy in the focus areas centered on 5G, which is expected to prosper with the birth of 5G SA (standalone), as the "Satellite Growth Strategy."
For the core service of 5G communications, we will focus on 5G network building and device popularization so the multi-brand communication ARPU revenues, which have been declining due to price reduction of smartphone fees, will increase in FY25.3 compared to FY22.3.
In addition, we have defined five focus areas with potential growth in the previous Mid-Term Business Strategy, namely,
[1] DX
[2] Finance
[3] Energy
[4] LX
[5] Regional co-creation (CATV and other services.)
We will accelerate growth by utilizing the synergies of these areas centered on telecommunications. Particularly in DX, we will establish an environment where customers can use 5G without concerns by blending telecommunications into everything through IoT.

To that end, we provide business platforms according to the needs of various industries to support customers' business creations. We aim for a virtuous cycle of DX in which newly added values transform people's lives.
During the mid-term, our goal is to make the DX Business Services segment our second largest business next to domestic telecommunications, accounting for approximately 20% of the consolidated operating income. Finance and energy businesses will accelerate our growth. LX transforms people's experiences with an eye on the future.
Regional revitalization will contribute to solving social issues with local communities. By growing these businesses, we aim to boost the sales of these focus areas to over 50% of the consolidated sales.

Initiatives for Strengthening of Management

To strengthen the foundation of our management that supports our "Sustainability Management," we will also promote initiatives to deal with major social issues such as carbon neutrality, transforming ourselves into a company that puts human resources first, respects for human rights, and improvements of our group governance.
First, KDDI is actively addressing carbon neutrality, which is a major issue on a global scale. KDDI (non-consoli- dated) is aiming to achieve net-zero CO2 emissions by fiscal 2030 and the Group as a whole by fiscal 2050. In order to achieve these targets, we will proactively promote energy efficiency and shift to renewable energy for mobile phone base stations and telecommunications equipment.
In addition, to ensure ongoing sustainable growth amid a business environment that is undergoing constant and profound change, employees and organizations must drive innovation and acquire a high degree of autonomy and growth to transform into a company that puts human resources first. In promoting innovation, we will strengthen R&D and capital investment for 5G and beyond 5G. And we will accelerate efforts for business creation, R&D, AI and advanced security technology efforts based on our Satellite Growth Strategy and will deepen partnerships such as collaboration with startups.

Mid-Term Management Strategy Summary

We position "Sustainability Management" at the core and aim to achieve the sustainable growth of society and the enhancement of corporate value together with our partners by promoting the Satellite Growth Strategy and strengthening of management.
For business growth, we aim to increase ARPU revenue by driving 5G, achieve profit growth of over 100 billion yen in focus areas, and improve cost efficiency by 100 billion yen.
The Company's financial policy is to prioritize capital and strategic business investments to 5G and other focus areas, aiming for a dividend payout ratio of over 40% and flexibly repurchasing shares. EPS growth goal is still 1.5 times compared to FY19.3.
We are committed to transforming our business in the environment that is undergoing constant and profound change, including the unstable global situation.

Regarding the Communication Failure on July 2, 2022

From July 2, 2022, KDDI experienced a prolonged communication failure. We sincerely apologize for the inconvenience caused to our customers using telecom services throughout Japan.
As a telecommunications carrier supporting social infrastructure and providing stable service, we take this incident seriously.
The entire company is committed to preventing recurrences of similar incidents and providing a telecommunications network that customers can use confidently by accommodating the ever-increasing amount of required transmission data in the 5G/Beyond 5G era. We will contribute groupwide to achieving a truly connected society.
We appreciate your unwavering support and helpful guidance for the KDDI Group.