CEO Message
KDDI makes achieving a truly connected society part of the KDDI Group Mission Statement. Telecommunications are an integral part of modern society and form the basis for life, industry, and social activities. Therefore, the stability and reliability of telecommunications have become even more critical. As a telecommunications carrier, we play an important role in society, maintaining telecommunications 24 hours a day, 365 days a year. We also recognize that promoting efforts toward creating a resilient future society that achieves both economic progress and the resolution of social issues is a vital issue and should be undertaken actively.
To achieve such a future society, we formulated the "KDDI VISION 2030" in May 2022.
"The creation of a society in which anyone can make their dreams a reality, by enhancing the power to connect."
Our mission is to connect and protect lives, connect day-to-day lives, and connect hearts and minds. We will enhance our power to connect, and we hope to create a resilient future society in which anyone can make their dreams a reality.
Under the Mid-Term Management Strategy (FY23.3 to FY25.3), we will promote "Business Strategy" and the "Strengthening of Management Base" with Sustainability Management―which is based on a virtuous cycle of corporate value improvement and the sustainable growth in society―at the core.
In our Business Strategy, we will pursue a "Satellite Growth Strategy" that expands growth areas by deepening the existing businesses and maximizing synergies. With 5G communications as the center of the satellite, we will position growth areas around this core and take on challenges in various transformations to promote business.
Regarding Strengthening of Management Base, we aim to achieve carbon neutrality―an environmental issue on the global scale―by fiscal 2030 for KDDI (non-consolidated) and by fiscal 2050 for the KDDI Group. We will also actively pursue transformation into a company that puts human resources first as well as promoting unified group management.
We expect changes to accelerate in the future―both changes in the business environment brought about by new technologies as well as changes in the social environment due to the global situation. The KDDI Group will unite as one to respond to these changes and promote sustainable growth.
We look forward to your continued support and guidance as we work on these initiatives to meet the expectations of our customers and society.
Looking Back on FY23.3
On Conclusion of the First Year of the Mid-Term Management Strategy
Under the current Mid-Term Management Strategy, we aim to achieve both sustainable profit growth and enhanced shareholder returns. Our consolidated operating revenue for FY23.3 increased 4.1% year on year to 5,671.8 billion yen, while consolidated operating income was up 1.4% year on year to 1,075.7 billion yen. Against factors such as the impact of price reduction and fuel price hikes, we were able to increase our operating income through steady growth in the focus areas of digital transformation (DX) and financial business, pursuing cost efficiency, and other efforts.
We are steadily advancing efforts toward achieving our goals for business growth: ARPU revenue increase due to 5G promotion, profit growth of 100 billion yen or more in focus areas, and cost efficiency at the level of 100 billion yen.
KDDI VISION 2030
To achieve our ideal future society, 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" in May 2022.
To contribute to building a resilient social infrastructure that withstands environmental changes, we will connect and protect lives, connect day-to-day lives, and connect hearts and minds to create a society in which anyone can make their dreams a reality through businesses with our partners while utilizing technology.
Aiming for "a platformer supporting society" that can add value to every industry and life scene, we will promote "business transformation centered on 5G" with a view of the year 2030.
Sustainability Management and Medium-Term Targets
We have established the "materiality (material issues)" centered on the interests of diverse stakeholders such as long-term investors as well as our vision and enterprise impact. With this in mind, we position Sustainability Management at the core and promote reinforcement of the business strategy and the underlying management base.
By doing so, we will aim for the sustainable growth in society and the corporate value improvement with our partners. Our goal is to create a virtuous cycle in which society's growth is fed back on the subsequent business strategies, and the business growth is reflected in society.
Business Strategy/Satellite Growth Strategy
In our Business Strategy, we are pursuing our business growth strategy in the focus areas centered on 5G, which is expected to prosper with the Stand-Alone (SA), under the name "Satellite Growth Strategy." With telecommunications―which is the power to connect―at the center, we will make new expansions into business areas that are positioned like satellites. For the core service of 5G communications, we will undertake all kinds of efforts to enhance the power to connect. We will also focus on 5G network building, provision of various services and penetration of 5G-compatible handsets so that multi-brand communications ARPU revenues, will increase in FY25.3 compared to FY22.3.
At the center of new business expansion are DX and life transformation (LX). For corporate customers, we will work on offering DX solutions that support the use of digital technologies to transform their businesses into becoming capable of sustainable growth. As for consumers, in an era of diversifying values, we will deliver an exciting world―both in the physical space and in cyberspace―through LX, which is represented by the metaverse.
In addition, we will expand our financial business. Telecommunications and finance will become closely linked in our future day-to-day lives. In an era where telecommunications and finance blend into our lives, we will develop financial services to become more closely tied to the lives of our customers by maximizing synergy between telecommunications and various financial services.
Highlight
"KDDI Digital Twin for All"
Modern society is characterized by the prominent changes in the environment arising from various internal and external factors. To overcome such dramatic changes and achieve "the creation of a society in which anyone can make their dreams a reality" that is stated in KDDI VISION 2030, we have developed a concept called "KDDI Digital Twin for All." DX for corporate customers and LX for individual customers form the two pillars of this concept.
Under "KDDI Digital Twin for All," we will transform people's lives to make them better by transferring data generated in the physical space where people live to the virtual cyberspace, conducting sophisticated simulations digitally in real time, and feeding back the results to the physical space.
A Society in which anyone can make their dreams a reality.
KDDI Digital Twin for All
Competition and Collaboration
To achieve advanced technological innovation required in the era of Beyond 5G as well as promote Sustainability Management while increasing social and environmental values, it will be important to define the areas for competition and those for collaboration with competitors and implement a balanced investment strategy. As an area for collaboration, in March 2023, we signed a basic agreement for global standardization of optical network technologies with Nippon Telegraph and Telephone Corporation toward deploying and standardizing innovative communication technologies centered on all-photonic networks. Through this agreement, the two companies will seek to achieve a sustainable high capacity optical network using the telecommunications technologies and experiences they have developed so far.
In addition, 5G JAPAN Corporation―which started business in 2020―is contributing to the sustainable growth in society by promoting infrastructure sharing based on the mutual use of base station assets held by KDDI and SoftBank Corp. and accelerating the rollout of 5G in rural Japan. Furthermore, through providing roaming services to Rakuten Mobile, Inc. via our 4G network, we will promote the expansion of area coverage nationwide in Japan by driving the effective use of our 4G infrastructure and focusing on the rollout of our 5G network.
Going forward, we will continue to collaborate with both telecommunications operators as well as various other partners around the world to achieve a truly connected society.
Initiatives for Strengthening of Management Base
To strengthen our management base 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, respect for human rights, and enhancement of our group governance.
We are also actively addressing carbon neutrality, which is a major issue on a global scale, and KDDI (nonconsolidated) is aiming to achieve net-zero CO2 emissions by fiscal 2030. Ahead of this, we aim to achieve the same goal at our data centers worldwide under the Telehouse brand by fiscal 2026, while the KDDI Group as a whole aims to achieve net-zero CO2 emissions by fiscal 2050. In addition to the commercialization of renewable energy generation, we will proactively promote energy efficiency and shift to renewable energy for mobile phone base stations and telecommunications equipment to achieve these goals.
In addition, to ensure ongoing sustainable growth amid a business environment that is undergoing constant and profound change, it is essential to transform into a company that puts human resources first, which promotes innovation and encourages a high degree of autonomy and growth for employees and organizations. 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.
Progress of Mid-Term Management Strategy
In our Mid-Term Management Strategy, we aim to achieve both business growth and shareholder returns. Besides sustainable profit growth, we will undertake capital expenditures and strategic business investments in 5G and focus areas. Based on a financial policy that aims for a dividend payout ratio of over 40% as shareholder returns, we will also consider flexible repurchasing of our shares.
As we move forward together, I would like to express my sincere appreciation for your continued support and guidance for the KDDI Group.
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