Financial Data and Key Metrics Changes - Consolidated operating revenue for the first half of the fiscal year ending March 2025 was JPY2,855.7 billion, an increase of 2.8% year-on-year, achieving a progress ratio of 49.5% against the full-year forecast [5] - Operating income rose to JPY573.1 billion, up 2.3% year-on-year, with a progress ratio of 51.6% against the full-year forecast [5] - Communications ARPU revenues continued to increase, contributing to overall revenue growth [6] Business Line Data and Key Metrics Changes - The Personal Services segment saw total ARPU revenues grow, with au brand increasing by approximately 3% year-on-year and UQ Mobile by about 7% year-on-year [10] - The Business Services segment reported operating revenue of JPY672.4 billion, a 13.1% year-on-year increase, with operating income at JPY113.7 billion, up 11.1% year-on-year [27] Market Data and Key Metrics Changes - IoT-related services in the Business Services segment achieved operating revenue of JPY79 billion, up 21.5% year-on-year, with IoT connections growing to 46.33 million [28] - Data center operating revenue was JPY65 billion, reflecting a 12.1% year-on-year increase [28] Company Strategy and Development Direction - The company aims to achieve EPS targets by promoting satellite growth strategies and enhancing efficiency in technology costs [9] - KDDI is focusing on expanding major businesses and new areas such as DX, Drones, Lawson, and Starlink [9] - The collaboration with Lawson aims to enhance customer experience and drive sales through data and AI [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting full-year forecasts, citing steady growth in major business areas and the successful implementation of new pricing plans [6][36] - The company is committed to strengthening its network and expanding its 5G capabilities to maintain competitive advantages [15][16] Other Important Information - KDDI has initiated a two-for-one stock split to attract new individual investors and announced an additional share repurchase of up to JPY100 billion [36][38] - The company is preparing for the launch of direct communications between satellites and smartphones using Starlink by the end of the year [17] Q&A Session Summary Question: What are the expectations regarding the NTT Law? - Management agrees with the direction of the draft report from the MIC Council, recognizing the need for updates to the NTT law in response to changing times [39] - The conclusion of discussions indicates no strong arguments for changing or abolishing the current legal system [39]

Financial Performance - Operating revenue increased to 5,770 billion yen, a 2.8% year-over-year increase, achieving 49.5% of the full-year forecast[2] - Operating income increased to 573.1 billion yen, a 2.3% year-over-year increase, achieving 51.6% of the full-year forecast[2] - DX (Business Services segment) experienced double-digit growth in operating income[2] Personal Services Segment - Total ARPU revenues increased, driven by growth in both communications and value-added services, reaching 986 billion yen[9] - Communications ARPU increased by approximately 3% year-over-year[9] - Value-added ARPU increased from 227.1 billion yen to 243.2 billion yen[9] - Smartphone subscriptions increased, contributing to ARPU growth[11] Business Services Segment - Operating revenue grew by 13.1% year-over-year[33] - Operating income grew by 11.1% year-over-year[34] - IoT-related services operating revenue increased from 65 billion yen to 79 billion yen[35] - Data Center operating revenue increased from 58 billion yen to 65 billion yen[35] Capital Policy - The company resolved to repurchase up to 100 billion yen of its own shares through market purchases, with a total repurchase price in FY25-03 of up to 400 billion yen[45, 46]

FY23-03 FY24-03 *1 au Financial Holdings (IFRS basis) excluding the impact of accounting treatment changes in FY23-03 *2 Comparison of 4 MNOs in Japan. The browsable license number by Ministry of Internal Affairs and Communications radiocommunication search as of April 12, 2024. 7 Mid-Term Management Strategy Tomorrow, Together Fiscal Year Ending March 2024 (April 2023-March 2024 ) | --- | --- | --- | --- | |-------------------------|--------------------------------------------|----------------|------------ ...

Financial Data and Key Metrics Changes - For the fiscal year ended March 2024, revenues increased to ¥5.754 trillion, up 1.5% year-on-year, while operating income was ¥961.6 billion, impacted by temporary factors [39][16][17] - The net income attributable to the owners of the parent was ¥637.9 billion, with a target for EPS to increase 1.5 times by FY March 2026 [39][41] Business Line Data and Key Metrics Changes - The financial business reported strong performance with operating income of ¥14.2 billion, while the energy business grew steadily to ¥16 billion [17][12] - ARPU revenues for multi-brand communications rebounded, increasing by ¥5 billion, while DX areas showed growth of ¥20.4 billion [8][18] Market Data and Key Metrics Changes - The company completed the rollout of 5G with 94,000 base stations, the highest in the industry, and expects Sub6 data traffic to increase by about 20% following the relaxation of satellite interference conditions [40][32] - The number of au Denki contracts is increasing, with a target for double-digit growth in operating income [57] Company Strategy and Development Direction - The company aims to integrate AI into its services to create new value and enhance customer experiences, focusing on digital transformation (DX) in finance and energy businesses [20][65] - A new satellite growth strategy has been formulated, emphasizing the combination of telecommunications with data-driven services and generative AI [30][52] Management's Comments on Operating Environment and Future Outlook - Management acknowledged temporary impacts on income but emphasized that the overall progress is on track, with a focus on sustainable growth and shareholder returns [16][41] - The company aims to achieve a consolidated operating income increase through enhanced communications ARPU revenues and double-digit growth in focus areas [13][68] Other Important Information - The company plans to allocate operating cash flow of ¥3 trillion over two years for growth investments and shareholder returns, including a dividend payout ratio of over 40% [7][59] - Aiming for sustainable growth, the company has extended its mid-term management strategy by one year and is focused on optimizing CapEx and OpEx levels [69][29] Q&A Session Summary Question: What are the core initiatives for growth? - The company emphasized the importance of creating value for customers through AI and data-driven services, particularly in the personal segment and convenience store partnerships [64] Question: How does the new satellite growth strategy impact future growth? - The new strategy focuses on DX, finance, and energy businesses, targeting double-digit CAGR growth and enhancing synergies with partners like Lawson [65][67] Question: What are the expectations for ARPU revenue in the coming fiscal year? - Communications ARPU revenue is expected to increase organically by ¥14 billion, despite a projected decrease due to access charge revisions, with limited impact on profits [68]

And my second question is on next year's view of the operating income guidance, not numbers, but I want to ask you for the image. The roaming will decline roaming revenue will decline but ARPU will revenue will increase and the focus area will increase in cost efficiency can bear fruit, and so we think the profit, the income will jump up next year. Are there risks that you did not anticipate or any cost increase that you anticipate just the general direction is fine. Thank you very much. Conference Call Par ...

Financial Data and Key Metrics Changes - The consolidated operating revenue for the first half of the fiscal year ending March 2024 was ¥2.779 billion, an increase of 1.4% year-on-year, with a progress ratio of 47.9% [2][39] - The operating income for the same period was ¥560.3 billion, up 0.2% year-on-year, with a progress ratio of 51.9% [3][39] - The first half operating income increased by ¥1 billion year-on-year, despite a decrease in Rakuten roaming revenue [3][40] Business Line Data and Key Metrics Changes - Group MVNO and Rakuten roaming revenues decreased by ¥20.3 billion, while multi-brand communications revenues increased by ¥800 million [4][40] - Digital Transformation (DX) revenues increased by ¥5.4 billion, and the financial business saw a decline of ¥9.9 billion, while the energy business increased by ¥9.5 billion [4][40] - Communications ARPU revenues rebounded, with total ARPU revenues increasing, and multi-brand communications ARPU reaching ¥3,960, up ¥30 quarter-on-quarter [6][7] Market Data and Key Metrics Changes - The number of multi-brand IDs reached 30.9 million, an increase of 280,000 year-on-year, indicating continuous growth [7] - The energy business saw significant profit increases in the second quarter, attributed to higher electricity usage due to extreme heat [49] Company Strategy and Development Direction - The company aims to enhance its telecommunications and financial services through synergies, focusing on growing communications ARPU revenues and expanding its financial customer base [28][44] - KDDI is promoting 5G area development and refining communication quality, while also leveraging generative AI for business development and human resource strategy [29][44] - The company is focusing on IoT and data centers as key growth areas, with a goal of expanding its global presence in connected cars and data center services [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the steady growth of key areas, despite challenges such as the decline in Rakuten roaming revenue [5][28] - The company anticipates that the impact of fuel price hikes will diminish in the second half of the fiscal year, allowing for improved profitability [19] - Management highlighted the importance of maintaining a competitive environment and expressed concerns about potential negative impacts from the revision of the NTT law [30][46] Other Important Information - KDDI is committed to achieving carbon neutrality at all data centers by 2026 and is actively promoting renewable energy initiatives [23] - The company is preparing for its first exhibition at MWC Barcelona 2024, aiming to enhance Japan's presence in the telecommunications sector [27] Q&A Session Summary Question: Factors for change in the energy business - Management explained that the energy business saw significant income increases in the second quarter due to price reviews and increased electricity usage during extreme heat [49] Question: Income level increase compared to the first quarter - The increase in income was attributed to the energy business and product support services, along with reduced sales promotion costs [54] Question: Long-term growth pillars - Management indicated that while building a strong pillar in the medium term may be challenging, areas such as IoT and generative AI will be key focuses for future growth [58] Question: Shareholder return strategy - Management acknowledged the need for flexibility in cash allocation and shareholder returns, emphasizing the importance of achieving EPS targets [62] Question: Impact of NTT law revision - Management expressed concerns that the integration of NTT could harm competition and service levels, but did not foresee immediate negative impacts on short-term income [66] Question: CapEx and procurement environment - Management stated that while CapEx is expected to stabilize, the weaker yen may impact procurement costs in the mid-term [90]

Financial Data and Key Metrics Changes - For Q1 of the fiscal year ending March 2024, consolidated operating revenues were JPY1,332.6 billion, achieving 23% of the full year forecast, while operating income was JPY266.7 billion, representing 24.7% of the full year forecast [6][36] - Operating income decreased by JPY30.6 billion due to a drop in Group MVNO revenues and roaming revenues by JPY10.5 billion, a decline in multi-brand communications ARPU revenues by JPY2.9 billion, and a decrease in financial business by JPY12.9 billion [7][37] - Excluding the negative impact of JPY18.2 billion from accounting changes in the previous fiscal year, the financial business would have shown a growth of JPY5.2 billion [8][37] Business Line Data and Key Metrics Changes - The NEXT Core segment reported operating revenues of JPY281.3 billion, with a significant contribution of JPY106 billion from NEXT Core, marking a year-on-year increase of 21.8% [18] - Business DX drove revenue and profit growth, particularly in IoT, with IoT connections expanding by JPY8.5 million year-on-year [19] - Multi-brand communications ARPU revenues experienced a year-on-year decline of JPY2.9 billion, while multi-brand IDs increased by 190,000 year-on-year, and 5G penetration rates reached about 60% [15][16] Market Data and Key Metrics Changes - The company is expanding its connectivity data center business globally, with overseas sales accounting for about 70% of data center business sales [22] - The financial business saw a steady increase in customer base, with transaction volumes totaling JPY3.9 trillion and au PAY Card members reaching JPY8.8 million [25][26] Company Strategy and Development Direction - KDDI aims to strengthen its infrastructure and partner collaborations to enhance connectivity, with a focus on satellite growth strategies and management strengthening [30][31] - The company plans to promote initiatives towards a decarbonized society and the utilization of generative AI for sustainable growth [29][31] - The consolidation of the CATV business with J:COM is expected to maximize business strengths and contribute to industry development [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the profit was affected by roaming revenue decreases and accounting treatment impacts from the previous year, but focus areas showed solid results [30][31] - The company expects to see improvements in ARPU revenues and overall profitability in the second quarter, driven by new pricing plans and strategic initiatives [43][90] Other Important Information - KDDI has signed a disaster agreement with Kanto Regional Development Bureau for disaster response cooperation and is deploying vehicle-mounted, portable, and shipboard base stations using StarLink [11][12] - The company is actively working on enhancing its financial services, which have shown synergies with telecom operations, contributing to value-added ARPU revenue and reducing churn rates [26] Q&A Session Summary Question: ARPU revenue growth in Q1 - Management indicated that while June showed close to year-on-year growth, they have not yet reached positive territory, but expect improvements in July [42][43] Question: Roaming revenue expectations - Management confirmed that they expect a JPY10 billion to JPY20 billion improvement in roaming revenues due to new agreements, aligning with their revised forecasts [46][48] Question: Focus areas for profit growth - Management highlighted that the DX and financial sectors are key focus areas, with IoT and mortgage loans being significant growth drivers [51][56] Question: Churn rate concerns - Management noted that the churn rate for multi-brand was 0.96, with UQ pushing it up, but they are implementing strategies to improve retention [58][60] Question: Profitability from new UQ mobile plan - Management reported that the new UQ mobile plan is performing positively, with a significant increase in customer adoption [70][72] Question: Share buyback policy - Management confirmed that the JPY250 billion share buyback is part of their strategy to achieve EPS targets, and they remain flexible in their approach [75][77]

| --- | --- | --- | --- | |---------------------------------------------------------------------------------------------------------------|-------|-------|-------| | Fiscal Year Ending | | | | | March 2024 Q1 Financial Results (April - June 2023) | | | | | July 28, 2023 | | | | | KDDI Corporation | | | | | The creation of a society in which anyone can make their dreams a reality, by enhancing the power to connect. | | | | Index | --- | --- | --- | --- | --- | |-------|-------|-------|----------------------- ...

Financial Data and Key Metrics Changes - Consolidated operating revenue for the fiscal year ending March 2023 was JPY 5,671.8 billion, an increase of 4.1% year-on-year [3][42] - Operating income reached JPY 1,075.7 billion, up 1.4% year-on-year [3][42] - The impact of fuel price hikes was negative JPY 36.3 billion, but overall profits grew due to strength in focus areas and cost efficiency efforts [5][44] Business Line Data and Key Metrics Changes - Multi-Brand Communications ARPU for fiscal year March 2023 was JPY 3,960, with a total of 31.23 million IDs [12][42] - The Business Services segment saw revenue growth of 17.6% year-on-year, with operating income expanding at a CAGR of 13% over the last five years [16][22] - The financial business reported a 17.7% year-on-year growth in finance-related value-added ARPU revenue [25] Market Data and Key Metrics Changes - IoT connections reached a total of 37 million, with expectations for expansion across all industries [8] - The company aims to increase 5G stations to approximately 90,000 by the end of March 2024, achieving over 90% population coverage [11] Company Strategy and Development Direction - KDDI Vision 2030 focuses on enhancing connectivity and contributing to a society where anyone can realize their dreams [6][7] - The company plans to invest an additional JPY 50 billion in network quality improvements over the mid-term [7] - The satellite growth strategy aims to provide new values through initiatives like drone delivery and smart fisheries [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving record profits despite challenges from fuel price hikes and roaming revenue declines [41][47] - The company anticipates a rebound in communications ARPU revenue and growth in focus areas for the fiscal year ending March 2024 [30][31] - Management emphasized the importance of enhancing customer attractiveness and increasing data usage to drive ARPU growth [14][59] Other Important Information - The company aims to increase dividends for the 22nd consecutive year, targeting a DPS of JPY 140 for the fiscal year ending March 2024 [32][35] - A share buyback program of JPY 300 billion has been earmarked to enhance shareholder returns [35] Q&A Session Summary Question: What are the assumptions behind the JPY 60 billion decline in roaming revenue? - Management explained that the decline reflects reduced roaming areas due to agreements with Rakuten, but some mitigation is expected from new agreements [50][54] Question: Can you elaborate on the JPY 180 decline in ARPU in the fourth quarter? - The decline was primarily due to connection fees and retrospective billing, with expectations for a rebound in the upcoming fiscal year [68][70] Question: What is the expected balance between downgrading from au to UQ and upgrading from UQ to au? - Currently, downgrading from au to UQ is larger, but the rate of migration from UQ to au is increasing, indicating a potential shift towards equilibrium [86][87] Question: How will the marketing strategy change in the new fiscal year? - The focus will be on making au more attractive through increased marketing efficiency, with a rise in marketing costs expected compared to the previous year [79][80] Question: How does the Business Services segment differentiate itself from IT services companies? - The Business Services segment leverages its telecommunications base to provide unique solutions, particularly in IoT and digital transformation [81][82]

Financial Performance - Consolidated operating revenue increased by 42% year-over-year, reaching ¥4,1829 billion[2] - Operating income decreased by 36% year-over-year to ¥8434 billion, impacted by fuel price hikes and communication failure[2] - NEXT Core Business (DX) operating revenue increased by 174% year-over-year, totaling ¥283 billion[3] - Financial Business revenue increased by 306% year-over-year to ¥1627 billion[3] - Financial Business operating income saw a significant increase of 2208% year-over-year, reaching ¥309 billion[3] Communications ARPU - Multi-Brand total ARPU revenues decreased from ¥3916 billion to ¥3788 billion year-over-year[16] - Communications ARPU revenues decreased from ¥1630 billion to ¥1896 billion year-over-year[16] - Value-added ARPU increased by ¥170 year-over-year, driven by electricity ARPU and other services[19] - Communications ARPU decreased by ¥210 year-over-year due to brand mix[19] Business and Sustainability - NEXT Core Business accounted for over 30% of total segment sales[27] - au Jibun Bank exceeded 5 million deposit accounts[38] - au PAY members increased by 42 million year-over-year[38] - The company aims to achieve carbon neutrality and is promoting renewable energy generation[40]