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]
KDDI(KDDIY) - 2024 Q2 - Earnings Call Transcript