Financial Data and Key Metrics Changes - Operating revenue increased by JPY 332.9 billion, reaching JPY 10,049.7 billion, marking a record high for the third quarter, driven by growth in domestic and global revenue, particularly from the Smart Life Business at Docomo [10][129] - Operating profit decreased by JPY 87 billion to JPY 1,399.2 billion, attributed to declines in communication service revenues in mobile and fixed line segments, and increased marketing expenses [11][130] - Net profit was JPY 850.7 billion, down JPY 160.4 billion year-on-year due to declining operating profit and a rebound from gains on stock sales from the previous year [13][132] - EBITDA was JPY 2,552.5 billion, down JPY 19.2 billion year-on-year due to the decline in operating profit [12][131] Business Segment Data and Key Metrics Changes - Integrated ICT business segment showed year-on-year growth despite a decline in mobile communication service revenue, mainly due to growth in finance and payment in the Smart Life business [14][133] - Regional Communication Business segment experienced decreases in both revenue and profit due to reduced network revenue and the impact of slowing down non-core assets [15][134] - Global Solution business segment saw increased sales in public, financial, and corporate sectors in Japan, with operating profit rising year-on-year due to higher operating income in the data center business overseas [17][136] - The Others segment reported increased sales and profit year-on-year due to the expansion of data center engineering and NTT Urban solutions [18][137] Market Data and Key Metrics Changes - The net increase in optical fiber services showed year-on-year growth due to enhanced marketing efforts, with strong results in mobile network portability [12][131] - The company is actively reviewing its cost structure to achieve medium-term growth, particularly in the context of regional revitalization and urban development initiatives [16][135] Company Strategy and Development Direction - The company is focusing on strengthening its customer base and enhancing marketing efforts, despite the short-term impact on profits [32][36] - Plans to open hotels, parks, and cultural facilities in the Osaka area in connection with Expo 2025, indicating a commitment to regional development [20][139] - The company aims to expand its data center business in India, which holds the number one market share, and is planning to exhibit its business strategy at the Mobile World Congress [21][142] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in achieving annual profit targets but emphasized efforts to recover through cost reduction and improved sales quality [12][131] - The competitive landscape is expected to remain intense, particularly in the mobile communication sector, impacting profitability [82] - Management is optimistic about the growth potential in the AI market and plans to reinforce capacities in this area [45] Other Important Information - The company is exploring various initiatives for cost reduction and efficiency improvements across its operating companies [53][56] - There are ongoing discussions regarding shareholder returns, with a commitment to maintain dividend payments in line with conventional policies [60][61] Q&A Session Summary Question: Concerns about Integrated ICT business and ARPU - The management acknowledged the challenges in the Integrated ICT business, particularly regarding ARPU and service revenue, and indicated that marketing expenses are increasing to secure market share [26][30] Question: Profitability in the enterprise section - Management confirmed that the enterprise section is facing difficulties, particularly in the SME market, and emphasized the need to fortify the network business and offer tailored solutions [38][42] Question: Cost reduction initiatives - Management stated that fundamental cost reforms are planned, and various initiatives are being implemented to improve efficiency, although significant effects may not be seen immediately [52][54] Question: Impact of inflation on pricing - Management acknowledged the impact of inflation on pricing strategies and indicated that they are considering how to reflect these increases while remaining competitive [104][105] Question: AI initiatives and revenue generation - Management highlighted ongoing AI initiatives aimed at increasing revenue and improving operational efficiency, although specific financial impacts are not yet available [110][112]
NTT(NTTYY) - 2024 Q3 - Earnings Call Transcript