Earnings Results For the First Quarter Ended June 30, 2006 (Q1/FY2007)

Transcription

1 Earnings Results For the First Quarter Ended June 30, 2006 (Q1/FY2007) August 8, 2006 SOFTBANK CORP. March 12, 2010 Version Due to protection of rights, some of the photos and images included at the time of publication have been modified or revised. FY2007 and FY07 refer to the fiscal year ending March 31, 2007, and other fiscal years are referred to in a corresponding manner in this material.

2 <Highlights> Consolidation of Vodafone K.K. (from May 1 st ) Continued to Record Surplus 2

3 Q1/FY2007 Summary of Consolidated Earnings Results <Quarter> <unit: b JPY> Q1/FY07 Q1/FY06 Year on year Net Sales EBITDA Operating income (loss) Ordinary income (loss) Income before income taxes and minority interest Net income (loss) (3.1) (13.0) 0.7 (11.1) *Earnings results of Vodafone K.K. is consolidated from May 1 st, 2006 (2 months)

4 Consolidated Net Sales (Quarterly) Q1 Q2 Q3 Q4 Q1 FY2006 FY2007 Others e-commerce Internet Culture (Yahoo! JAPAN) Fixed-line telecom (Japan Telecom) BB Infrastructure <unit: b JPY> Annualized net sales on a scale of 2 trillion JPY Mobile communications (Vodafone) 4

5 Consolidated Operating Income 60.0 (Quarterly) 54.3 <unit: b JPY> Q1/FY b JPY FY04 FY FY 06 FY07 Q1 Q1 Q1 Q Increased due to consolidation of Vodafone K.K. (2 months portion)

6 Consolidated Operating Income 54.3 (Quarterly) Mobile Communications Impact of sale of ADSL modem rental business <unit: b JPY> Mobile communications (Vodafone K.K.) +27.2b JPY Q1/FY b JPY FY04 FY05 Q1 Q1 Q1 Q FY 06 FY Existing business showing steady performance excluding special factors such as sale of ADSL model rental business in the previous year 6

7 Consolidated EBITDA (Quarterly) 120 <unit: b JPY> Q1 Q1 Q1 Q1 FY04 FY05 FY 06 FY07 Mobile communications (Vodafone K.K.) +55.8b JPY Q1/FY b JPY (EBITDA: Operating income (loss) + depreciation, amortization, loss on disposal of fixed assets included in operating expenses.) 7

8 Consolidated Non-operating Income (expenses) (Quarterly) <unit: b JPY> Q1/FY07 Q1/FY06 <Note for FY07> Interest income Equity in earnings under the equity method SBI +9.1 Interest expense (14.6) (6.8) SOFTBANK (4.4) BB Mobile (6.2) Others (Net) (23.9) (4.9) Cost from structuring of LBO Bridge Loan (19.6) Total (28.3) (9.8) 8

9 Consolidated Ordinary Income 29.7 (Quarterly) <unit: b JPY> Q1/FY b JPY FY04 FY05 FY 06 FY07 Q1 Q1 Q1 Q Increased 39b JPY year on year -40 9

10 Consolidated Net Income (Quarterly) <unit: b JPY> Q1/FY07 Q1/FY06 <note> Ordinary Income 25.9 (13.0) Special Income, net Income before income taxes and minority interest Income taxes: Current Primarily Yahoo! JAPAN Income taxes: Deferred 9.2 (2.7) Primarily Vodafone K.K. Minority interest Net income (loss) (11.1) Primarily Yahoo! JAPAN 10

11 Consolidated Net Income (Quarterly) <unit: b JPY> FY04 FY05 FY 06 FY07 Q1 Q1 Q1 Q1 Q1F/Y07 1.4b JPY Increased 12.5b JPY year on year

12 Consolidated Operating CF (Quarterly) <unit: b JPY> Royalty payment in advance from sales of the modem rental business FY04 FY05 FY 06 FY07 Q1 Q1 Q1 Q1 Q1/FY b JPY Increased 82.8b JPY year on year

13 Active Management to Achieve Profitability Operating Income Mobile communications (Q2/Q3) Proactive up-front investment for future growth MNP related cost Cost for brand change Increase the No. of base station Broadband Infrastructure Fixed-line telecommunications (Japan Telecom) Mobile Communications (Vodafone K.K.) Time 13

14 SOFTBANK consolidated BS Vodafone portion 527.4b JPY Goodwill:Vodafone 1,114.4b JPY Amortization Period :20 yrs Current assets Non-current: Tangible assets Non-current: Intangible assets 1,371.0 Investments and other assets 1, , , Assets (End June 2006) Vodafone K.K. s Asset and Liabilities are consolidated at fair value as of acquisition <unit: b JPY> Total asset: 4trillion JPY LBO Bridge Loan (Non-recourse) Long-term Liabilities Net Asset Liabilities and Net Assets Current Liabilities 2,

15 Cash Position <unit: b JPY> Unused Portion of Credit Line Facility Cash and Cash Equivalents Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Jun-06 15

16 Trends in Net Debt (Unit b yen) 2,500 2,000 Consolidate Net Debt 2, ,500 1, CB Mar.04 Mar.05 Mar.06 Jun.06 + Vodafone s Bonds:125b JPY Investment by SB and Yahoo! JAPAN : 320 b JPY LBO Bridge Loan : 1,166b JPY (Non-recourse) Net debt increased due to the acquisition of Vodafone K.K.* *Excluding fees related to the acquisition and acquisition financing 16

17 Vodafone Acquisition Financing (by BB Mobile) Completed acquisition bridge financing (April 27 th ) LBO bridge loan facility agreement Facility size : 1.28t JPY Participating Financial Institutions: 17 Refinance targeted at the end of September Shift to long-term and diversified financing Syndicated loan Securitization or liquidation of network infrastructure Lease finance, etc. *Bridge loan due March

18 (Subsequent Events) Ensure Financial Flexibility Sale of SBI Holdings Shares Sale proceeds Approx b JPY Gain on sale Approx b JPY Date of the sale Ownership ratio August 1 st and 2 nd 26.7% to 0% Reallocation of management resources following this Sale -Improve our financial stability -Continued relationship with SBI Group 18

19 Mobile Communications Business 19

20 Mobile Communications/ Key Performance Indicator Subscriber % 2.0% (m) /Q1 Q2 Q3 Q4 07/Q1 Churn Rate/ Upgrade Rate Upgrade Rate 2.05% 1.69% 2.81% 1.59% 2.61% 1.47% 3G proportion 24.4% 2.34% 1.61% 1.99% 1.50% 2G 3G ARPU* 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 (JPY) (Quarter) Acquisition incentive per gross add 50,000 40,000 5,870 (JPY) *excludes termination fees and other fees 5,930 5,840 5,600 5,590 06/Q1 Q2 Q3 Q4 07/Q1 44,900 46,100 44,900 45,600 44,400 Churn Rate 1.0% 06/Q1 Q2 Q3 Q4 07/Q1 30,000 06/Q1 Q2 Q3 Q4 07/Q1 20

21 Progress on Four Commitments 1. 3G Network Enhancement 2. 3G Handset Enrichment 3. Content Enhancement 4. Enhancement of Sales Structure and Branding 21

22 1. 3G Network Enhancement 22

23 3G Network Enhancement Cover black spots Setting up Base Stations steadily towards Mobile Number Portability Target within FY2007: 46k Base Stations No. of 3G Base Stations: 22,771 (as of the end of June) 05/3 06/3 06/6 07/3 Vodafone 23

24 2. 3G Handset Enrichment 24

25 3G Handset Enrichment: 1 905SH, AQUOS handset sold primarily out of 5 One-Segment capable 3G handsets One-segment Handset Sales Ranking No.1* Vodafone 905SH New foothold for introduction of future flagship models * Based on June July cumulative sales number (after the launch of the handset) Source: GfK Japan, which aggregates actual sales number of nationwide major mass retailers 25

26 3G Handset Enrichment: 2 Launched on June 14 Thinnest 3G handset made in Japan, 705SH SLIMIA launched Launch of Popular Handset Brisk Sales! Width 17mm Vodafone 705SH 26

27 3. Content Enhancement 27

28 Disney content distribution launched ahead of others World s first Disney Content Distribution - Launched on June 1 Disney Mobile Comics World first! E-Comics for mobile phones Aladdin, Beauty and the Beast, Lion King II are currently offered with more popular titles to come every month Cars 3D Game World first! Interactive racing games via Bluetooth Games offered in advance of movie releases 28

29 Provide easy access to Yahoo! - Step 1 On July 4, Yahoo! JAPAN was relocated to the top of the Vodafone live! content page Direct access Access to Yahoo! significantly increased! 29

30 Provide easy access to Yahoo! - Step 2 Build-in Yahoo! Keitai Button (service to start from Oct. 1 onwards (scheduled)) Press here Yahoo! Keitai Button etc. 30 Access to a variety of services/content with a single touch of a button

31 4. Enhancement of Sales Structure and Branding 31

32 Change of Portal Site and Service Names On October 1, Vodafone mobile phones will become SOFTBANK mobile phones Vodafone Service name change Vodafone/ Vodafone live! SOFTBANK, SoftBank or S! Vodafone Portal site name change Vodafone live! Yahoo! Keitai 32

33 Enhancement of Sales Structure Corporate Customers Mobile Business Division was newly created as part of JAPAN TELECOM JAPAN TELECOM Sales team* Approx.1,500 staff 1. Sales activities to JAPAN TELECOM s corporate customers 2. Building FMC mobile solutions for corporate customers Vodafone Sales team approx. 100 staff * Includes sales-related customer support staff and system engineers. Increase income & profit by developing corporate customer segments 33

34 Enhancement of Sales Structure - Alliance Business Alliance with TOKAI Group 1. Collaboration in mobile communications business 2. Complementary networks 3. Collaboration in consumer broadband business TOKAI Group Sales strength (door-to-door, in-person sales) Existing customer base (energy services, broadband and CATV services) Comprehensive telecom operator Internet technology and know-how Network offering to MVNOs (Mobile Virtual Network Operators) is also being considered. * TOKAI Group: Energy services, information and telecommunications operator centered in Shizuoka. 34

35 No.1 IP Group Company 35

36 Speed of Growth (No. of million lines) Vodafone K.K. Acquisition Acquisition Established a customer base of approx. 26 million in approx. 4.5 years Sept. 2001~ 0 01/3 02/3 03/3 04/3 05/3 06/4 *The number of lines as of April 2006 includes million Vodafone K.K. lines as of the end of April

37 Took a lead over competitors with innovative technologies Had already built a full-ip network by 2001 Internet Connection Internet Connection 37

38 Build further advanced network Integrate broadband, fixed-line and mobile networks Large/Mid Corporate user Other ISP Operators Corporate Mobile user Corporate user Relay point Leased line service Relay point Routing info. exchange service Relay point Base Stations Large relay point Large relay point Accommodation bldg. Large relay point Relay NW Nearest NTT central offices Large relay point Relay NW Nearest NTT central offices Vodafone K.K. Base Stations Wi-Fi Hot spot xdsl FTTx xdsl FTTx Residential User Residential user LAN LAN LAN LAN SME/SOHO user Consumer Mobile 38

39 30 Yahoo! JAPAN Growth by Broadband (PV in billions) 35 Trends in Page Views Monthly Page Views Steadily expand due to broadband penetration No.1 Portal 1.24b page views/day* 44.8m unique customers/month* /6 06/6 *Source:Yahoo! JAPAN s web site 39

40 Validation of Internet Business Model (Yen) 4,500 4,000 3,500 3,000 Continuous revenue growth through additional services Average revenue per user* (ADSL) <Launch of service> 04/10~ (Start charging) 02/4~ 02/12~ 2,500 2,000 1,500 1, /Q3 06/Q1 ADSL 12M 06/1~ 04/8~ ADSL 45M 04/1~ 03/7~ 02/8~ Yahoo! ISP BB Security BB Phone call charge Wireless LAN Modem rental fee (Incl. equipment purchase fee) Basic fee *Based on paying subscribers 40

41 Ability to create innovative services/content Growth, profitability, etc. Foresight into new services/technologies Develop/expand markets? New mobile services Software distribution No.1 Portal No.1 E*TRADE Online securities No.1 Auction No.1 ADSL No.1 Online games No.1 Online Video Time 41

42 SOFTBANK s Enterprise Value:1 Overseas development Vodafone K.K. Customer base Technology Content Content Human resources Sales force Unrealized gain Company performance Before the launch of Yahoo! BB (Yahoo!, E*TRADE) (Know-how in Internet) (Mass retailers) Human resources Sales force Unrealized gain Company performance Present time (BB+Fixed+Mobile) 42

43 SOFTBANK s Enterprise Value:2 Driving force for growth 1) Profitability 2) Competitiveness Oversea development Customer base Technology Content Human resources Sales force Alibaba Taobao Vodafone Group BB+Fixed+Mobile =26m World-strongest IP backbone Creation of IP-based content Know-how in telecom /Internet industry Mass retailer, corporate sales, mobile shops Visible Value Economic Value Unrealized gain Company performance Yahoo!, etc. Profitability 43

44 Challenge to become No.1 company Mobile Communications NTT DoCoMo Internet Connection NTT (Dial-Up ISDN) (ADSL) ISP Nifty Narrowband Infrastructure (Hardware) plays a key role Broadband Content (Software) plays a key role 44

45 New evolution of the Internet Service and entertainment conversion Participation services 45

46 The Internet is shifting from a communication tool to a platform in daily life Communication / search tool Convenience in daily life E*TRADE Converging convenience with entertainment Entertainment 46

47 New online entertainment concept 11UP - Internet full of smiles, an exciting space! - G-Planet concept Make the Internet an exciting entertainment platform rather than a technology-driven platform E-commerce and auction services evolve to entertainment Collaboration between CAMELOT * and the SOFTBANK Group CM played at a plaza in town A click will link to relevant information Open space for various events This is a point connecting to individual games. *CAMELOT: a major consumer game developer that produced and sold several games including a million copies of Everybody s Golf and MARIO GOLF. 47

48 G-Planet concept, the first wave of titles I LOVE GOLF! Aug 2006 Pre-launch test with limited users By end 2006 Full launch (planned) To be sold on Yahoo! Games A three-dimensional lobby at the club house May also play online with other players. Multi-window screen as if a live golf match; width and length of windows may be changed. 48

49 Massively Multiplayer Online Game World s first MMO * action Dynasty Warriors BB Achieved through development capability of Koei and broadband performance of SOFTBANK Yahoo! BB s exclusive application Enjoy the game with real-time exhilaration of mighty warriors! *MMO: Massively Multiplayer Online Enjoy exhilarating speed and action with simple operation. Official service to be launched in fall 2006! 49

50 Contest with Audience Participation Yahoo! Streaming Internet Beauty Contest Audience-screened beautiful girl in her first leading role in a broadband drama. To be released on Yahoo! Streaming. Applicants: 5,560 Total votes: 156,384 Lost Memories Leading actresses: Rei Kikukawa Saemi Ikeda Broadband drama award Episodes: 10 episodes, 30 minutes each Category: Romantic suspense (tentative title) Collaborator: OSCARPROMOTION CO., LTD. Release: To be released winter

51 Entertainment with Audience Participation Odds Park Horse racing by the top 10 horses selected by audience voting The 1 st Odds Park Fan Selection in Kasamatsu held on 7 July 7 regional horse racings additionally included from 1 July -> Provide betting slip sales for 11 out of 16 regional horse racings nationwide. 51

52 Citizen participating News Site - OhmyNews Japanese version of OhmyNews (tentative name) having a strong position as new media to be launched initially on 28 August Opening Preparation Blog in place Application for citizen reporters from 21 July Registered reporters: approx. 560 (as of 7 August) "Every citizen is a reporter" ( Chief editor: Shuntaro Torigoe 52

53 SOFTBANK s Future Goal 53

54 Strategy to achieve our goal 54 No.1 in Infrastructure/Platform Portal/Content Business Finance Commerce Publication Sports Game Broadcast Music Platform/Portal Infrastructure

55 Lifestyle Company in the 21 st Century Amusement:Broadcast, Sports, Game Housework:Auction, on-line shopping Travel:Hotel, airport Business:Mobile office Finance:On-line trading Healthcare:Home healthcare School:On-line education Broadband available to all living people everywhere 55

56 SOFTBANK s Fundamental Management Policy Endeavoring to benefit society and the economy and maximize enterprise value by fostering the sharing of wisdom and knowledge gained through the IT revolution. 56

57 This presentation contains forward-looking statements including statements regarding future events, future strategies or future performance of SOFTBANK CORP. that involves risks or uncertainties. In evaluating these statements, a recipient thereof should specifically consider various factors that could cause actual events or results to differ materially from those indicated, including without limitation; continuing decline in the general economic conditions, general market conditions, customer demand for products and services, increased competition, inherent risk in the international operations and other important factors. 57