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KDDI CORPORATION
Financial Results for the 1st Half of
the Fiscal Year Ending March 2014
October 28, 2013
President Takashi Tanaka
Disclaimer
The figures included in the following brief, including the business
performance target and the target for the number of subscribers are all
projected data based on the information currently available to the KDDI
Group, and are subject to variable factors such as economic conditions, a
competitive environment and the future prospects for newly introduced
services.
Accordingly, please be advised that the actual results of business performance
or of the number of subscribers may differ substantially from the projections
described here.
Highlights of 1st Half Performance
Favorable progress
toward 20% YOY increase in income
 Higher communications revenues made strong
contributions to increased income
 Favorable progress in mobile ARPU and net
additions
 Fixed-line progress favorable for both FTTH
and J:COM

2
1H Performance
4

Consolidated Performance (YOY)
Operating Revenues

Operating Income

(Billions of yen)

Robust Growth in
Operating Revenues
and Income, YOY

(Billions of yen)

2,053.8

347.6

1,740.6
+18.0%
YOY

FY2013.3
1H

231.2

FY2014.3
1H

FY2013.3
1H

+50.3%
YOY

FY2014.3
1H
Consolidated Performance (Progress Rate)
Operating Revenues

Operating Income

(Billions of yen)

Toward Full-year
Operating Income Forecasts

3,662.3

4,140.0

(Billions of yen)

(E)

630.0 (E)
512.7

Strong Progress of

55.2%

[1H]

[1H]

1,740.6

2,053.8

231.2

47.5%

49.6%

45.1%

FY2013.3

FY2014.3

5

FY2013.3

347.6
55.2%

FY2014.3
Consolidated Performance

6
(Billions of yen)

FY13.3
1H
Operating revenues
Operating income
Operating margin

Ordinary income
Net income
EBITDA
EBITDA margin

Free cash flow

FY14.3
1H

Influence of
J:COM
consolication

FY14.3

yoy

(Forecast)

Progress

1,740.6

2,053.8

174.0

+18.0%

4,140.0

49.6%

231.2

347.6

34.7

+50.3%

630.0

55.2%

13.3%

16.9%

227.0

352.1

34.7

+55.1%

620.0

56.8%

79.8

163.0

-32.6

+104.4%

295.0

55.3%

440.8

600.9

75.0

+36.3%

1,160.0

51.8%

25.3%

29.3%

-7.6

173.0

-

-

41.0

-

15.2%

-

28.0%

-

270.0

-

64.1%
Segment Performance (1)
Revenues Up,
Income Up
Operating revenues

Personal
Services

Operating income
Operating margin
EBITDA
EBITDA margin

Revenues Up,
Income Up

FY13.3
1H

FY14.3
1H

7
(Billions of yen)

Influence of
J:COM
consolication

FY14.3

yoy

Progress

(Forecast)

1,344.7

1,603.4

161.9

+19.2%

3,210.0

50.0%

166.9

260.7

31.9

+56.2%

485.0

53.8%

12.4%

16.3%

341.1

479.0

25.4%

29.9%

FY13.3
1H

FY14.3
1H

-

70.8

+40.4%

-

-

15.1%

940.0
29.3%

51.0%
-

(Billions of yen)

Influence of
J:COM
consolication

FY14.3

yoy

(Forecast)

Progress

Operating revenues

Value
Services

69.8

99.8

21.4

+43.1%

210.0

47.5%

Operating income

19.8

27.2

2.7

+37.8%

50.0

54.5%

28.3%

27.3%

24.2

33.3

34.7%

33.3%

Operating margin
EBITDA
EBITDA margin

-

4.1
-

+37.3%
-

23.8%

62.0
29.5%

53.6%
-
Segment Performance (2)
Revenues Up,
Income Up
Operating revenues

Business
Services

Operating income
Operating margin
EBITDA
EBITDA margin

Revenues Up,
Income Up
Operating revenues

Global
Services

Operating income
Operating margin
EBITDA
EBITDA margin

FY13.3
1H

8

(Billions of yen)

FY14.3
1H

FY14.3

yoy

Progress

(Forecast)

313.0

322.1

+2.9%

650.0

49.6%

36.9

50.6

+37.3%

80.0

63.3%

11.8%

15.7%

61.1

71.6

19.5%

22.2%

FY13.3
1H

+17.2%
-

-

12.3%

127.0

56.4%
-

19.5%

(Billions of yen)

FY14.3
1H

FY14.3

yoy

Progress

(Forecast)

95.3

123.3

+29.3%

218.0

56.5%

2.8

4.7

+66.3%

9.0

52.4%

3.0%

3.8%

9.2

12.3

9.7%

10.0%

+33.3%
-

4.1%

23.0
10.6%

53.5%
-
Consolidated Operating Income:
Factor for Change in 1H, YOY

9

Contributions from higher communications revenues
accounted for 54% of increased income,
further contributions made by J:COM consolidation

347.6

<Personal Services*>
Communications
Revenues

+34.7

+63.1

+44.3

231.2

Others*

Fixed-line
Mobile

(Billions of yen)

+18.6

+18.8

• Personal Services
-1.2
• Impacts except
Personal Services
+19.8

Impact of
J:COM
consolidation

*Excludes impact of J:COM

1H/FY2013.3

+116.4

1H/FY2014.3
10

Personal Services
(Mobile)

Changes by 6-month period

Mobile
Communications
Revenues

(Billions of yen)

823.7

YOY

806.2

YOY

+5.7%

+5.7%

784.9

1H

2H

FY2012.3

789.0
779.3

1H

2H

FY2013.3

1H
FY2014.3
11

Personal Services
(Fixed-line)

Changes by 6-month period

Fixed-line
Communications
Revenues

(Billions of yen)

347.5
152.3
188.6

+96.9%

166.5

176.5

57.6

63.1

75.0

84.6

92.3

103.7

YOY

Influence
of J:COM
Consolidation

103.4

101.5

104.0

102.9

161.2

Other

(Except J:COM consolidation)
+10.6%

1H

2H

FY2012.3
Note: Other (Cable-plus phone, CATV, Metal-plus, etc.)

FTTH

1H

2H

FY2013.3

1H
FY2014.3
Strong Performance Underpinning
Communications Revenues Growth
13

Personal Services
(Mobile)

Breakdown of au ARPU

au ARPU

4,110 4,180
4,240 4,240 4,220 4,030

2,880

Data

1,920

1,860

Voice
(before
application
of discount)

-890

-920

-950

1Q

2Q

2,790

2,040

2,030

2,020

1,830

1,890

-520

-580

-680

-800

1Q

2Q

3Q

4Q

3,000

4,060

3,150

3,110

2,720

2Q/FY14.3

(Yen)

3,180

¥4,180

FY2013.3

Amount of
discount
applied

Full-year(E)

FY2014.3
14

Personal Services
(Mobile)
Quarterly YOY Change
(Full-year)

-7.7%

au ARPU

(Full-year)(E)

-2.9%
-1.4%

Rapid
Improvement
Heading toward YOY Upturn in 4Q

-3.1%
-6.0%
-9.2%
-8.2%
1Q

2Q

3Q

FY2013.3

-7.8%
4Q

1Q

2Q

FY2014.3
15

Personal Services
(Mobile)

Rise Ratio of Data ARPU (YOY)

Data ARPU
2Q/FY14.3

14.0%

¥3,180
5.5%

No.1 Growth

0.8%
1Q
*Data ARPU figures prepared by KDDI based on packet ARPU for
NTT DOCOMO and data ARPU for SoftBank Mobile (excluding
communications modules)

2Q

3Q

FY2013.3

4Q

1Q

2Q

FY2014.3

SOFTBANK
MOBILE

NTT DOCOMO
Smartphone

Personal Services
(Mobile)

16

Over half of total smart phones compatible with LTE
au Smartphone Penetration
LTE smartphone

Breakdown of Smartphone Sales
LTE smartphone

3G smartphone

42%

3G smartphone

100%

LTE

80%

28%

98%

60%
40%

LTE

22%

20%

0%

0%
6/'12

9/'12

12/'12

3/'13

6/'13

9/'13

1Q

2Q

3Q

FY2013.3

4Q

1Q

2Q

FY2014.3
17

Personal Services
(Mobile)

Data ARPU

Increase in Data ARPU* around
the Time of Upgrades to Smartphones

2,600

Greater
Increases*
Due to Customers Changing
to Smartphones

2,500
2,200

1,700

1Q

1,800

2Q

1,900

3Q

FY2013.3

4Q

1Q

2Q

FY2014.3

* Comparison of data ARPU between the month before users
upgrade from feature phones to smartphones and the month after

(Yen)
18

Personal Services
(Mobile)

Quarterly Basis

Maitsuki Discount

(Full-year)

YOY

(Full-year)(E)

¥1,800

(Monthly Discount)

Steadily Control

(Yen)

¥1,600

2,050
1,750

1,750

1,650
1,400

1,400

1Q

2Q

-20%
1Q

2Q

3Q

FY2013.3

4Q

FY2014.3
19

Personal Services
(Mobile)

Quarterly Basis

au Churn Rate

SOFTBANK
MOBILE

0.99%

Maintaining lowest
rate in the industry
2Q/FY14.3

NTT DOCOMO

0.86%

0.67%

0.67%
1Q

*au churn rate is calculated for ordinary
handsets based on Personal Services segment,
which exclude module-type terminals.
*Based on financial results materials, etc. of each company.

2Q

3Q

FY2013.3

4Q

1Q

2Q

FY2014.3
20

Consolidated
(Mobile)

YOY Change

au Net Additions

Favorable Progress
Progress Rate

2.60
2.11

58.1%

YOY +33.4%

(Millions)

2.30

1.34
0.66
31.3%
FY2012.3

1.00
38.5%
FY2013.3

Progress
Rate

58.1%
FY2014.3

(E)

1H
21

Consolidated
(Mobile)

Quarterly Basis

MNP
Net Additions
24 consecutive months

No.1

600k
400k
200k
0

SOFTBANK
MOBILE

-200k
NTT DOCOMO

-400k
-600k
1Q

2Q

3Q

FY2013.3
*Created by KDDI based on telecommunications sector
analyst reports, etc.

4Q

1Q

2Q

FY2014.3
FTTH

Personal Services
(Fixed-line)

22

Favorable growth in subscriptions,
au HIKARI to begin generating a profit
FTTH Net Additions

Progress Rate
51% 2,822 3,045
2,561
575

605

3,260
Commuf@-

630

9/'12

hikari (ctc)

0

au HIKARI

Chura (OCT)

540
2,001

au HIKARI Operating Income/Loss

(‘000)

2,219

2,403

2,590

3/'13

9/'13

au HIKARI

3/'14(E)

1H

2H
FY2013.3

Note: FTTH net additions: total for KDDI group’s FTTH services (au HIKARI,
au HIKARI Chura, and Commuf@-hikari)

1H
FY2014.3
23

3M Strategy

Quarterly Basis

(Millions)

au Smart Value

5.40

au subs (Mobile)

Increasing
Steadily
Per-household au subscriptions to

1.89Note1

HouseholdsNote2(Fixed-line)

2.86
0.66
0.44

3/'12
Note1: au subscriptions divided by households
Note2: Households: total for KDDI group companies and fixed-line allied companies

6/'12

9/'12 12/'12 3/'13

6/'13

9/'13
au Smart Pass

3M Strategy

24

Boosting Value ARPU with “au Smart Pass”
Trends in Members

Value ARPU on Quarterly Basis
(Millions)

Progress Rate

7.99

53%

6.82

(Yen)

440

Overall average

380

Smartphone users

350

5.74

300
3.98

250 240

1.47

6/'12

9/'12 12/'12 3/'13

280

280

2.43

6/'13

9/'13

1Q

240
240

2Q

3Q

FY2013.3

250

4Q

260

1Q
2Q
FY2014.3
Supporting the Competitiveness of
Mobile Services

The New
Comprehensive Strength of au 4G LTE

26

Further reinforce comprehensive strength
leveraging foundation of network strengths
Network

800MHz
Platinum Bandwidth

99% (planned for March 2014)
Maximum downlink speedNote2 of 75Mbps available nationwide
Actual population coverageNote1

Handsets

Smartphone Lineup

iPhone 5s/5c,
iPad Air, iPad mini with Retina display
7 AndroidTM models

Fees

au Smart Value

Collaborate with 4 CATV companies
Enhance services for people living alone

Services

au Smart Pass

Strengthen O2ONote3 businesses

Support

au Smart Support

Expand range of smartphone users
Rollout unique initiatives

Note1) For calculation purposes, Japan has been divided into 500m2 grid squares. Actual population coverage is the coverage ratio in comparison to the total population of grid squares designated as part of KDDI’s service area. Plan is
based on forecasts released in September 2013. Note2) Maximum downlink speeds for 4G LTE networks vary by area. This is the best-effort method service. The speed mentioned is the maximum speed by technical standards and
does not show the actual usage speed. Even within high-maximum speed service areas, the speed may slow down significantly depending on the usage environment and traffic status. Note 3) O2O (online to offline) refers to utilizing
information available on the Internet to encourage users to purchase items in the real world (community organizations, stores, etc.)
27

au 4G LTE Network
Strengthening of competitiveness with
emphasis placed on 800MHz Platinum Bandwidth
Maximum downlink speedNote1

800MHz
Platinum
Bandwidth

2.1GHz

Actual population coverageNote2
(planned for March 2014)

75Mbps

99%

Approx. 98% (As of Oct 16, 2013)

37.5Mbps 37.5Mbps~
150 Mbps
150Mbps

(planned for March 2014)

Over

80%

Approx. 78% (As of Oct 16, 2013)

Note1) Maximum downlink speeds for au 4G LTE networks vary by area by handset. The speed mentioned is the maximum speed by technical standards and does not show the actual usage speed.
Bandwidth compatibility may vary by handset.
Even within high-maximum speed service areas, the speed may slow down significantly depending on the usage environment and traffic status. This is the best-effort method service.
Note2) For calculation purposes, Japan has been divided into 500m2 grid squares. Actual population coverage is the coverage ratio in comparison to the total population of grid squares designated as part of KDDI’s service area.
Plan is based on forecasts released in September 2013.
28

Lineup 2013 winter
Robust lineup compatible with
800MHz Platinum Bandwidth 4G LTE
iPhone 5s/5c
iPad Air, iPad mini with Retina display

7 Android models
TM

Note

• au exclusive model
• Handsets popular both in
Japan and overseas

(TD-LTE)

Tribrid mobile routers

• New 20MHz of bandwidth in the 2.5GHz band
• Compatibility with TD-LTE
• Commercial usage from Oct 31, 2013

Note) isai, Xperia™ Z1, GALAXY Note3, AQUOS PHONE SERIE, ARROWS Z, DIGNO® M, ARROWS Tab
29

Strengthening of au Smart Value
For Families

New

au Smart Value

For People Living Alone

au Smart Value mine

Increase number of allied companies
(Start accepting applicants in December 2013)
COMMUNITY TV KOMORO

Cable Net Suzuka Co., Ltd

Himawari TV

TV MATSUMOTO CABLEVISION

Expand to consist of 6 FTTH companiesNote1,
122 CATV companies and
209 CATV channelsNote2

+
Tribrid mobile router*

au smartphone

Applications accepted beginning
November 12, 2013

Note 1: KDDI (au HIKARI); Okinawa Cellular Telephone Company (au HIKARI Chura); CHUBU TELECOMMUNICATIONS CO., INC. (Commuf@-hikari); K-Opticom
Corporation (eo HIKARI); STNet, Inc. (Pikara Hikari); and Energia Communications, Inc. (MEGA EGG)
Note 2: Numbers of CATV companies and channels includes 22 companies and 22 channels allied with STNet, Inc.

*Wi-Fi WALKER WiMAX2+
Strengthen Services and Support
au Smart Support

au Smart Pass
Bolster collaboration in O2O* businesses
PIA Corporation

O2O*

Safe
and
secure
Digital
content

Hold event-style
smartphone
classes

Ikyu Corporation

Conduct first bus
tour featuring
smartphone class

×

iPhone/iPad
Compensation for repair fees

Unlimited use of apps

Begin sales of
gift certificates
Allow gift certificates to be
used to give support to
one’s elderly parents

*O2O (online to offline) refers to utilizing information available on the Internet to encourage users to
purchase items in the real world (community organizations, stores, etc.)

30
Convertible Bond

Note1

Redemption

31

Early redemption exercise of convertible bonds approved

89%* already converted

*Based on information disclosed through the Tokyo Stock Exchange on October 17, 2013

As of
Mar 31, 2013

Treasury stock
Shares outstanding

Million
shares

As of
Sep 30, 2013

As of
Dec 16, 2013
Forecasts Note2

132.54

70.54

61.98

764.42

826.42

834.98

FY2014.3 Forecasts
Earnings per share (EPS)Note3

Yen

385.91

356.96

353.30

Total dividend paymentsNote4
(Dividend payout ratio)Note3

Billion
Yen

91.7
(31.1%)

ー

99.7
(33.8%)

Note1: The Zero Coupon Convertible Bonds due 2015 (bonds with stock acquisition rights, tenkanshasaigata shinkabu yoyakuken-tsuki shasai)
Note2: Calculated using the number of shares outstanding and treasury stock as of September 30, 2013, and by dividing the number of unconverted bonds as of September 30, 2013, by the
conversion price of ¥2,865.5
Note3: Forecasts for EPS and dividend payout ratio calculated using the forecasted net income figure of ¥295.0 billion
Note4: Forecasts for total dividend payments calculated using the initial forecasts for full-year dividends per share (interim dividend and year-end dividend of ¥60 per share)
Introduction of Shareholder Benefits
Target improved satisfaction
and increased numbers of private investors
Overview of Shareholder Benefits
Provide coupons for purchasing
au handsets in accordance with numbers
of shares held and holding period

例)

Example: 1 share-trading unit (100 shares)
Held for more than 5 years
->¥10,000 discount coupon

Note

Ratio

of Shares Held by Private Investors
for KDDI and TOPIX Core 30

Need to increase
number of
private investors

17.0%

3.8%
TOPIX Core 30 average

Note: Prepared by KDDI based on the data regarding each
company’s stock as of March 31, 2013

32
Summary
 Strong progress toward operating income goal due to
increase in communication revenues
 Rapid improvement toward 4Q YOY upturn in ARPU
 Strengthening of competitiveness by leveraging
the new “au 4G LTE” with emphasis placed on
800MHz Platinum Bandwidth

Favorable progress toward achieving
double-digit annual operating profit growth rate
up until FY2016.3

33
Appendix
Progress of KPIs in FY2014.3 (1)
3/'13

Consolidated
au subscriptions

'000

37,709

3/'13

au subscriptions

'000

32,189
FY13.3-2Q

Personal
Services

au churn rate

%

9/'13

39,045

9/'13

33,206
FY14.3-2Q

Change

+1,336

Change

+1,017
Change

3/'14(E)

40,009

3/'14(E)

33,689
FY14.3(E)

35

Progress

58.1%

Progress

67.8%
yoy

0.65

0.67

+0.02

0.69

-

au ARPU

yen

4,240

4,180

-60

4,060

-1.4%

au handset sales

'000

2,620

2,630

+10

10,900

+0.4%

of smartphone sales

'000

1,810

1,980

+170

8,600

+9.4%

au handset shipments

'000

2,410

2,520

+110

10,680

+4.6%

Maitsuki Discount unit price

yen

1,750

1,400

-350

1,600

-20.0%
Progress of KPIs in FY2014.3 (2)
3/'13
【Utilizing au Smart Value】

Personal
Services

9/'13

Progress

5,400

+1,540

6,900

50.7%

2,120

2,860

+740

3,450

55.6%

'000

FTTH subscriptions

3,860

'000

【Utilizing au Smart Value】

2,822

3,045

+223

3,260

50.8%

3/'13

au Smart Pass members

'000

9/'13

5,740
13.3期
2Q

Value ARPU

6/'12
%

9/'12

32

Change

7,990

Change

280

12/'12

39

Note: Data offload rate for FY14.3 includes data traffic of LTE compatible smartphones.

43

3/'14(E)

+2,250

FY14.3-2Q

240

yen

-Data offload rateNote

3/'14(E)

'000

au subscriptions
Households

Value
Services

Change

36

10,000
FY14.3(E)

+40

3/'13

290

6/'13

52

Progress

9/'13

56

52.8%
yoy

+16.7%

3/'14(E)

59

54
CAPEX

37

CAPEX (cash flow basis)

1H/FY2014.3

580.0
90.0

467.0

¥239.7B
YOY +¥24.2B
Progress Rate 41.3%

(Billions of yen)

Mobile
Fixed-line
J:COM and other

110.0

128.0

239.7

215.5

43.2

64.1

151.0

1H

338.2

Full-year

FY2013.3

55.4

380.0

141.1

1H

Full-year(E)

FY2014.3
*
*
*
*
*
*
*
*
*

"Android" is a trademark or a registered trademark of Google Inc.
"iPhone" and "iPad" are trademarks or registered trademarks of Apple Inc. The trademark ‘iPhone’ is used with a license from Aiphone K.K.
"WiMAX" is a trademark of WiMAX Forum.
"AQUOS PHONE" and "SERIE" are trademarks or registered trademarks of Sharp Corporation.
"DIGNO" is a registered trademark of Kyocera Corporation.
"Xperia" is a trademark or a registered trademark of Sony Mobile Communications AB.
"ARROWS" is a registered trademark of Fujitsu Limited.
"GALAXY" is a trademark or a registered trademark of SAMSUNG ELECTRONICS Co., Ltd.
Other company names and product names are generally registered trademarks or trademarks of their respective company.
KDDI Financial Results for the 1st Half of FY2014.3

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KDDI Financial Results for the 1st Half of FY2014.3

  • 1. KDDI CORPORATION Financial Results for the 1st Half of the Fiscal Year Ending March 2014 October 28, 2013 President Takashi Tanaka
  • 2. Disclaimer The figures included in the following brief, including the business performance target and the target for the number of subscribers are all projected data based on the information currently available to the KDDI Group, and are subject to variable factors such as economic conditions, a competitive environment and the future prospects for newly introduced services. Accordingly, please be advised that the actual results of business performance or of the number of subscribers may differ substantially from the projections described here.
  • 3. Highlights of 1st Half Performance Favorable progress toward 20% YOY increase in income  Higher communications revenues made strong contributions to increased income  Favorable progress in mobile ARPU and net additions  Fixed-line progress favorable for both FTTH and J:COM 2
  • 5. 4 Consolidated Performance (YOY) Operating Revenues Operating Income (Billions of yen) Robust Growth in Operating Revenues and Income, YOY (Billions of yen) 2,053.8 347.6 1,740.6 +18.0% YOY FY2013.3 1H 231.2 FY2014.3 1H FY2013.3 1H +50.3% YOY FY2014.3 1H
  • 6. Consolidated Performance (Progress Rate) Operating Revenues Operating Income (Billions of yen) Toward Full-year Operating Income Forecasts 3,662.3 4,140.0 (Billions of yen) (E) 630.0 (E) 512.7 Strong Progress of 55.2% [1H] [1H] 1,740.6 2,053.8 231.2 47.5% 49.6% 45.1% FY2013.3 FY2014.3 5 FY2013.3 347.6 55.2% FY2014.3
  • 7. Consolidated Performance 6 (Billions of yen) FY13.3 1H Operating revenues Operating income Operating margin Ordinary income Net income EBITDA EBITDA margin Free cash flow FY14.3 1H Influence of J:COM consolication FY14.3 yoy (Forecast) Progress 1,740.6 2,053.8 174.0 +18.0% 4,140.0 49.6% 231.2 347.6 34.7 +50.3% 630.0 55.2% 13.3% 16.9% 227.0 352.1 34.7 +55.1% 620.0 56.8% 79.8 163.0 -32.6 +104.4% 295.0 55.3% 440.8 600.9 75.0 +36.3% 1,160.0 51.8% 25.3% 29.3% -7.6 173.0 - - 41.0 - 15.2% - 28.0% - 270.0 - 64.1%
  • 8. Segment Performance (1) Revenues Up, Income Up Operating revenues Personal Services Operating income Operating margin EBITDA EBITDA margin Revenues Up, Income Up FY13.3 1H FY14.3 1H 7 (Billions of yen) Influence of J:COM consolication FY14.3 yoy Progress (Forecast) 1,344.7 1,603.4 161.9 +19.2% 3,210.0 50.0% 166.9 260.7 31.9 +56.2% 485.0 53.8% 12.4% 16.3% 341.1 479.0 25.4% 29.9% FY13.3 1H FY14.3 1H - 70.8 +40.4% - - 15.1% 940.0 29.3% 51.0% - (Billions of yen) Influence of J:COM consolication FY14.3 yoy (Forecast) Progress Operating revenues Value Services 69.8 99.8 21.4 +43.1% 210.0 47.5% Operating income 19.8 27.2 2.7 +37.8% 50.0 54.5% 28.3% 27.3% 24.2 33.3 34.7% 33.3% Operating margin EBITDA EBITDA margin - 4.1 - +37.3% - 23.8% 62.0 29.5% 53.6% -
  • 9. Segment Performance (2) Revenues Up, Income Up Operating revenues Business Services Operating income Operating margin EBITDA EBITDA margin Revenues Up, Income Up Operating revenues Global Services Operating income Operating margin EBITDA EBITDA margin FY13.3 1H 8 (Billions of yen) FY14.3 1H FY14.3 yoy Progress (Forecast) 313.0 322.1 +2.9% 650.0 49.6% 36.9 50.6 +37.3% 80.0 63.3% 11.8% 15.7% 61.1 71.6 19.5% 22.2% FY13.3 1H +17.2% - - 12.3% 127.0 56.4% - 19.5% (Billions of yen) FY14.3 1H FY14.3 yoy Progress (Forecast) 95.3 123.3 +29.3% 218.0 56.5% 2.8 4.7 +66.3% 9.0 52.4% 3.0% 3.8% 9.2 12.3 9.7% 10.0% +33.3% - 4.1% 23.0 10.6% 53.5% -
  • 10. Consolidated Operating Income: Factor for Change in 1H, YOY 9 Contributions from higher communications revenues accounted for 54% of increased income, further contributions made by J:COM consolidation 347.6 <Personal Services*> Communications Revenues +34.7 +63.1 +44.3 231.2 Others* Fixed-line Mobile (Billions of yen) +18.6 +18.8 • Personal Services -1.2 • Impacts except Personal Services +19.8 Impact of J:COM consolidation *Excludes impact of J:COM 1H/FY2013.3 +116.4 1H/FY2014.3
  • 11. 10 Personal Services (Mobile) Changes by 6-month period Mobile Communications Revenues (Billions of yen) 823.7 YOY 806.2 YOY +5.7% +5.7% 784.9 1H 2H FY2012.3 789.0 779.3 1H 2H FY2013.3 1H FY2014.3
  • 12. 11 Personal Services (Fixed-line) Changes by 6-month period Fixed-line Communications Revenues (Billions of yen) 347.5 152.3 188.6 +96.9% 166.5 176.5 57.6 63.1 75.0 84.6 92.3 103.7 YOY Influence of J:COM Consolidation 103.4 101.5 104.0 102.9 161.2 Other (Except J:COM consolidation) +10.6% 1H 2H FY2012.3 Note: Other (Cable-plus phone, CATV, Metal-plus, etc.) FTTH 1H 2H FY2013.3 1H FY2014.3
  • 14. 13 Personal Services (Mobile) Breakdown of au ARPU au ARPU 4,110 4,180 4,240 4,240 4,220 4,030 2,880 Data 1,920 1,860 Voice (before application of discount) -890 -920 -950 1Q 2Q 2,790 2,040 2,030 2,020 1,830 1,890 -520 -580 -680 -800 1Q 2Q 3Q 4Q 3,000 4,060 3,150 3,110 2,720 2Q/FY14.3 (Yen) 3,180 ¥4,180 FY2013.3 Amount of discount applied Full-year(E) FY2014.3
  • 15. 14 Personal Services (Mobile) Quarterly YOY Change (Full-year) -7.7% au ARPU (Full-year)(E) -2.9% -1.4% Rapid Improvement Heading toward YOY Upturn in 4Q -3.1% -6.0% -9.2% -8.2% 1Q 2Q 3Q FY2013.3 -7.8% 4Q 1Q 2Q FY2014.3
  • 16. 15 Personal Services (Mobile) Rise Ratio of Data ARPU (YOY) Data ARPU 2Q/FY14.3 14.0% ¥3,180 5.5% No.1 Growth 0.8% 1Q *Data ARPU figures prepared by KDDI based on packet ARPU for NTT DOCOMO and data ARPU for SoftBank Mobile (excluding communications modules) 2Q 3Q FY2013.3 4Q 1Q 2Q FY2014.3 SOFTBANK MOBILE NTT DOCOMO
  • 17. Smartphone Personal Services (Mobile) 16 Over half of total smart phones compatible with LTE au Smartphone Penetration LTE smartphone Breakdown of Smartphone Sales LTE smartphone 3G smartphone 42% 3G smartphone 100% LTE 80% 28% 98% 60% 40% LTE 22% 20% 0% 0% 6/'12 9/'12 12/'12 3/'13 6/'13 9/'13 1Q 2Q 3Q FY2013.3 4Q 1Q 2Q FY2014.3
  • 18. 17 Personal Services (Mobile) Data ARPU Increase in Data ARPU* around the Time of Upgrades to Smartphones 2,600 Greater Increases* Due to Customers Changing to Smartphones 2,500 2,200 1,700 1Q 1,800 2Q 1,900 3Q FY2013.3 4Q 1Q 2Q FY2014.3 * Comparison of data ARPU between the month before users upgrade from feature phones to smartphones and the month after (Yen)
  • 19. 18 Personal Services (Mobile) Quarterly Basis Maitsuki Discount (Full-year) YOY (Full-year)(E) ¥1,800 (Monthly Discount) Steadily Control (Yen) ¥1,600 2,050 1,750 1,750 1,650 1,400 1,400 1Q 2Q -20% 1Q 2Q 3Q FY2013.3 4Q FY2014.3
  • 20. 19 Personal Services (Mobile) Quarterly Basis au Churn Rate SOFTBANK MOBILE 0.99% Maintaining lowest rate in the industry 2Q/FY14.3 NTT DOCOMO 0.86% 0.67% 0.67% 1Q *au churn rate is calculated for ordinary handsets based on Personal Services segment, which exclude module-type terminals. *Based on financial results materials, etc. of each company. 2Q 3Q FY2013.3 4Q 1Q 2Q FY2014.3
  • 21. 20 Consolidated (Mobile) YOY Change au Net Additions Favorable Progress Progress Rate 2.60 2.11 58.1% YOY +33.4% (Millions) 2.30 1.34 0.66 31.3% FY2012.3 1.00 38.5% FY2013.3 Progress Rate 58.1% FY2014.3 (E) 1H
  • 22. 21 Consolidated (Mobile) Quarterly Basis MNP Net Additions 24 consecutive months No.1 600k 400k 200k 0 SOFTBANK MOBILE -200k NTT DOCOMO -400k -600k 1Q 2Q 3Q FY2013.3 *Created by KDDI based on telecommunications sector analyst reports, etc. 4Q 1Q 2Q FY2014.3
  • 23. FTTH Personal Services (Fixed-line) 22 Favorable growth in subscriptions, au HIKARI to begin generating a profit FTTH Net Additions Progress Rate 51% 2,822 3,045 2,561 575 605 3,260 Commuf@- 630 9/'12 hikari (ctc) 0 au HIKARI Chura (OCT) 540 2,001 au HIKARI Operating Income/Loss (‘000) 2,219 2,403 2,590 3/'13 9/'13 au HIKARI 3/'14(E) 1H 2H FY2013.3 Note: FTTH net additions: total for KDDI group’s FTTH services (au HIKARI, au HIKARI Chura, and Commuf@-hikari) 1H FY2014.3
  • 24. 23 3M Strategy Quarterly Basis (Millions) au Smart Value 5.40 au subs (Mobile) Increasing Steadily Per-household au subscriptions to 1.89Note1 HouseholdsNote2(Fixed-line) 2.86 0.66 0.44 3/'12 Note1: au subscriptions divided by households Note2: Households: total for KDDI group companies and fixed-line allied companies 6/'12 9/'12 12/'12 3/'13 6/'13 9/'13
  • 25. au Smart Pass 3M Strategy 24 Boosting Value ARPU with “au Smart Pass” Trends in Members Value ARPU on Quarterly Basis (Millions) Progress Rate 7.99 53% 6.82 (Yen) 440 Overall average 380 Smartphone users 350 5.74 300 3.98 250 240 1.47 6/'12 9/'12 12/'12 3/'13 280 280 2.43 6/'13 9/'13 1Q 240 240 2Q 3Q FY2013.3 250 4Q 260 1Q 2Q FY2014.3
  • 26. Supporting the Competitiveness of Mobile Services The New
  • 27. Comprehensive Strength of au 4G LTE 26 Further reinforce comprehensive strength leveraging foundation of network strengths Network 800MHz Platinum Bandwidth 99% (planned for March 2014) Maximum downlink speedNote2 of 75Mbps available nationwide Actual population coverageNote1 Handsets Smartphone Lineup iPhone 5s/5c, iPad Air, iPad mini with Retina display 7 AndroidTM models Fees au Smart Value Collaborate with 4 CATV companies Enhance services for people living alone Services au Smart Pass Strengthen O2ONote3 businesses Support au Smart Support Expand range of smartphone users Rollout unique initiatives Note1) For calculation purposes, Japan has been divided into 500m2 grid squares. Actual population coverage is the coverage ratio in comparison to the total population of grid squares designated as part of KDDI’s service area. Plan is based on forecasts released in September 2013. Note2) Maximum downlink speeds for 4G LTE networks vary by area. This is the best-effort method service. The speed mentioned is the maximum speed by technical standards and does not show the actual usage speed. Even within high-maximum speed service areas, the speed may slow down significantly depending on the usage environment and traffic status. Note 3) O2O (online to offline) refers to utilizing information available on the Internet to encourage users to purchase items in the real world (community organizations, stores, etc.)
  • 28. 27 au 4G LTE Network Strengthening of competitiveness with emphasis placed on 800MHz Platinum Bandwidth Maximum downlink speedNote1 800MHz Platinum Bandwidth 2.1GHz Actual population coverageNote2 (planned for March 2014) 75Mbps 99% Approx. 98% (As of Oct 16, 2013) 37.5Mbps 37.5Mbps~ 150 Mbps 150Mbps (planned for March 2014) Over 80% Approx. 78% (As of Oct 16, 2013) Note1) Maximum downlink speeds for au 4G LTE networks vary by area by handset. The speed mentioned is the maximum speed by technical standards and does not show the actual usage speed. Bandwidth compatibility may vary by handset. Even within high-maximum speed service areas, the speed may slow down significantly depending on the usage environment and traffic status. This is the best-effort method service. Note2) For calculation purposes, Japan has been divided into 500m2 grid squares. Actual population coverage is the coverage ratio in comparison to the total population of grid squares designated as part of KDDI’s service area. Plan is based on forecasts released in September 2013.
  • 29. 28 Lineup 2013 winter Robust lineup compatible with 800MHz Platinum Bandwidth 4G LTE iPhone 5s/5c iPad Air, iPad mini with Retina display 7 Android models TM Note • au exclusive model • Handsets popular both in Japan and overseas (TD-LTE) Tribrid mobile routers • New 20MHz of bandwidth in the 2.5GHz band • Compatibility with TD-LTE • Commercial usage from Oct 31, 2013 Note) isai, Xperia™ Z1, GALAXY Note3, AQUOS PHONE SERIE, ARROWS Z, DIGNO® M, ARROWS Tab
  • 30. 29 Strengthening of au Smart Value For Families New au Smart Value For People Living Alone au Smart Value mine Increase number of allied companies (Start accepting applicants in December 2013) COMMUNITY TV KOMORO Cable Net Suzuka Co., Ltd Himawari TV TV MATSUMOTO CABLEVISION Expand to consist of 6 FTTH companiesNote1, 122 CATV companies and 209 CATV channelsNote2 + Tribrid mobile router* au smartphone Applications accepted beginning November 12, 2013 Note 1: KDDI (au HIKARI); Okinawa Cellular Telephone Company (au HIKARI Chura); CHUBU TELECOMMUNICATIONS CO., INC. (Commuf@-hikari); K-Opticom Corporation (eo HIKARI); STNet, Inc. (Pikara Hikari); and Energia Communications, Inc. (MEGA EGG) Note 2: Numbers of CATV companies and channels includes 22 companies and 22 channels allied with STNet, Inc. *Wi-Fi WALKER WiMAX2+
  • 31. Strengthen Services and Support au Smart Support au Smart Pass Bolster collaboration in O2O* businesses PIA Corporation O2O* Safe and secure Digital content Hold event-style smartphone classes Ikyu Corporation Conduct first bus tour featuring smartphone class × iPhone/iPad Compensation for repair fees Unlimited use of apps Begin sales of gift certificates Allow gift certificates to be used to give support to one’s elderly parents *O2O (online to offline) refers to utilizing information available on the Internet to encourage users to purchase items in the real world (community organizations, stores, etc.) 30
  • 32. Convertible Bond Note1 Redemption 31 Early redemption exercise of convertible bonds approved 89%* already converted *Based on information disclosed through the Tokyo Stock Exchange on October 17, 2013 As of Mar 31, 2013 Treasury stock Shares outstanding Million shares As of Sep 30, 2013 As of Dec 16, 2013 Forecasts Note2 132.54 70.54 61.98 764.42 826.42 834.98 FY2014.3 Forecasts Earnings per share (EPS)Note3 Yen 385.91 356.96 353.30 Total dividend paymentsNote4 (Dividend payout ratio)Note3 Billion Yen 91.7 (31.1%) ー 99.7 (33.8%) Note1: The Zero Coupon Convertible Bonds due 2015 (bonds with stock acquisition rights, tenkanshasaigata shinkabu yoyakuken-tsuki shasai) Note2: Calculated using the number of shares outstanding and treasury stock as of September 30, 2013, and by dividing the number of unconverted bonds as of September 30, 2013, by the conversion price of ¥2,865.5 Note3: Forecasts for EPS and dividend payout ratio calculated using the forecasted net income figure of ¥295.0 billion Note4: Forecasts for total dividend payments calculated using the initial forecasts for full-year dividends per share (interim dividend and year-end dividend of ¥60 per share)
  • 33. Introduction of Shareholder Benefits Target improved satisfaction and increased numbers of private investors Overview of Shareholder Benefits Provide coupons for purchasing au handsets in accordance with numbers of shares held and holding period 例) Example: 1 share-trading unit (100 shares) Held for more than 5 years ->¥10,000 discount coupon Note Ratio of Shares Held by Private Investors for KDDI and TOPIX Core 30 Need to increase number of private investors 17.0% 3.8% TOPIX Core 30 average Note: Prepared by KDDI based on the data regarding each company’s stock as of March 31, 2013 32
  • 34. Summary  Strong progress toward operating income goal due to increase in communication revenues  Rapid improvement toward 4Q YOY upturn in ARPU  Strengthening of competitiveness by leveraging the new “au 4G LTE” with emphasis placed on 800MHz Platinum Bandwidth Favorable progress toward achieving double-digit annual operating profit growth rate up until FY2016.3 33
  • 36. Progress of KPIs in FY2014.3 (1) 3/'13 Consolidated au subscriptions '000 37,709 3/'13 au subscriptions '000 32,189 FY13.3-2Q Personal Services au churn rate % 9/'13 39,045 9/'13 33,206 FY14.3-2Q Change +1,336 Change +1,017 Change 3/'14(E) 40,009 3/'14(E) 33,689 FY14.3(E) 35 Progress 58.1% Progress 67.8% yoy 0.65 0.67 +0.02 0.69 - au ARPU yen 4,240 4,180 -60 4,060 -1.4% au handset sales '000 2,620 2,630 +10 10,900 +0.4% of smartphone sales '000 1,810 1,980 +170 8,600 +9.4% au handset shipments '000 2,410 2,520 +110 10,680 +4.6% Maitsuki Discount unit price yen 1,750 1,400 -350 1,600 -20.0%
  • 37. Progress of KPIs in FY2014.3 (2) 3/'13 【Utilizing au Smart Value】 Personal Services 9/'13 Progress 5,400 +1,540 6,900 50.7% 2,120 2,860 +740 3,450 55.6% '000 FTTH subscriptions 3,860 '000 【Utilizing au Smart Value】 2,822 3,045 +223 3,260 50.8% 3/'13 au Smart Pass members '000 9/'13 5,740 13.3期 2Q Value ARPU 6/'12 % 9/'12 32 Change 7,990 Change 280 12/'12 39 Note: Data offload rate for FY14.3 includes data traffic of LTE compatible smartphones. 43 3/'14(E) +2,250 FY14.3-2Q 240 yen -Data offload rateNote 3/'14(E) '000 au subscriptions Households Value Services Change 36 10,000 FY14.3(E) +40 3/'13 290 6/'13 52 Progress 9/'13 56 52.8% yoy +16.7% 3/'14(E) 59 54
  • 38. CAPEX 37 CAPEX (cash flow basis) 1H/FY2014.3 580.0 90.0 467.0 ¥239.7B YOY +¥24.2B Progress Rate 41.3% (Billions of yen) Mobile Fixed-line J:COM and other 110.0 128.0 239.7 215.5 43.2 64.1 151.0 1H 338.2 Full-year FY2013.3 55.4 380.0 141.1 1H Full-year(E) FY2014.3
  • 39. * * * * * * * * * "Android" is a trademark or a registered trademark of Google Inc. "iPhone" and "iPad" are trademarks or registered trademarks of Apple Inc. The trademark ‘iPhone’ is used with a license from Aiphone K.K. "WiMAX" is a trademark of WiMAX Forum. "AQUOS PHONE" and "SERIE" are trademarks or registered trademarks of Sharp Corporation. "DIGNO" is a registered trademark of Kyocera Corporation. "Xperia" is a trademark or a registered trademark of Sony Mobile Communications AB. "ARROWS" is a registered trademark of Fujitsu Limited. "GALAXY" is a trademark or a registered trademark of SAMSUNG ELECTRONICS Co., Ltd. Other company names and product names are generally registered trademarks or trademarks of their respective company.