Consolidated Performance Overview
Yasuaki Miyakura: Thank you for taking the time to join us today. I am Yasuaki Miyakura, President and Representative Director. I will be presenting our financial results.
Starting this time, we have made some changes to the layout and structure of certain materials. This is in line with the launch of our Mid-Term Management Plan, and is intended to provide a clearer explanation of the areas on which we are focusing, taking into account our ongoing communications with investors.
Let me begin with an overview of consolidated performance. Year on year (YoY), operating revenue increased by 800 million yen to 20,613 million yen, operating profit rose by 273 million yen to 4,644 million yen, net income grew by 284 million yen to 3,272 million yen, and EBITDA increased by 140 million yen to 6,202 million yen.
Regarding the rate of increase/decrease shown in the far right of the slide, the larger YoY increase in net income was mainly due to the impact of tax effect accounting associated with the defense tax hike.
Factors Causing Increase/Decrease in Operating Revenue
The slide shows a waterfall chart illustrating changes in operating revenue. Beginning this quarter, we are adopting a new definition for total mobile revenue, which appears on the left side of the graph.
As noted in the footnote at the bottom of the slide, the new pricing plans we recently announced incorporate added value such as Ponta Pass and Subscription Plus Points. Based on this, in line with our strategy of offering integrated value combining telecommunications and added-value services, we will now disclose total mobile revenue as a combined figure for telecommunications revenue and added-value revenue, in a change from previous practice.
Year on year, total mobile revenue increased by 266 million yen, handset sales revenue grew by 193 million yen, and au Denki sales rose by 139 million yen. The increase in au Denki sales is attributable to higher electricity usage per household.
In other revenue, the growth in revenue from business services and FTTH services contributed to a 202 million yen increase. As a result, overall operating revenue grew by 800 million yen YoY to 20,613 million yen.
Factors Causing Increase/Decrease in Operating Profit
This slide shows a graph illustrating changes in operating profit. The blue waterfall chart in the center to the left represents the revenue-increasing factors I explained earlier, while the gray section on the right represents cost-increasing factors.
Year on year, au Denki costs rose by 133 million yen, and sales-related costs increased by 567 million yen, while other costs decreased by 173 million yen. The decrease includes the impact of certain shareholder benefit expenses being recorded in 2Q this fiscal year, rather than in 1Q in the previous fiscal year.
As a result, overall operating profit increased by 273 million yen YoY to 4,644 million yen.
Comparison with Performance Forecast
This is the comparison with our performance forecast. Both operating revenue and operating profit are progressing steadily in line with the forecast.
Mobile Operations Overview
I will now explain the status of each business, starting with mobile operations. In 1Q FY Mar.26, we achieved 2,800 net additions, bringing the total number of mobile subscribers to 693,000. We continue to maintain a solid trend in sustaining net additions.
The progress rate for net additions in mobile subscribers shown on the right side of the slide stands at 28% of the full-year forecast, indicating steady performance.
Churn Rate
Let me explain the churn rate. On the left side of the slide, we show the trend in the multi-brand churn rate. While the churn rate for 1Q was 1.11%, down from the most recent 4Q, market liquidity remained high as in the previous fiscal year, and the rate stayed at an elevated level.
As a supplement, the orange line graph shows the churn rate for au. Although the churn rate for au has remained relatively low, the persistently high overall churn rate is attributable to UQ mobile, particularly customers with SIM-only contracts.
The measure for this is shown in the diagram on the right side of the slide. In addition to our ongoing recommendation of bundled handset sales, we are working to reduce churn rate by offering bundle services for UQ mobile customers, such as Ponta Pass, FTTH service, and au Denki.
Total Mobile Revenue
Turing to total mobile revenue, it increased by 266 million yen YoY to 11,157 million yen. In addition to continued steady revenue growth, the increase was driven by the strong performance of our handset repair services, as in the previous fiscal year, and the higher roaming revenue resulting from a record-high number of domestic tourists visiting Okinawa Prefecture in 1Q.
On the right side of the slide is a graph illustrating the rate of increase/decrease. In 1Q, revenue rose by 2.5% YoY, indicating steady growth.
FTTH
Turning to FTTH service, as shown on the left side of the slide, we achieved net additions of 1,100 subscribers from the previous fiscal year-end, bringing the total number of subscribers to over 130,000. The progress rate shown on the right side of the slide stands at 28%, indicating steady performance.
Since the start of this fiscal year, in addition to acquiring new subscribers, we have been strengthening our efforts to encourage existing customers to upgrade to our 10 Gbps service. Applications for the 10 Gbps service have been increasing ahead of expectations, and performance remains strong.
au Denki
Turning to au Denki, the total number of subscribers in 1Q edged down slightly from the previous fiscal year-end to 76,700, partly due to the suspension of sales activities through June following the deterioration in profitability in the previous fiscal year. On the other hand, with profitability expected to improve this year, we resumed sales activities in July.
au Denki
As we announced in June, we will enter the retail electric power sector in October this year. By shifting from our previous role as an agent selling the services of The Okinawa Electric Power Company, Incorporated to directly operating in the retail power sector, we will be able to provide a one-stop solution from electric power sourcing to customer delivery. We aim to improve profitability by implementing efficiency measures across each stage of the value chain.
For the current fiscal year, we plan to achieve a net increase of 4,400 contracts and are steadily working toward this target. We have already begun notifying customers of plans that anticipate their transition to our new retail electric power service starting in October, and preparations for the launch are progressing smoothly.
Business Services
Let me introduce some topics. On July 25, JUNGLIA OKINAWA, a new attraction drawing nationwide attention, opened.
We have built the core infrastructure in the park and are also providing internet lines. In addition, we provide security systems, including entry/exit management of employees and the on-site security camera network.
Problem-Solving
Japan Entertainment Inc., the operator of JUNGLIA OKINAWA, has concluded a transportation access partner agreement with Nago City. The City where JUNGLIA OKINAWA is located has concerns over traffic congestion in the surrounding areas, as well as the issue of gaps in public transportation despite being a relatively populous region.
To address the challenges, the AI on-demand transport service mobi has been introduced. As shown on the right side of the slide, there are 247 pick-up and drop-off points across the Nago area. By incorporating not only tourism facilities but also locations such as Lawson convenience stores, we are building a system that enables customers to travel freely from their chosen starting point to their desired destination.
We will continue to work diligently on this initiative as a leading example of public-private collaboration in addressing regional challenges.
Carbon Neutrality
In June last year, we announced our commitment to achieving carbon neutrality in fiscal 2024, and we have now successfully achieved this goal.
We achieved our target through energy-saving initiatives to reduce CO2 emissions, the deployment of sustainable base stations utilizing solar power generation, and the use of electricity generated from renewable energy sources within Okinawa Prefecture.
By promoting our environmentally friendly communications network, branded as Green Network by Okinawa Cellular, which has been realized through the achievement of carbon neutrality, we aim to further raise awareness and momentum for carbon neutrality within the prefecture.
Stock Split
As another update, we have decided to conduct a stock split with the purpose of lowering the minimum price of investment and allowing more people to purchase our shares more easily. The split ratio will be two shares for each share held, with a reference date of September 30, 2025, and an effective date of October 1, 2025.
Total Mobile ARPU (Ref.)
As a reference, the slide shows the trend of total mobile ARPU.
Change in Business Performance (Ref.)
The slide shows the trend in past business performance.
Change in Performance by Business Segment (Ref.)
Please refer to the slide for the change in performance by business segment.
That concludes the presentation of our financial results for 1Q FY Mar.26. Thank you for your attention.