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NTT Docomo held a financial results briefing for 2019 online on April 28. Operating income decreased 3.9% year-over-year to 4,651.3 billion yen, and operating income fell 15.7% to 854.7 billion yen.
Operating income in the telecommunications business decreased ¥ 290.1 billion year-over-year to ¥ 3,687.0 billion, but operating income in the non-telecommunications business smart living area increased ¥ 108.2 billion year-over-year to ¥ 97.7 billion . It was
▽ In the telecommunications business, we were in the red due to the decrease in revenues from the mobile communications service and the drop in the number of terminals sold. In the smart life area, 60% of total revenue comes from reliable support services such as mobile phone clearing services.
The number of subscribers exceeds 80 million, the number of 5G subscribers has started as planned
The number of mobile phone contracts increased by 2% over the previous year to 80.33 million, of which the number of smartphones and tablets increased by 4% to 42.04 million. The dropout rate was 0.54% (excluding MVNO) as a whole and 0.44% only for phones (smartphones and feature phones), both of which decreased by 0.03 points year-over-year. Docomo Hikari increased by 13% over the previous year to 6.49 million contracts.
As for the number of 5G contractors that started service on March 25, they were 14,000 at the end of March, which was approximately what was planned. Also, the number of subscribers is approximately 40,000 at last.
Regarding the expansion of the 5G area, the spread of new infectious diseases by coronavirus is said to be affecting, and it may be difficult to reach the goal of 10,000 stations in June 2021 (* Related article)
The ARPU (average monthly income per user) for the fourth quarter of 2019 was 4,760 yen, a decrease of 10 yen compared to the same period of the previous year. In addition, NTT DOCOMO’s ARPU does not include incidental service revenue such as various content.
Use and status of the contract for various services
The number of d-point club members was 7.59 million (an increase of 7% year-on-year), and the number of d-point card registrations was 43.26 million (28% more than the previous year) . The transaction value of financial and settlement services, including d cards and d payments, was 5.32 billion yen (an increase of 36% year-on-year), of which 4.15 billion yen (an increase of 32% year-on-year) ) was due to cards d. The number of d-card contracts was 12.97 million (14% more year-over-year), of which d-card GOLD was 6.85 million (30% more year-over-year).
The transaction amount for payment in d was 399 billion yen (3.2 times more than the previous year), and the number of users also increased approximately 2.0 times to 25.26 million. The number of member stores accepting payments and points also increased 63% year-over-year to 1.71 million locations.
The number of d points used in fiscal year 2019 was 1998 billion points, of which more than half, 121.1 billion points, were used by the partners. The number of affiliates at point d was 752, which is 1.8 times the previous year.
Fiscal year 2020 is the beginning of a new era, new initiatives
The company positions fiscal year 2020 as the “start year for growth in the new era.” “Further strengthen the customer base”, including early 5G development, “Large-scale member-centric business operation” by strengthening financial and payment fields, etc. Focusing on “value creation,” the company will work on structural reforms by streamlining business processes through digital transformation (DX) and business operations by strengthening 3G migration.
Regarding the financial forecast for fiscal year 2020, due to the spread of the new coronavirus infection, it is difficult to calculate a reasonable financial forecast, and it has not been announced at this stage. Regarding the timing of the commercial forecast disclosure, a rational calculation will be made immediately when possible. We will maintain an annual dividend of 120 yen, the same level as at the end of the same period of the previous year and at the end of the previous year.
Questions and answers
–What is the most difficult part to forecast in fiscal year 2020 when the prospects for business results are difficult?
Mr. yoshizawa
Although the earnings forecast for fiscal year 2020 is not disclosed, we would like to capture the effects, changes, and signs of the new coronavirus infection. Although there are many uncertainties about business results for the current fiscal year, there is a desire to target the level of earnings at the same level as the previous year. However, I cannot read the number of users who visit the store. Since the second half of March, the number of visitors has decreased considerably, and it is unclear how long it will continue. There are also terminal sales associated with the number of visits to the store, and we don’t know how much it will affect.
International roaming can be assumed, but the number of voice calls has actually increased since mid-March. However, the fixed amount is increasing. I can’t read how this will affect my bottom line. On the other hand, the volume of data communication is also increasing. As the Gigaho increased from 30GB to 60GB from January, it increased by 5-6% from January to February from the previous year. Since March, it has not increased further and is described as a slight increase. I don’t know unless I see movement in the future.
Regarding dividends, we have established a basic stable and continuous dividend increase policy, but as NTT DOCOMO, we never reduced dividends. Although there are some effects of the new coronavirus infection, I think the extent to which it affects the financial base is such that “there will be a big change.” This time, it is slated to be more or less the same as in 2019. There is no decision to buy back shares. You will have to decide based on your financial situation.
–The number of phones sold continued to decline in fiscal 2019. What is the situation in April?
Mr. yoshizawa
Although the April results have not been reached, it is true that they have fallen. I cannot give you specific numbers.
–Mobile traffic is said to increase slightly due to telecommuting, but when do you think ARPU will stop falling?
Hiromon
The mobile ARPU after applying the discount was invested by 40 yen in the fourth quarter compared to the third quarter of 2019. However, the year-on-year rate was negative. Before the new coronavirus infection, it pointed to a reversal around the second and third quarters of 2020, compared to the same period the year before. However, what is the impact of a decrease in international roaming revenue?
Mr. yoshizawa
In April, we switched from feature phones to smartphones and from 3G to LTE. However, the number of clients in their 60s and 70s has decreased. Originally, an increase in ARPU was also considered for smartphone migration. There are also additional sales (change to a higher plan). There is also a high contract rate for 5G Gigaho (as an expectation factor for the future ARPU reversal).
–What is the impact of shortening store opening hours?
Mr. yoshizawa
⇒ The restriction on reception work is implemented in accordance with the issuance of an emergency declaration. More recently, the number of store visits in April decreased by 70% from the previous year, to approximately 30% from the previous year. Because of this, I have been contacting the call center a lot, but the structure of the call center is shrinking and I am instructing the procedure on the website.
–How does the decrease in sales promotion costs affect the results for April?
Mr. yoshizawa
It is true that the number of terminal sales has decreased and the number of contracts has also decreased, resulting in a decrease in incentives. However, it is not yet clear what will happen in April. At the end of March, the number of sales and fees has decreased at the end of fiscal year 2019 due to the new coronavirus infection, and we expect it to continue in April.
–The Rakuten Mobile service has started. What are the perceptions and perspectives of impact?
Mr. yoshizawa
▽ I was a little surprised that version 2 was on April 8. It has been a month since it started, but it is an acknowledgment that there has been no major impact. Although it may be affected by the new coronavirus infection, it can be difficult to understand what is happening in the current service area, so it is necessary to take a closer look at the future area of Rakuten Mobile and the development of the alignment. 5G service is slated to begin in June, and action will be taken as needed.
The impact of the new infectious coronavirus disease is the same for DoCoMo, but I would like to firmly address network quality and after-sales support and respond.
–About the number of 5G contracts. Let me know if you have reached your goal in late March and under the influence of the new coronavirus infection.
Mr. yoshizawa
14,000 at the end of March. I think it was as planned because it started on the 25th. The number of terminals purchased was less than expected. It’s only been a month since the service started, but the two current terminal acquisition models are progressing smoothly and the number of contracts is less than 40,000. It will exceed 40,000 by the end of April. For example, the selection rate of 5G gigaho is approximately half. The conventional gigaho is approximately 20%, which is approximately double. The percentage of online purchases is also high.
–What is the impact of area development on new coronavirus infection?
Mr. yoshizawa
Regarding capital investment, construction-related items, such as network equipment, are produced abroad, including China. There is no impact from April, but may be affected in the future. However, we have to look at the situation to see how much it will be.
The company side of construction work has slowed down considerably, so while telecommunications construction has priority for those in the process, the rest have priority. Workers are not always full. We will continue to promote 5G, but if the current situation continues, we would definitely like to achieve 500 cities, including ordinance-designated cities at the end of the fiscal year, but the next target of 10,000 stations by June of next year will be quite difficult. We are paying attention to how many thousands of stations will decrease.
–What is your confidence and ingenuity towards your goals for 5G base station development from March next year?
Mr. yoshizawa
In addition to 5G, there is also an advanced LTE build, but in the end, how do you prioritize? I want to reach 500 cities by the end of 2020. The next 10,000 stations are planned ahead of schedule and will be affected.
–Events experiencing 5G have been canceled, like the Olympics, but what about the impact on customer acquisition?
Mr. yoshizawa
I think there will be some impact if the event for consumers is canceled. However, the event is a way to rent a 5G terminal to the person actually hosting the event, eventually a contract with B2B, a corporation, and a service for the industry. If possible, I would like to firmly continue the corporate business as planned. From the current situation, although the area is quite limited, it seems that the “all you can use in LTE” is considered a merit even though it has 5G communication speed. I would like to actively work to achieve 2.5 million contracts.
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