Kddi Corp Unsp/Adr

Thank you. The first half consolidated results. Of the fiscal year ending in March 2024, enjoyed increased operating revenues and operating income, a good progress versus the fully air-focused. The left shows the operating revenue, which was 2.779 billion yen, up 1.4% year-on-year. The progress ratio was 47.9%. The right is the operating income, which was 560.3 billion yen, up 0.2% year-on-year. The progress ratio was 51.9%. Next, let me explain factors for change in the first half consolidating operating income. The first half operating income was up 1 billion yen year on year. From the left, Group NBNO and Rakuten Roaming Revenues were minus 20.3 billion yen. Multi-brand communications upper revenues were up 800 million yen. TX was up 5.4 billion yen. Financial business was down 9.9 billion yen. Energy business was... plus 9.5 billion yen. Profit increased by growth in communications upper revenues and focus areas despite a decrease in Rakuten roaming revenue. Key points of the consolidated financial results. Looking beyond March 2025, there's steady growth in key areas creating medium-term earning base. From the left, 5G communications saw its multi-brand communications revenue rebound in the first half. DX enjoyed steady expansion on profit increase. Financial business had a double-digit growth in the first half. Energy business increased profit in the second quarter. Next, on rebounding communications ARPU revenues and growth. First, ARPU revenue. Communications ARPU revenues rebounded and value-added ARPU revenue increased. The left shows increased total ARPU revenues. Moving to the right, communications ARPU revenues rebounded. The second quarter result was up 3.7 billion yen year-on-year. Next shows IDs and communications ARPU. The left indicates that multi-brand IDs are 30.94 million up to 180,000 year-on-year plus 40,000 quarter-on-quarter, maintaining an upward trend growing continuously. The right shows multi-brand communications ARPU, which was 3,960 yen up 30 yen quarter-on-quarter. To grow the communications business further, we are enhancing attractiveness of AU. First is AU money activity plan. Look at the left, please. KDDR has been offering telecommunications plus value-added services set plans tailored to customers ahead of peers. Moving to the right, from the 1st of September, we launched AU money activity plan. which is an industry-first set plan of telecommunications plus finance. One out of three unlimited Mac subscribers has chosen this plan and it's off to a good start compared with the company plan. The second endeavour to enhance attractiveness of AU is to increase online content for smartphones. The left shows that increased online content such as sports and live content cultivates smartphone viewing. We offer a worry-free, unlimited plan to meet the needs. The right indicates that we utilise our strength in partnering, enhancing free sports distribution. High school baseball games, called virtual high school baseball games, were distributed covering all the games from regional preliminaries, making the record number of viewers. Starting from this October, we launched distribution of high school football and high school volleyball games. We are moving toward an exciting future for everyone through sports. As for UQ Mobile, many choose medium and large capacity plans as data usage increases. The left shows a double-digit growth of the monthly data usage. The right shows the launch of three new plans of UQ Mobile in June. New plans have been well accepted and recently about 70% of customers have chosen komikomi or tokutoku, that's large and medium capacity plans. Very good results. Next, 5G network that supports KDDI's mission to connect. The left indicates how areas expanded along customers' lifeline. We are connecting the everyday. As of today, The end of October, the area expanded 47 routes in railway and 384 commercial areas. In particular, 5G is available at all Yamanote Line stations with the number one communication speed according to a survey. The ride shows our initiatives to improve quality. We have been utilising quality data for each device or each handset. Using a variety of data, we automatically collect and analyze data and implement measures and execute rapid quality improvement. We'll continue to promote area expansion along customers' lifeline and refine communication quality. We are leveraging Starlink. Connecting the unconnected. The left indicates that we are utilising Starlink for AU-based stations, creating an area while connecting the extraordinary, including mountains, festivals and a time of disasters. Moving to the right, in August this year, we concluded a new business alliance with SpaceX for satellite and smartphone direct communication service development. We aim to begin sending and receiving messages in 2024, connecting wherever you see the sky. Next, let me focus on KDDI Group's financial business. As you can see, KDDI Group is offering a full range of financial services in support of our customers. The right shows that our customer base in key services has been steadily growing, with AU Paycard members exceeding 9 million in October. In addition, AUP members reached 33.73 million as the end of September, AU Jibun Bank account expanded to 5.45 million and AU Kabukom Securities account reaching 1.61 million. Next, about our financial business performance. The left shows finance-related value-added upper revenue, which was up 13.4% year-on-year, contributing to the increase of value-added upper revenues. The centre is first-half operating income of AU Financial Holdings, which increased 92.9% year-on-year, excluding the accounting changes in the previous term. A significant growth. Moving to the right, transaction volume of settlement and loans steadily increased 19.3% year on year.

Next is credit cards and banks that drive the growth of the financial business. Left side, the number of AUPAY gold card members, which will be the future growth driver, grew significantly to 970,000 members as of the end of September 2021. which is up by 54% year-on-year, and it exceeded 1 million this October. Right side, mortgage loan balance was 2.3 trillion yen, up 56.2% year-on-year. attractive interest rates led to high customer satisfaction. In addition, the preferential interest rate discount eligibility expanded within the KDDI group to offer set discount with JCOMNET NTV from September and CTC's Komifa Hikari from November 1st. Toward further growth in the financial business, we will leverage synergies with telecom to expand our financial customer base. Left side. Financial services collaboration is accelerating with AU money activity plan. Since the launch of the plan, the over-the-counter subscription rate has increased respectively, as you can see here. Right side. We will leverage these synergies with telecom to further expand our financial services customer base. KDDI Group's strategy for its financial business is a virtuous circle of telecom and finance. From the left, we aim to increase our pool and reduce churn rate in the telecom business by promoting the attractiveness of AU through the AU Money Activity Plan and other programs. Furthermore, we will leverage this telecom customer base to accelerate the growth of the financial business of the AU Financial Group. Next, let me explain DX and LX. First is the business segment results. Left side, operating income for the first half increased by 5.7% year-on-year, in line with our expectation. Next core, especially IoT, drove growth. An existing telecom business also saw an increase in mobile communications revenue. The impact of fuel price hikes that partially affected the first half compared to the previous year is expected to be gone in the second half. Right side, we are aiming for double-digit year-on-year growth on a full-year basis with business growth centered on next core, including IoT and data centers and M&A effects. Next, let me touch on one of KDDI's strengths, IoT. Left side, the number of IoT connections exceeded 37 million for KDDI and 6 million for Soracom in October, for a total of 43 million. Right side, connected cars are driving this growth. we now offer more than 22 million connections globally. We are pleased to announce that we will be expanding this service to overseas automakers and also decided to establish a new company for our overseas connected business for further growth. In the connected car business, where high market growth is expected, we aim to further expand globally on the strength of our high-quality communication infrastructure, which is chosen by many customers. The data center business is also performing well with its strength, Connectivity Data Center. Left side, data center business revenues continue to grow strongly at a CAGR of 20.4%. Telehealth, which operates KDDI's data center business, is the world's number one telecom carrier in terms of the number of connections. Right side. We are leveraging this connectivity strength to further expand our global deployment. In North America, we have successfully completed the acquisition and transfer of Canada's number one connectivity data center. And in Europe, we opened new facilities in Frankfurt and Paris in October to meet growing demand. One of KDDI's unique DX strengths is the utilization of group assets. In addition to know-how cultivated in the telecom operations, such as ID platforms and management, KDDI has a variety of group capabilities that support data utilization. Let me introduce a case study on Company A in the real estate industry, on the left. By integrating customer IDs that were different for each business and building a data utilization infrastructure, we are contributing to the marketing sophistication and the identification of new customer needs. As we compete with SIRs and other companies, KDDI is receiving recognition for strength of group collaboration and is contributing to the DX of the customer's business. We are also promoting carbon neutrality through our business. Left side. We are switching to renewable energy and conserving energy at our data centers as part of our own efforts. We will accelerate our efforts with the goal of achieving carbon neutrality at all data centers by 2026. Right side. We will also support our customers' carbon neutrality by utilizing DX. KDDI Green Digital Solution provides one-stop support from visualization of emissions to planning and implementation of reduction measures through partner collaboration. Next is our LX initiative, Alpha U. Left side. Since the launch of Alpha U in March, metaverse for each use case has been emerging one after another and needs are expanding. Sales to corporations have been particularly strong, growing approximately five times year on year. 2C domain also has over 1,000 distributors. In this environment, we expanded Alpha U service, which is now in full swing to accelerate the creator economy. Alpha U Place offers a new shopping experience through a virtual store that combines the best of both real store and the internet. Lower right, Alpha U Metaverse added a karaoke function. Alpha U Live will support creators by streaming artists' performances and songs to the world. Furthermore, by utilizing generative AI, we will create a creator economy full of more diverse content. Generative AI will be utilized to strengthen the foundation for DX and LX growth. Left side, we will first promote the internal use of KDDI AI chat to enhance our operations. upper right. In September, we announced our collaboration with Azure Open AI Service and AWS for business development of generative AI. Based on the user experiences and use cases of 10,000 KDDI employees, we will support the social implementation of generative AI. Lower right, we will also accelerate our human resource strategy along with business streamlining. In addition to shifting human resources to DX and LX areas, we will expand Web3 and AI training to strengthen human resource development that support growth. Next is MWC Barcelona 2024. KDDI will exhibit for the first time next February. The exhibition theme is Enhancing the Power to Connect. We are preparing our business field under the theme of the power to connect, which is part of our vision. There are fewer Japanese exhibitors in MWC, so we will work with Dokomo to exhibit in MWC to raise Japan's presence. The specifics of our exhibit will be announced in the future. Lastly, today's summary. Regarding consolidated results, both revenues and income increased in the first half, and we are progressing steadily towards the full-year forecast. While ROC 10 roaming revenue declined, income increased thanks to growth in communications ARPU revenues and focus areas. Towards sustainable growth, we will promote efforts to grow communications ARPU revenues and focused areas. Communications ARPU revenues rebounded, and initiatives for growth, including AU money activity plan, are progressing. We are promoting 5G area development along customers' lifeline and further refining our communication quality. In financial services, we are expanding our financial customer base through synergy with telecom business and full lineup services. We are strengthening DX and LX efforts to solve issues faced by customers and society. In addition, we will accelerate business development and human resource strategy by promoting the use of generative AI within the company. Let me take a few moments after this to once again share our thoughts on the NTT law and how it should be implemented. Regarding the discussion on the review of the NTT law, LDP is currently discussing it in the project team on the future of the Act on Nippon Telegraph and Telephone Corporation, NTT, in the Special Mission Committee on Financial Resources for Defense-Related Expenses, and MIC in Information and Communications Council. As we have said at each hearing, we think it is necessary to review NCT law in line with the times, for example, the provisions such as the obligation to disclose research results, authorization of company name change, and the director appointment. On the other hand... We oppose the abolition of NTT law, which jeopardizes the public interests, and believe that careful policy discussions should take place on the following three reasons. The first is to ensure fair competition between NTT Group and other operators to prevent further integration and unification of NTT Group. We think this is important. The second is to protect the existing 60 million users to ensure the obligation to provide services nationwide. The third is to ensure the government control over communications that are high public interest to protect NTT's special assets by foreign investment regulations. If these are not maintained we are very concerned about the impact on the national interests and people's lives. In addition on October 19th. 180 entities, including telecommunication operators and local governments, submitted a jointly signed request to the LDP and the Minister of Internal Affairs and Communications to oppose the abolition of NTT law. This 180 includes parties from various regions in Japan, including many cable TVs. This many people or parties are concerned that the integration and unification of NTT group will undermine a fair competitive environment. Considering this situation and the public interests, we call for more careful policy discussions. This concludes my explanation. Thank you very much for your kind attention. We will now begin the financial results briefing and Q&A of KDDI Corporation for the second quarter of fiscal year ending March 2024. Thank you very much for taking time out of your busy schedule to join us today. I am Miyakawa of Investor Relations Department and will serve as the moderator today. This briefing will be broadcast live on the Internet with simultaneous Japanese to English interpretation. The presentation will be available on demand on our IR website at a later date. Thank you for your understanding in advance. Let me introduce the participants today. Takahashi, President and CEO. Thank you. Amamiya, Executive Vice President and Executive Director of Personal Business Sector. Yoshimura, Senior Managing Executive Officer, CTO and Executive Director of Technology Sector. Kuwahara, Senior Managing Executive Officer and Executive Director of Solutions Business Sector. Matsuda, Director and Executive Director of Business Exploration and Development Division. Saishoji, Managing Executive Officer, CFO, and Executive Director of Corporate Sector. Aketa, Executive Officer and Executive Director of Corporate Management Division. Three financial results-related materials, presentation material, Tanshin quarterly report, and detailed material are posted on our IR website. Please refer to the disclaimer in the material regarding statements made in these documents, performance targets, and projected subscriber numbers, etc., explained in the Q&A session today.

Now we would like to entertain your questions. If you have a question, please state your name and affiliation. To allow as many of you as possible to ask questions, please limit questions. questions to two per person. If you have two questions, wait for the answer to your first question and then raise the second question. If you have a question, please raise your hand. I have two questions. First, Page five, the factors for change, especially the second quarter, just focusing on three months, the energy and others, that part. What are the factors? What are the elements? Would you like to explain that, please? Thank you for your question. Regarding this, I'd like to ask Sai Shoji to address your question. Thank you for your question. Just focusing on the second quarter and on energy. Regarding energy business, In the first quarter versus previous year, it was negative in terms of the operating income, but in the second quarter, the income increased significantly. The fuel cost increased. To counter that, starting from June, the prices were reviewed, and as a result, the performance stabilized significantly. In the second quarter, the stabilization continued. In addition, we had extreme heat, power usage increased, electricity usage increased, and it's reflected in the increase of income. As for others... The first quarter and the second quarter, this is common between the two. In the mid-term business plan, cost structural reform is one of the things we are doing. And CAPEX is thoroughly controlled. And depreciation, amortization, reduction is now reflected in this fiscal year. And in this fiscal year, on a full year basis, it will be reflected as a reduction effected. In addition, product support for handsets. How to use the handsets? It's actually a support service. As a service, it's going very well, and revenues and income from that have increased, which was significant in the second quarter. This concludes my answer. Another question, please. Thank you very much. My second question. It's also about the factors for change concerning the income. Compared with the first quarter, in the second quarter, your income level sort of increased further. So comparison against the first quarter, could you focus on that? Not against the previous year, but versus the previous quarter. So income level increased. What are the factors contributing to the increase of income? Regarding the consensus numbers, they are actually becoming higher. So would you like to focus on that, please? Thank you. Saishoji will address your second question as well. Compared with the first quarter, income level has increased. As I said, energy business increased, which was the most significant part. Also, product support service increased. Again, there's been a shift to the second quarter about sales promotion costs to reduction. is reflected in the second quarter, profit increased significantly. Regarding the sales promotion, there's some seasonality, and because of the campaign, because of the measures we have, they can either increase or decrease. In the second quarter, it has been reduced, but regarding the second half of the year, depending on the situation, it will be implemented. This concludes my answer. Did we answer your questions? Thank you.

Please raise your hand if you have a question. B, line one, person in the back, please. Nomura Securities, Masuno is my name. In your medium-term management plan, I have two questions. So first question is, in business, this year ARPU rebounded in the Rectin roaming, revenue is stable and energy... You passed successfully, and so your DX is growing, finance is growing, so you are building one by one, achieving your target, and I think you have a clear view on your direction in four to five years. Big pillar. Will you build a big pillar that will support your business? I think that will be great. In the three-year medium-term plan period, it may be difficult to build a big, strong pillar. So in a longer time frame, will you develop a big pillar? In which part, which area will that be? If you could share with us your view as things go, I think you will achieve the target next year. But one is whether the three-year plan is sufficient. In four to five years, if you're thinking of a big pillar, a big domain, Could you share with us your view? Thank you. Like you said, Masuno-san, for the past few years, the price reduction was difficult. But I think the negatives are gone, and the ARPU is rebounding, and Rakuten roaming revenue saved us for the past few years, but this decline will be smaller. And the growth that will offset that, DX, finance and energy, the volatility was big, but now it's stabilizing. And so we can just grow, focus on the growth area. So you're right. Now, if I could talk about my personal view, population in Japan will decline, as you know well. In fiscal 2024 and 2025, the handset will decline. Total sales will decline. But we still have to work hard in this difficulty. But in the handset, the new generative AI will be incorporated into new handsets. And this is also worked on by all players. And we feel encouraged. So we want to grow this area. But the big growth is in the business domain, IoT. IoT is big. The profit contribution is still small, but as you see in the presentation, 42 million connections on a global basis already. So we think this is opportunity for us. We should not just stay still. We should not just stay with the revenue from the connections. The telecommunication is involved in everything, so we need to leverage that, and the added value part needs to become a business, full-fledged business. So data-driven and generative AI will play a huge role. So this will be the key, the focus in the medium term, and that's the focus of our growth area. We are working on the rolling medium term plan. So after this... When we announce our full-year results, we hope to present the latest version. And master link and space is also another promising area. So we want to draw a good medium-term plan. Thank you. Second question is on the medium-term financial aspect. So in the three-year cycle, you're doing shareholder returns. So your three-year cycle is fixed. I wonder if that is the optimal portion. the cross-shareholding strategically held shares is now being reduced from the trend of the times, and I think there is a term for that. So if you could extend the shareholder return period to a longer period so that it can be more flexible, do you think you need such a stance? What do you think? We have to think that, revisit that. In the current medium term, EPS 1.5 times. We must achieve this. This is something we committed to. But there was price reduction, and so we wanted a one-year moratorium, if you will, and we talked about that to you. And on that basis, we want to achieve the goal. Regarding cash allocation, the operating cash flow is 5 trillion yen. So how we use for shareholder return and growth investment... We already showed that to you, so we need to think of that as a basis. But as you rightly said, the strategically held shares, cross-held shares, there are many changes. So we hope to be flexible. That said, the cash allocation for the medium term needs to be maintained, but I think we need to address flexibly. We will be aware of that. Thank you very much. That's all.

Thank you. If you have a question, please raise your hand. C1, please. SMBC, Niko Securities, Kikuchi, thank you very much. Entity law revision, you explained about this today. We are interested in the impact on their performance. That's the main interest. But just entity, if the West and the East becomes integrated and integrated with the entity holdings, To your company, will that have an impact? I don't really think it's going to have a huge impact. The prices may remain high, but in that case, you might be able to win a greater share. About the entity law revision, especially reviewing the organization or reviewing the universal service, to your company, In terms of performance, will it have any negative impact? Is there anything that we are missing? Regarding this discussion, I don't really think that it has a kind of a short-term impact from the telecommunications liberalization regarding this big entity has become separated, split, and there has been the foundation for competition policies. And as the MIT, the ministry has been saying, because of the competition policies, as a result, customer services improve, Rakuten improves, and joining and four companies, and then prices have come down. That's part of the competition policies, and it has been conducted. And the one giant entity, they have been sort of splitting. And this entity law, in a way, curbs that part. Why? They have some specific facilities, specific assets, I presume, If it's abolished, that curbing force will not function. So to a giant company, they will just go back to a giant company. And the competition environment is somehow harmed. Then the competition is not promoted. The service level to the customers may go down. That's... So that's the history of the competition policy. As a resident of KDDI, this is something we have to take to our heart regarding the detail. If entity becomes just a single entity, the group management, so what access charge can be increased? Connection charge can be increased significantly. For instance, Docomod, it's negative for the entities east and west. They will have the positive results and all the other companies can suffer from the negative part. I mean, you could manipulate it, but in terms of a short-term... I don't really think that that's to be eroded, but as part of the competition policy, we are in principle opposing the abolition of the NTT law. Thank you. I hope you will keep us informed. My second question. I think you were just saying it rather softly, your share price compared with peers, it's slightly lower because yesterday there was an explanation from Kyocera, just a slight impact, I believe, Toyota and Kyocera. How can you sort of reorganize this? 300 billion yen buyback, but two companies mentioned this, then 300 billion will not be enough. So regarding your policy about your share buyback, and 300 billion is such a limit. Last year, 200 billion. This year, 300 billion. Is there such a limit of the share buyback? That's my second question, please. Well, to be honest with you, During about noon, I heard about this formally from Kyocera. We haven't heard anything formally, so it's rather difficult for me to comment on this. But I heard about that comment being made by Kyocera. Once we hear that formally, we can start conversation. It's the same thing with Toyota. They said something and then we had the discussion and for both Cursera and Toyota... To shareholders, it's not a good idea to give trouble to shareholders and to us to the extent that doesn't give us any trouble. That's what they are always saying. So we would like to have a good conversation in a manner that's not going to disappoint shareholders. We could study this. about cash allocation, 5 trillion yen operating cash flow. That's there for the time being, and investment, 2 trillion, and growth investment, 1.3 trillion yen. And strategic investment to 300 billion yen. So this is what we have shared so much. So 300 billion yen dividend for three years and 200 billion yen share buyback again for three years. That's how we designed it. With this calculation, in terms of cash, we still have buffer and two shareholders, Coursera or This time it's Coursera, and you talked about Coursera, but once we hear formally from them, we would like to consult with them, and we don't want to disappoint the shareholders, and we would like to address this. I think that will be the direction. Thank you. Thank you.

Thank you. Please raise your hand if you have the next question. So C, line two, front row, please. Mitsubishi UFJ Morgan Stanley Securities. I'm Tanaka. I have two questions, so let me go one by one. First is on the financial results. In the detailed material, page two, personal business, others, revenue. In the three months to second quarter, it grew significantly, 32, 33 billion. Your subsidiaries are active, I think. So which companies are they, and how much profit contribution do you have? Thank you. So Amamiya-san, please. So that's about revenue and profit, the income as well. So contribution on both. Because I'm not interested in just sales growing, the shop channel, vital, or something, if there's any particularly active, strong area, and the sustainability thereof. So our subsidiaries... from first to second quarter, were strong. Most of our subsidiaries were strong. And numbers, I cannot mention numbers, but some strong AU Financial Holdings, which is doing the financial business, and JCOMM. The increase was big. And Big Globe and overseas subsidiaries, Mobicom and Myanmar, second quarter profit was higher than the first quarter. So AU financial holdings, this is included in added value ARPU, but excluding that, yes, some fall under the added value ARPU, and other areas are also growing. Which areas are strong? I'm sorry, I'd like to refrain from going into detail. What about non-AU? Lone, the non-AU areas, maybe? Maybe? loan, and other related financial services. Everything that is not in ARPU are here. So loan and credit card, those are in added value, those peripheral miscellaneous items. Thank you very much. My second question is on the main material, page six. 5G communications. So communications ARPU revenue rebounded. Second quarter last year, communications charge was up 5.9 billion. In third quarter, the hurdle will be higher. Comparatively, maybe this is a small question, but your medium to large capacity is growing, so it's stable. Can you keep the momentum in third and fourth quarter? Amamiya will explain. Thank you for the question. So 5.9 billion from the service outage. So excluding that, it is positive. So including that, it is a slight negative, but on a quarter-on-quarter basis, 2.9 is down to 2.2 billion. So we are making steady progress. Now, towards the rebound of ARPU, we're taking various measures. One is in AU, it's money activity plan. We started that from September 1st. which is trending strongly. Money activity plan, ARPU, is high, and money activity plan is raising the max, unlimited max ratio, so ARPU is rising. So AU money activity plan was launched in September, and since then, ARPU, we need to see further, but according to our analysis, We can enjoy higher ARPU than the existing users. So if we progress, AU ARPU will rise. And on the UQ side, in June, we introduced a new plan, which is also trending strongly. ARPU, this is contributing to higher ARPU. So all in all, basically it is positive for ARPU. One negative factor is the AU to UQ. But this number, this shift is now stabilizing. So in a chronological, the sales in ARPU are both increasing as time goes by. There may be differences in speed, but in any case, we are rising upward rapidly. And that I can say for sure. Thank you. So what are the reasons that the subscribers go for Max? Is it video? Is it because Max because of money activity plan? Or what is the reason? Money activity plan is limited. Max is limited. So that's a good reason. Thank you. Thank you.

Next question. If you have a question, please raise your hand. C3. I have two questions. First, strategic investment. mid-term plan during the three years, already about half has passed. At the moment, 700 billion was planned. To what extent it has been actually allocated, used? What's the actual? And going forward, to reach the plan, I don't really think you try to manage to just reach that plan. But in terms of the scale, what domains, what areas, to the extent possible, could you please share that with me? Strategic investment, as I said before, 700 billion yen for mid-term plan, but at the moment it will already be announced to 200 billion yen strategic investment has been implemented. Specifically, Canada data center, free cash flow, CapEx, we are looking at it, a little less than 550 billion yen. IIJ, Evolvert, and Reliance, and Integration. We're not using so much cash. In total, about 200 billion yen. Other than this, Apple Rebound is now in sight. So the large-scale deals are there. And it's not mission to use 700 billion yen, but... so that we can make an announcement for such large deals. We are doing the preparation when the time comes. We would like to share that information with you. Thank you. So there are such possible deals. And after scrutiny due diligence versus plan, if you don't use all of that planned money, Mr. Takashi, in the cash allocation that you said, return to shareholders. Are you going to place more weight on the shareholders' return? What do you think? As Masato-san said, yes, we would like to be flexible. It's the same. Cash flow allocation is concerned in the mid-term plan. We have no plans to change them at the moment. But about share buyback... 200 billion yen three years, but 200 billion yen and then 300 billion yen, as you said, that 700 billion yen out of that, it's still 200 billion yen. So, of course, we'd like to be flexible. At the moment, we don't have to say that we're going to change in this way or that way. So at the moment, it just remains unchanged. Thank you. My second question. mobile competition environment. I have a question regarding that. July, September, the new plans and other new brands have been introduced by other peers, and the churn ratio is deteriorating, I think, compared with peers about the M&P situation. Compared with the previous quarter, any changes you are looking at? What about your outlook going forward? The way I feel is that it has stabilized significantly. In the past few years, yes, the various plans have been introduced by other companies trying to be creative so that we can increase Apple. Yes, we introduced them. Docomo introduced them. And SoftBank also introduced those. And the competitive environment has somehow become stabilized. But iPhone commercial time in the future, then it's becoming better again in this fiscal year. But 40,000 rule, so-called, the new incentive rule, that guideline is there. It will be started from January. So what would be the movement or development? But handset loan sales, that's... sort of stabilized so that the liquidity, I don't really think, is going to increase. But towards the end of the year, they will later again keep monitoring. Amamiya, anything to add? As Takashi said, regarding M&P, the market has become smaller. Still, we've been winning and winning. In June, when we introduced that EUQ plant, a bit weaker, but then started recovering in July and MNP, we would like to keep winning going forward as well. July and September, other companies introduced various new plants. Some are similar, some are not. No significant impact has been felt so far. With those new price brands, the iPhone and the handset-related changes have a better impact. So we would like to compete and we would like to win. Thank you for your detailed explanation. That's all from me. Thank you.

Please raise your hand if you have a question. See line two in the back, please. SBI Securities, Moriyuki is my name. So the communication ARPU is rebounding, and so we'll have more positives, and that will be great if that happens. Is that really okay? Do you feel comfortable? Maybe another round of pressure from the government? So 5G or investment is difficult if we think of the profitability. So communications, CapEx, including 5G. Will the amount of CapEx increase or any changes in the amount? We have been doing a lot of CapEx investments. So when price was cut, we wanted to do more CapEx. We want to suppress CapEx more, but there's the area opening plan. We have to do 91,000 this year. This is the peak. Once this is over, we peak out. So next focus will be the quality. So we do not think CapEx will increase significantly going forward. Now, sub-6, this is 5G spectrum, but the satellite interference is seen at the end of March. By the end of the fiscal year, the satellite base station will move So this interference will be resolved. So we can raise the output and quality will improve. So that is how we want to ensure quality. So to answer your question, with that, we've been doing much CapEx and we do not anticipate a big increase in CapEx going forward. So I'm sorry to be the devil's advocate, but will there be another pressure if this becomes a situation? Well, MIC is now busy with the NTT law, but price reduction, when all industries are raising prices and labor costs is rising and investment is increasing, this kind of pressure is unlikely. Thank you. Second question. So you are investing in 5G, building 5G, and the high-end plan is driven by the video, which is the extension of the current service. When do you launch new services? I think people are waiting. So if you could give us the image, the consumer service. 5G and the way customers are using 5G is changing. More specifically, if I could use an example, there was the high school baseball tournament in summer. We used to watch it on TV, but from the preliminary match, everything is distributed, streamed by the Internet, and the traffic is skyrocketing. So this high school baseball, Koshien, it is now viewed by smartphone. Watching it by smartphone is a commonplace now. So KO high school manager said, did not say the viewers on TV. He said, viewers on the Internet. So from the preliminary match, this can be done because it's Internet, right? The traffic rose rapidly in addition of the spring high school volleyball and high school soccer, football, these preliminary match. This is now clearly done by smartphone, viewed by smartphone, real time. So traffic will rise. Second point, this is just my personal view, but going forward, contents will be UGC, will be user-generated contents. So the users will post the contents. We're in that era. With generative AI, this will become pitch. Rich. Until now, it was simple contents, but be it TikTok, be it YouTube, they were simple. But now it will become richer with more creativity where people can unlock and exert creativity. And with that, I think traffic will increase. That will be one trigger. And the other is Google announced this, the handset. The cloud-based generative AI is drawing much attention, but what's most clear for the user is the handset. It's not like the eraser magic, but those will come out more and more next year. And so I think these will drive 5G. It's just my personal view, but that's what I think. Thank you.

Thank you very much. We are running out of time, so next will be the last question. If you have a question, please raise your hand. A2. Thank you very much. JP Morgan Securities, Chiba. Following the previous question, cost and capex inflation, the impact of the weaker yen, what's your approach? As I look at the performance results, and excluding energy costs, I don't really think it's negative, but actually, how do you look at this deep procurement environment today? if you are making any efforts, what efforts are actually effective in terms of procurement? In the mid-term, the weaker yen will have an impact, but In principle, it's the yen denominated funding or procurement. So at the moment, no significant impact. But as you rightly said, in the midterm, regarding the weaker yen, it becomes even weaker about purchasing prices. In many cases, we buy from the overseas. That's going to have an impact. But at the moment, it is all right. Thank you. with overseas vendors in the negotiation. It's not so disadvantageous to you. You don't have to lower the volume. The same scale purchasing is still possible. Is that what you are suggesting? Thank you. In principle... Based on the contract, the payment is yen denominated, so FX fluctuations are not felt. Also, overseas group companies, we have such group companies, when there is a weaker yen, it has an impact. better impact. One weaker yen against the dollar means 100 million yen increase in our income. That's the structure. So the FX impact is not keenly felt in terms of the structure. Thank you. About CapEx. Virtualization will be So, of course, we are mindful of the cost and also we would like to curb that cost. Thank you.

Thank you very much. So with that, we will close financial results briefing for the first half of the fiscal year ending March 2024 for KDDI Corporation. Thank you very much for your attendance.