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We will now start the briefing session of NTT's financial results of fiscal year 2020. Thank you very much for participating today despite your busy schedules. I am Fujiki from the IR office and will be serving as today's facilitator. It is very nice to meet all of you today. I would like to introduce today's attending members. First of all, from NTT, we have Mr. Sawada, representative member of the board, president. Mr. Shimada, representative member of the board, senior executive vice president. Mr. Nakayama, executive officer, senior vice president, head of finance and accounting. Mr. Taniyama, executive officer, senior vice president, head of corporate strategy planning. And from NTT DoCoMo, we have Mr. Hiroyi, representative member of the board of directors, senior executive vice president. Today's briefing session will be streamed live on the internet. This will also be distributed on demand basis on a later date, so we kindly seek your understanding. Today's presentation materials are posted on our company's IR website under presentation materials. On the first page of the presentation materials, points to be considered are stated, so we kindly ask you to please read through them. After this, Mr. Sawada, the President, will explain the outline of the results and others, followed by opening the floor for questions. Mr. Sawada, please.

Thank you very much. My name is Sawata, the President and CEO. Thank you for joining us at this presentation. Despite your busy schedule, before we start with the financial results, allow me to express my heartfelt sympathy to those who have been affected by the spread of COVID-19. Also, if I may, I would like to talk about our response to the recent occurrence, if I may. Regarding the recent occurrence in which members of management dined with ministry officials, we sincerely apologize for causing great inconvenience and concern to our customers, our shareholders, and all related parties. Allow me to share with you the current status. On March 9th, NTD established a special investigations committee, including external experts to clarify facts. And this has been conducted by this committee. The recent occurrence was a result of lack of awareness on the part of members of the management. And NTD deeply regrets that members of management who should set an example to employees have caused such a situation. Going forward, in order to strictly prevent the reoccurrence of such an incident and to regain the trust of our customers, shareholders, and all related parties, NTT will undertake a review of its internal rules and will implement thorough initiatives to prevent any reoccurrence. Further initiatives will be announced in the future after the Special Investigations Committee presents the results of its investigation. I would now like to go on to talk about the overview of fiscal year 2020 consolidated results. So this shows you the highlights of the consolidated results. Operating revenues, operating income, and profits all increased across the board. Operating revenue and profit set new record high. As for operating revenue, there was decline due to a drop in Docomo's handset sales, roughly As for operating sales, there was decline due to drop in Docomo's handset sales and overseas system integration revenue from impact of COVID-19, as well as from the impact of change in accounting at Entity Limited. But this was offset by increase at Docomo's smart life business revenue, roughly more than 80 billion yen, as well as domestic system integration increase. So operating revenue increased by 44.6 billion yen year on year. Turning now to operating income, the impact of COVID-19 and increase in electricity procurement costs at ENET was offset by increase in revenue, as well as cost reduction among group companies. So, therefore, operating income increased 109.2 billion yen year-on-year. Turning now to profit, there was increase linked to increase in operating income, roughly 55 billion yen, as well as 40 billion yen linked to minority interest as a result of making Docomo a wholly owned subsidiary firm. So, profit increased by 60.9 billion yen year-on-year. Turning now to overseas sales, there was decline due to change in accounting, roughly 90 billion yen, as well as impact from COVID-19. But overseas operating income margin improved due to streamlining at Entity Limited. Operating revenue, operating income, and profit all exceeded our initial projection and guidance. As I mentioned earlier, The impact from COVID-19 on financial results is roughly $20 billion in terms of revenue and $50 billion in terms of profit. As for initial projected impact, due to smaller impact related to NTD data sovereignty system integration revenue, Docomo's handset sales, the level of impact on revenue shrunk by $150 billion and impact on profit shrunk by $20 billion. Next page shows you the contributing factors by segment. Mobile communication segments saw increase in both revenue and profit. Impact from expanded customer revenue and declining mobile communication revenue due to drop in international roaming was there, but this was offset by increased smart life business and improved efficiency of marketing cost. Smart business increased by 44 billion, and also efficiency marketing cost was also there. So, therefore, operating income increased in the segment, regional communication segment. This segment experienced an increase in both revenue and operating income for the first time since 2010. And this was the first time for NTT West to experience increase in operating revenue. But NTT East and West enjoyed increase in revenue from strong net addition in fiber sales, as well as system integration, as well as cost reduction. Increase in system integration was brought on by the strong demand for remote work, so both operating revenue and income increased. Turning now to long-distance and international communication business, there's declining revenue due to change in accounting and entity limited, as I talked about earlier, as well as from the impact of COVID-19. But then due to improved profit from structural reform overseas taking place in the previous year, operating revenue declined, but operating income increased. As for data communication in business, this was already announced by NTD Data in their financial results. They experienced both increase in operating revenue and operating income. Due to increase in revenue domestic public sector, social infrastructure, and finance sector, as well as from reduction in unprofitable transaction, there was increase in both revenue and income. Also, impact of COVID-19 outside Japan was not as much as expected. That was another positive factor. As for others, other business, there was impact from the spin-out of, there was impact from spinning of this business roughly 47 billion in terms of impact on revenue and 8 billion impact on operating income. So, and there was also increase in procurement cost of , so both revenue and income declined in this sector. Let me now talk about the forecast for fiscal year 2021. Operating revenue and operating income and profit will all increase across the board. and they're expected to reach record high levels. And profit is expected to exceed $1 trillion for the first time. While there's still the impact of COVID-19, there's also decline in revenue from launch of AHAMO and expanded the impact of customer return program from GigaHall and Premier at Docomo. But then, on the other hand, there is also increased system degradation due to strong demand for digitalization. And based on strong digital demand and expanded smart life business, as well as structural reform effect in our overseas business, as well as cost reduction at various companies, We believe that operating revenue and operating income will increase year on year. That is the guidance that we have set. As for profit, on top of increase expected linked to increase in operating income, there is also the impact from turning Docomo into a wholly owned subsidiary firm. That's a positive impact of 160 billion yen. So, as a result, the profit is expected to increase by $168.8 billion. EPS will be $300 billion. As for meeting term financial targets, I will talk about this later on in the course of my presentation. So, that is the target which we will aim for. Now, let me now talk about forecast summary by segment. As for mobile communication segment, yes, increase in both operating revenue and operating income. The $60 billion impact from customer return program expansion, but then increases in our life business is close to $60 billion. So, we'll also be exercising cost reduction. So, we believe that we'll be able to see increase in both operating revenue and operating income as a result. Turning now to regional communication business. Last year, we had significant impact in system integration, so in reaction, operating revenue will be coming down. But then there is also increasing fiber, and so there is also cost reduction. So while operating revenue will decline, we'll expect an increase in operating income. Long distance and international communication business. increase in both operating revenue and operating income year on year. This is due to increase in revenue from expanded added value service at entity limited as well as structural reform effect. As for data communication business, this was already announced by Entity Data. They're expecting increase in both operating revenue and income. Next, I would like to talk about the overview of the meeting term financial targets. With regard to the review of the medium-term financial targets, we were scheduled to announce them in the month of May. But as I mentioned at the beginning, because of the incident involving dining with ministry officials and also the Minister of Internal Affairs and Communications, they've set up a study meeting on an ideal way of ensuring fair competition. So as a result, We decided to wait until the report of the study meeting on ideal way of ensuring fair competition is announced. The timetable for the announcement of the report is not yet clear. So until we wait for that report from this study meeting, there could be some implications in terms of the overall society. So we want to not announce the status of the financial meeting term financial targets at this time. Once the report of the study meeting is made clear, we will review meeting term management strategy and announce them. Now, as far as the status of the meeting term financial targets are concerned, this is indicated in this slide. So, areas where there's strong progress is indicated in dark green color. In white letter, what would be cost reduction targets? In 2021, we were scheduled to have 840 billion in cost reduction. That is already anticipated. So, in 2023, we were anticipating 800 billion yen. So, that target has been brought forward by two years. It can be achieved two years ahead of the original target year. In terms of capex sales, we are aiming for 13.5 percent in fiscal year 2021. That was the original target for 2021. So we believe that, as scheduled, we'll be able to achieve 13.5 percent this fiscal year. So the green-colored and the white-colored letter portion, this is achievable targets. As for three other green-colored boxes, EPS, for example, In fiscal year 2020, we had 248, and this will increase to 300 yen in 2021. And the target was 320 yen for fiscal year 2023. It will make efforts so that this could be achieved one year ahead of schedule. As for medium-term target is concerned, as I mentioned earlier, we will be studying all these items separately. As for overseas operating income margin, in fiscal year 2020, this improved by 0.8 percent. In fiscal year 2021, NTD Data and NTD Limited will experience increase in operating income. So that indicates we believe that the overseas operating income margin will double up to 6 percent, 6 percent in fiscal year 2021. So this will bring us closer to the 7 percent target for 2023. As for overseas sales, there is a change in the accounting system. So that being the case, we are aiming for $19 billion in fiscal year 2021. 25 billion fiscal 2023, there seems to be some gap at this time. As for return on operating income, investor capital is very strong. We are aiming for 7.4% in fiscal year 2021. So 8% in 2023 is now within our sights, I believe.

Regarding the topics, I would like to briefly go over them. First is regarding enhancing the R&D. The Ion Innovation Center, we would like to newly establish it this July. This is for the photonic discovery computing infrastructure, utilizing the photon as electronic convergence technologies and also integration mobile and fixed and network and computing is what we would like to further enhance. And we are going to appoint Mr. Hidehiro Otsukano to be head of the Ion Integrated Innovation Center. where it will be more of an R&D that will be utilizing NTT's fundamental R&D. And also, regarding the midterm management strategy, we have said that we are going to make an investment of 2 trillion yen in five years. And this is going to – this is progressing as planned, that fiscal year 2021, we are planning to have 500 billion yen in scope. And next is aiming for the lab concept of natural world. And this is to translate and disseminate a new image of society created by the ION concept into information that can be felt by ordinary people at an individual level of their own. We are going to collaborate with the Infocom Research and Hakuhodo with an alliance, and we would like to combine the science-based knowledge and the humanities-based knowledge. And regarding enhancing the governance structure, we would like to activate the board of directors by introducing the outside member of the board and executive officer system to major subsidiaries. And we would like to review the directors of compensation. For the holding companies, EPS, but for the major subsidiaries, we are going to set KPI and newly implement the stock compensation system. What is currently 30% is linked to the performance, and we would like to reflect the midterm and long-term results more in the incentive and the compensation for the directors. and aiming for realizing the remote world. We have a cloud-type contact center service, and also we have the remote access service that is secured. We have already started to provide it in April. Regarding the remote world, due to the COVID-19, which is still a severe situation, but even post-COVID-19, in that environment, the remote work is going to be indispensable is what we think. And as for the progress of the medium-term management strategy initiatives, it is summarized in the next slide. It is quite in detail, so I'd just like to point out some key points. First of all is the B2B2X project. The fiscal year 2021 was 100 projects, but fiscal year 2021 end of March was 104 projects. So we have achieved the target a year ahead. and also for the medley which is the online medicine and with the alliance with the Mitsubishi UFHJ Bank and also Smart Life with the Smart City MOU with New South Wales with Australia. And also, we have gone into local corporation for Israel for creating new businesses. And regarding the dividend forecast for fiscal year 2021, We will increase it to 110 yen per share, an increase of 5 yen from fiscal year 2020, and this was resolved in today's Board of Directors meeting. So this means that dividends are expected to increase for the 11th consecutive year since fiscal year 2011. That is all from my side.

We will now take your questions. As we have already announced beforehand, we will be taking questions only those who have registered beforehand and who are connected to the phone conference system. The operator will now explain how we will receive your questions. We will now be starting the Q&A session. If you have a question, please push zero followed by one. If you wish to withdraw and cancel your question, please push 0 followed by 2. Kikuchi-san from SMBC Nikko Securities. Thank you. Kikuchi is my name. I would like to ask two broad questions, if I may. First, relates to Docomo. In terms of customer return program, you mentioned that the impact is 60 billion yen. Is that a mobile communications segment service? But then you expect such a big decline in mobile communication service in your guidance. So it seems to be an equal amount. Was that what you were talking about when you talked about the impact of customer return expansion? But then there are a lot of different factors involved here. Monthly support impact, for example. So, $60 billion in customer return program, is that due to the, how much of that is due to impact on price reduction? If you can share that, I would appreciate it. And also, with regard to smart life business, $60 billion you mentioned, is that sales or profit? And also, how factors are involved there? And also, can you talk about the current status of AHAMU, for example, subscriptions, for example, and the outlook going forward? I would appreciate all. So that's my first broad question. Thank you for your question. So with regard to a question related to Docomo, I would like to invite Mr. Hiroi to take the floor. Yes, thank you very much. I would like to respond to your question, if I may. With regard to Mr. Kiyoshi's question, you're talking about the guidance for 2021, the decline in mobile communication service revenue for 2021. If I talk about the major trend here, it's as follows. Yes, the mobile communication service revenue is expected to decline by this much. But the ARPU that we disclosed, if you take a look at the ARPU, for fiscal year 2021, it's minus 30 yen. So in terms of the user base, actually, the level of decline is not that much among the customer base. So the major contributing factors are different. This is in relation to revenue, decline in revenue in relation to MVNO. Wholesale voice and also interconnection charges will be reduced, and that will have an impact on the revenue. So that's one effect. Also, what about the impact in relation to AHAMO, if I were to respond to your question on this point? As far as AHAMO is concerned, right now, the subscription is more than 1 million yen. And 1 million persons, correction, 1 million persons. And the impact of AHAMO is this. In fiscal year 2021, the level of, there is the impact, there is impact on declining ARPU, but then why are we promoting AHAMO? We want to expand the customer base, and we want to realize revenue base over the medium term. That is the intention behind the AHAMO program. So that being the case, it's true that Ahomo's subscription for Ahomo, where we take away customers from competition, is still limited. But still, there is the impact of taking away customers from others. So mobile number portability for the month of April is now in the positive territory in terms of the user base. It's not that customers are shifting from GigaHot to Ahomo. Not all customers are grading down from GigaHot to Ahomo. We have from, so we believe the customer, there's a potential for upselling among the customers because we're promoting something within the 20 giga range. And also in terms of port out. With the home, people will be incentivized to remain. So the port out risk can be reduced. So as a result, the user base is now improving as a result of all these efforts. And also, young customers are now beginning to join Docomo. People in their 20s, 30s, and even 40s are now accounted for 80% of Ahamu's user base. So that being the case, it could be said that in terms of improving the quality of the user base, although it might be slight, over the medium term, we believe that Ahamu will have a very positive effect down the road. Also, with regard to smart life, the increase in revenue for smart life, For fiscal year 2021, smart life will account for a large bulk of the increase in operating revenue. And the most significant factor is in the financial sector, D card and D payment and D points. So finance and payment will be the major driver for increase in operating revenue for smart life business. As far as the contents are concerned, D point It's expanding the user base. So data analysis is now progressing. So by using this data analysis, we can offer marketing solutions, and that will translate into an increase in revenue. And also, DeepPoints can be leveraged for offering solutions. So therefore, we'll be able to further upsell DeepPoint sales. So that's another factor contained in our guidance. So that being the case, overall, DeepPoint membership will be expanded. Up until now, D card and D payment was the only factor, but now we're able to incorporate the data usage, and we can translate this into a business model, and then we have a plan for actually generating revenue here. So there's also quality improvement here. So our intentions are now beginning to be realized. Thank you. Thank you for that response. If I could ask a follow-up question. Earlier, you mentioned that was for customer return program. Is that impact, is the press production impact to 60 billion yen? Is that what you're saying? Well, how can I put it? It's equivalent to the overall decline in mobile communications service revenue. So, it's impact, so revenue from ARPU and a VNO-related customer base. Customer return embraces all those factors that I just mentioned. I see. It may be difficult for you to compare with your competition, but in the case of SoftBank, for example, yesterday they announced their financial results. There was an impact of $7 billion in terms of declining their revenue. That's what they mentioned. It seems close. It seems close to that number. Maybe I don't know if you have the common definition. It's probably difficult to compare Apple to Apple. But the impact of price reduction, can you specify the amount of impact on price reduction per se? Would that be very difficult? As for specific numbers, I'm afraid we'll not be able to comment. But we are discussing our ARPU, so I hope you will use those numbers as a point of reference for your calculation. Okay, thank you very much. My next question is this. This is in relation to the strategy for the entity group as a whole. This time around, You mentioned that you have to wait for the results of the study group. But I believe, yes, I can understand that you have to wait for the results of the study group in relation to the combination of NTD Communications, Comware, and Docomo. But what about the relation to other companies? For example, MSC minister, well, you present the business plan to the ministry in the beginning of March, and I believe roughly the same with the previous year. But the term common procurement appeared for the first time in the business operation plan submitted to the ministry across the board. So I get the sense that you're very earnest about delivering this. So can you talk about the major selling points for your group, aside from NTT Communications, Docomo, and Comware. Maybe it's in real estate, maybe it's in energy, maybe it's overseas. At the NTT data presentation yesterday, well, this was a company that never had entity really explained cooperation with other group companies for the first time ever. So maybe it's a sign of new movement. Can you talk about something that is taking place within the group right now? Well, thank you. Toward the end of your question, you talked about entity data. Well, it's not just global, but it could be said that Collaboration with other group companies are now really progressing for entity data, not just in global, but in other areas. In terms of the global business, specific projects are ongoing, especially in North America, as well as in Europe. So in various areas, we're beginning to see progress in such collaboration among entity and other group companies. So maybe Mr. Homa was being very, very proactive in his presentation yesterday. Now, let me talk about the overseas business first. System integration is doing very well right now. And also, on top of that, if we can offer digital solutions capabilities such as consulting, well, I hope that Entity Limited will deliver that. As for Entity Limited, they should further expand their added value services. That will be the basic policy on the sales side, so increasing added value and improving margins. That is the structure we want to aim for. Also, structural reform will continue. For both NTD Limited and NTD Data, they will continue on with their efforts in this area. And hopefully, the group as a whole will be able to improve their cost efficiency further. We want to deepen such efforts. That, I believe, will be the one focal point. At the second point, yes, this relates to the domestic operations involving NTT, Docomo, communications, and ComWare. Yes, many study groups and meeting study groups are taking place. We cannot change the structure per se, but already discussions about actual partnership and marketing, there is no constraint there. So already that is ongoing among these relevant companies. So that being the case, the synergy effect has not been incorporated in our guidance for 2021. So in actuality, If alliance between communications were to improve, then further synergy effects could be added as an upside. Turning to power and electricity, there is discussion about carbon neutral, and this is really progressing and advancing. Last year, we provided a vision about the environment. I think one major point would be how we review the vision for environment that we announced last year. The fourth point would, of course, be the following. Because of the issue involving dining with ministry officials, we want to change the model of management. One way to do this would be to promote our own digital transformation, NICT. So it's important that we accelerate digital transformation more than ever. We need to further enhance this. And at the end of the day, we need to promote a remote world as well as remote work style and create a corporate style that is suited to that. We talked about $840 billion cost reduction. This could be achieved two years ahead of schedule. As I mentioned earlier, we want to further realize a cost reduction so that we could make our management more leaner. And hopefully we'll be able to create a model where we'll be able to expand ourselves as a result of such a model. I'm afraid we do not have the data, so we cannot share with you the data for each of these different segments. So we want to refrain from talking about specific numbers, if I may. Okay, thank you very much. That is all from my side.

Mr. Kikuchi, thank you very much. We would like to take the next question now. Next question from Nomura Securities. Mr. Masuno, please go ahead. This is Masuno from Nomura Securities. Can you hear my voice? Yes, we can hear you clearly. Hello? Yes, we can hear you. Oh, sorry about that. I have two questions. The first question is a synergy between Docomo and Holdings. There's two perspectives from the organization and the business. For the summer, they'll be consolidated with communications, or from next spring, it will be one organization. You have just mentioned that you don't have anything to comment at this point. I just wanted to confirm is that is the current situation. And regarding this synergy, to begin with, the network backbone integration, it was going to require some time. And because the organization is not clearly stated yet, the sales and marketing part we don't know. So I thought that this fiscal year there's not that much synergy, but is there some synergy that is starting to show up? I just wanted to confirm that point first. Well, first of all, regarding the organization side, originally next spring, we have a target of what are we going to do about the organization. And of course, we have to step up things. However, the start of such effort will be after the results of the committee's review. So at this point, I will not be able to provide you with a solid schedule in this process. And the second point regarding synergy, as you have mentioned, regarding integration of the backbone or the alliance between the sales and marketing efforts, the organization capability will be more enhanced. Without the organization part, we have already started the collaboration and alliance and the efforts. And well, apart from if we can call this a synergy, but the effect from that is incorporated in the plans. Okay, thank you very much. And also regarding the individual companies with Docomo and NTT Communications, I have a question. First of all, regarding NTT Docomo, the mobile communications revenue, you had a decline. Well, actually, in March term 2021, Docomo, aside from ARPU, that due to MVNO, there will be a decrease in revenue of $60 billion, $70 billion, and the voice the time of that was the difference. So it's into fiscal year 2021, or the data connection is the timing was delayed to 2021 March. But originally in the first half, this is something that you have already expected. But if you exclude that, the ARPU of 30 yen, It seems that it was a very good landing compared last fiscal year and this fiscal year. The MVNO impact decline in revenue, maybe it's just the timing difference, but if you add the last two years, what is the actual situation? Let me confirm. Well, first of all, as you have pointed out, there is a difference in the timing. But as Mr. Hiroi mentioned previously, the positive impact of Ahamo is showing. The people who left us stopped leaving us. And also the net additions situation, we have experienced an increase. So the base part is starting to be pushed up. Therefore, there is a timing difference of the voice wholesale, but the ARPU of 30 yen, I myself think that it is a good situation and we are seeing a good impact is my understanding. Mr. Hiroi, do you have additional questions? I think that 30 yen is a very good number, too. Regarding the MVNO, if I may add, as Mr. Matsuno, you pointed out, at the end of fiscal year, the voice wholesale, from the plan perspective, we were looking at various things, honestly speaking, and the timing was deferred to fiscal year 2021. But the actual money amount, as of end of March, it was decided. So regarding the money amount itself is slightly different. However, as the overall structure, it is as you have pointed out, Mr. Masuno. So if that is so, this MVNO area, there is a timing difference. So let's put that aside for a second. But in fact, the impact of lowering the rates, but before lowering the rates, the ARPU, the second half, it was increasing. And this fiscal year was going to go up, but due to the decrease in the rates, it is declining. So the majority is due to the impact of declining rates, but the positive impact of other than decreasing the rates with other initiatives such as cost reduction, others that is being observed, but the decline in revenue. Acquiring new subscribers and improving efficiency, you're able to absorb that, is that correct? There was a question before that. There is an impact of a declining revenue, but you'll be able to cover it with acquiring new subscribers. Yes, we understand in that way. The environment that Docomo is placed on, it is moving towards a good direction. And also the smart life business is following a positive trend. So if we have the enterprise-related business with the collaborations with NTT Communications, it will be another good addition is how we look at it. Thank you very much. And lastly, NTT Communications, a Japan business, domestic business, recently, The enterprise network structures, enhancement, digitalization, remote from home, cloud, data center, due to all these aspects, there is a very strong demand that is continuing. the operating income increase, how much can it continue? If we look at that for entity communications, a domestic business, I just think that maybe they can increase their operating income a bit more. But how do you look at this? Well, honestly speaking, the same timing as now of last year or two years ago, entity limited structural reform limited was established in 2019 and we thought that the japan domestic business will face a tough situation however due to covet 19 they were able to provide various solutions and for us too starting april We have started the zero trust remote system was introduced and holding company actually implemented that. And this is from NTT communications. So it is a very comfortable and very well suited to working from home or remote working. And for the education-related matters, a lot of entity communications is providing solutions. So if the digitalization becomes stronger and stronger, then the market for entity communications is going to further expand, and that is becoming a favorable wind. So the plan is March of 2022 of profit. The plan seems that it is flat. So it's difficult to see the sense of increase. So what do you think about that? Well, basically, the remaining telephone system areas decline occurs every year. So we need to fulfill that part. So the end result, we cannot help it to look flat. However, the telephone system or the legacy part is going to start to settle down. So in that sense, if they have the appropriate solutions to be provided, then they will probably be able to head towards a structure that they will continue to increase the profit. And this is my last question. Once they settle and increase profit in a new area. So that would be March of 2022 or the midterm March 2024. So around next fiscal year, we will be able to see a clear picture of that more. including the platform type of business. Yes, we are proceeding quite a bit with the preparation. So whether that's going to be 2022, 2023, I feel that NTG Communications has a bit more longer perspective, but as a direction, that is correct. Thank you very much. That is all.

Thank you very much, Mr. Masuno. We'll go on to the next question now. Next question is from Taiwan Securities, Mr. Ando. Mr. Ando, the floor is yours. Thank you. This is Ando. Can you hear me? Yes, we hear you, sir. Thank you. I would like to ask two questions, if I may. It's to elaborate on the previous questions. Mr. Healy talked about 60 billion yen. impact from price reduction and digital in revenue. I would like to confirm that. So price reduction for consumers and also price reduction for MVNO. Is this the amount that combines both two factors? I would like to confirm that. And also, in principle, what How can I put it? What moving factors, moving variables are there? For example, let me explain what I mean. For example, the percentage of change in the Hamo plan, a question, do you have an assumption as to how much people would change to a Hamo? Can you please elaborate so that we can have a clear image? That's my first question. Thank you. Yes, thank you. I would like to respond to your question. This is Hiroi. Mr. Ando, you wanted to confirm the first point. So press reduction for users and press reduction for the MVNOs. Yes, the number that I mentioned earlier is a combination of both two factors. Now, you addressed the so-called moving factor or moving variable. I don't quite understand the gist of your question, if I may. You're asking a very difficult point. But I have, as I have mentioned since the beginning, to the extent possible, we want to improve the structure of our user base. So the pricing strategy and the sales strategy that we have in place is really to expand our user base. So therefore, we want to get into the positive territory for MNP. We also want to expand our headset sales and also expand our user base. And also, we want to retain high ARPU customers as much as possible. That is what we are aiming for. So in terms of change in the plan among the existing customers, we want to make sure that they plan that they enjoy a higher pricing range. So that is the objective behind our exercise. I hope that answers your question, Ando-san. Well, if I may, sorry, if I could follow up. I would like to ask additional question, if I may. So the percentage of change in the plans. It seems probably larger than your initial expectation. That was covered in some of the newspaper articles. Going forward, if the percentage of such transition were to change, then the percentage of customers that have joined from non-dokomo competition could actually contribute to the profitability of a hamo. Is that the scenario you have in mind? If you could give us some pointers or some clues as to where you're headed, how you see the situation. Well, let me see. When we take a look, it's only been a very short period since this Hummel was launched. The percentage of conquests from non-Dokomo customers hasn't really changed significantly just because of our Homo. So we have set up the profit plan based on the prevailing situation as our assumption. And actually, we want to acquire non-Dokomo customers as much as possible based on the Homo, the larger the better. And also, the competition has been has concluded their promotional campaigns at the month of April. So we're going to see some effects of various factors. Hopefully this will translate into positive effect. But we want to continue on with such marketing efforts naturally going forward. But we're beginning to see some signs. But that's the extent that I'm able to share at this juncture. Well, in terms of the overall balance, I believe new subscriptions really contribute to the ARPU, and also conquests from non-Dakamu customers, right, and also upselling customers. And we also have customers that will be downgrading their plan. Although we have not made this open, but it's a combination of all these factors, I would imagine. Yes, that is the case. But right now, we're at a very good place, right? Yes. Dr. Yes, the situation we see right now is very much in line with our initial expectation. So, as you mentioned, Mr. Ando, so the proportion, if we are able to acquire larger customers out of, from outside, from outside Docomo, if the percentage were to improve, then that would improve. But that is the current mixture that we have. Okay, thank you. I would like to ask the second question. It's about your overseas business. Margin will be jumping from 3 percent to 6 percent. That is your guidance. So can you elaborate on what factors will contribute in the improvement of the operating margin for overseas? In the past, you talked about increasing the percentage of value-added services as part of your overseas portfolio. Is that the case? Or is it cost reduction? Is it impact from cost reduction? If you could give us a breakdown. I'm sure that there's several factors involved. So if you could please show concrete numbers, if at all possible. Thank you. Okay, thank you for your question. I think it's probably 30 billion for NTT Limited and NTD Data, respectively. So the total is 60 billion yen. Seventy percent is probably from cost reduction. So structural reform and cost reduction. NTD Data was behind in the past, but they've already completed their structural reform and data in North America, and they will do so in Europe. NTD Limited will continue on with their efforts. So that effect is included in these numbers. So 70 percent from cost reduction efforts. So the remaining 30 percent. NTD Limited will be transitioning to added value service. The target was 37 percent. We want to improve this to 39 percent. We want to improve this by increasing the percentage of added value services. This will have an impact on increasing revenue. As for NTT data, increasing their digital offering needs to be done. That will improve their operating profit because of increased sales. So that is the macro picture that we have envisioned. Okay, thank you very much for that.

Mr. Ando, thank you very much.

We'd like to take the next question.

Next.

BOFA Securities. Mr. Kinoshita, please go ahead. BOFA Securities. Mr. Kinoshita, can you hear me? I have two questions also. First question. is something related to the questions that have been concentrated. To just question is the way of thinking of our proof of NTT Docomo. The discount applied amount, I think, is heading towards a declining direction in the last fiscal year. Also, by that largely declining, it is actually supporting the ARPU recovering. But this fiscal year's mobile ARPU, when you were doing the calculation, this discount applied scope last fiscal year was 460 yen. And the image is that it's going to go down to around 300 yen. Is that the correct understanding that I'm having? I just wanted to confirm that first. Mr. Kinoshita, that's quite a deep-dived question. And tomorrow, I think you can have those questions with Docomo tomorrow. Mr. Hiroi, would you like to answer that now? No, I can answer that tomorrow, no problem with me. I just want to talk to you about the outline of this. As you, Mr. Kinoshita, pointed out, the monthly support discount, the impact amount is probably what you're talking about. Of course, fiscal year 2021, there is still the impact remaining, and towards fiscal year 2022, it is going to start to decline significantly. And compared to fiscal year 2020, as you have pointed out, there is a declining amount. So the details I would like to explain tomorrow. okay understood thank you very much so tomorrow i look forward to speaking to you and my second question is related to uh the dividend this time when you were thinking about the dividend amount based on what uh thinking did you increase it by five yen and last fiscal year as a result there was a 10 yen increase in total So you are continuing to increase the dividend, and this time EPS is going to increase by 18%, and the dividend increases 5 yen. How are you thinking about this? And in the interim point of the fiscal year, Is there a possibility that you will be reviewing the dividend payment and increase it by one notch? Well, as you have mentioned, in 2020, the third quarter in February when we had the financial results at that time, we did approve and resolve the increase in dividend. And that is because the fiscal year 2020 results was good. That was the background. And this time for fiscal year 2021 forecast, From the revenue to the profit in the three accounting items, we were able to we can expect a record high number. So at this point, as the dividend forecast, we wanted to increase the amount. However, as we execute our plans and if the business situation goes quite positive in the mid-term of increase of a dividend, we would like to consider that. So I just want to confirm that if you can see that you will be able to achieve the plan, you can consider increasing the dividend? Or are you saying that unless you will have a profit that is one step higher than what you plan, you cannot increase the dividend? Well, I'm talking about both. Maybe closer to the first part. Well, of course, my feelings, I would like to increase it. But if I give you a stately comment, maybe it will be the first statement you said that if we can clearly see that we'll be able to achieve the plan. Thank you. That is all from my side. Thank you, Mr. Kinoshita.

Tomorrow from 1 p.m., there is going to be a session with ATD Docomo. So we hope that you'll take part tomorrow as there. Let's go on to the next question. Next question is from Credit Suisse. Mr. Eguchi, the floor is yours. Credit Suisse, Eguchi-san, please. Thank you. Can you hear me? Yes, we hear you. Thank you. I would like to ask two questions as well. My first question relates to the following. It's about the military management strategy and its policy. You talked about the cost reduction. In the new fiscal year, 170 billion yen was added. And so for the next period onwards, I suppose that there's room to further increase your cost reduction. So can you talk about the factors why the cost reduction is being implemented in such a smooth manner? And also, what about the next year onwards? Is there a room for upside for cost reduction from next fiscal year as well? Can you share with us your thoughts at this moment? That's my first question. Thank you for your question. Well, for the last couple of years, as you're aware, in our global business, we created entity and limited entity data and other companies pursued structural reform very significantly and in a very aggressive manner. We have encouraged them to do so. We talked about this earlier, but among the major subsidiary firms, for the officers, we'll be expanding the scope of performance-linked, performance-based compensation. Outside Japan, that percentage was quite high. So performance-linked compensation, especially, we need to make sure that the recognition APS penetrates. So it should be linked with the performance, and we should also pursue digital transformation in this context. That is the basic principle. So the medium-term financial targets are quite lofty, but it's important that operating companies understand this. And it's important that they pursue improved efficiency, improved productivity, as well as streamlining. So it's a result of those efforts that we are seeing these numbers. So 840 billion yen target. was achieved ahead of schedule. This is due to the change in the mentality and the awareness of the group companies who are big into some positive trends there. So these are the factors which have allowed us to achieve the cost reduction targets. It's important that we maintain this momentum. At the same time, we also need to pursue digitalization, digital transformation, and ICT to pursue further upside in cost reduction. That is very important. Mr. Sawada, you talked about the IT promotion, IT and digital transformation. Are you talking about improved productivity among your own staff, right? What about the KPI? Have you said any KPI? Are you following that? Are you monitoring that? Also, how confident are you that you're able to make a major transformation in your own organization? Well, we are still, we've just started various initiatives. So we have not yet been able to confirm the KPI in this effort. But, for example, we want to change our internal system to cloud-based system. This was already decided at Entity Holding Company. And in the month of May and June, I believe that such decisions will be made by other group operating companies, which means that both domestic and outside Japan, in the next two years or so, I believe, everything will transition to cloud-based ERP. That is the work which is already in progress. This is already factored in in our plan. I see. So may I take it that your profit structure will be much leaner going forward? I'm talking about entities that was primarily, but we're beginning to see very senior aged employees. On the other hand, Do we have the capacity to hire people? There are areas where there's a shortage of people. That's a microcosm of the Japanese society, but there are areas where there's a shortfall of personnel. So that's why we need to promote automated technology as well as remote work based on digital transformation. Unless we do so, we cannot improve productivity and we cannot operate our business. So this, I think, will be a great testbed, and hopefully we will be able to promote our ideas to our customers as well. Thank you very much. My second question. This goes back to the carbon neutral 2030, the environment vision that you talked about earlier, Mr. Sawada. You mentioned that you want to go beyond carbon neutral. So I suppose this doesn't represent a major shift in your strategy. But you're also involved in energy business and you also have the telecom infrastructure. Very few companies have both such assets. So through Smart City, how do you intend to contribute to carbon neutral? I really have expectations about the timetable for achieving this. But what are some of the challenges ahead? And what are some of the responses you have in mind against such challenges? And if possible, can you give us some numbers that you envision in terms of the changes taking place in this segment going forward? Well, thank you for your question. To talk about the big picture, We are struggling to come up with firm targets or numbers in this segment. Why? In terms of we do not yet have a structure where the renewables can be considered as a stable source of supply. And also, in terms of power supply, Striking a balance between the supplier and the demander is very difficult to do in the current grid system. So as an independent source of power, having renewables and PVP and electricity storage, that model is already there. But to locally produce and locally use energy and translate that into a smart city and offer this as a solution? and also be in a place to use those services ourselves. That is the model which we have envisioned. But right now, we cannot set numbers and we cannot set numbers for the work. One factor is, of course, the accuracy. And the second is related to equipment, development of equipment that can accommodate direct current. And the third is battery, storage battery, the price of and the cost performance of storage. Naturally, in the case of military management strategy, we want to offer accumulation based on hydrogen. And also, we want to send hydrogen through our infrastructure. That business model, I think, is also possible. So in the context of smart city, there are a lot of options available for possible solutions. But in terms, we are not yet there where we can set up a business plan for the items that you mentioned in the course of your question. Mr. Shimada, do you have any follow-up response? Well, this relates to BPP and battery storage. You talk about these items, but we're still at an R&D phase for these technologies. So what concrete products will be applied? What will be the most efficient product? That needs to be tested in various trials. We're still going through the trials at this stage. So it will take some time before we can organize business models. Maybe this will take another couple of years before we can come up with concrete business models. Now, in the case of the smart city project, with regard to energy, we have some projects. We'll introduce that naturally. And right now, very smart city programs are ongoing as we speak. In those projects, we will naturally introduce new energy projects. That is our understanding. Thank you very much for your response.

Mr. Eguchi, thank you very much. I would like to take the next question. Mr. Okumura, please go ahead. I am Okumura from Okasan Securities. Can you hear me? Yes, we can hear you. Please go ahead. Thank you very much. I have two questions. The first question is a qualitative question regarding NTT Limited, the high value added service. The high value added service. It seems that it is quite of a sticky, reoccurring business. And the businesses related to that is steadily proceeding. But I think the situation is that you're slightly struggling acquiring new business. This high value added service business, if you have a positive trend that you're seeing, for example, in the order received, et cetera, As you have mentioned, the high value added service, meaning the high margin of business data center or managed service or managed network or security type of businesses, it requires experts. And acquiring a new deal, so we were struggling. However, for example, NDT Limited America The organization that has the high value services and the sales organization, the collaboration of these two organizations are proceeding. And they are listing up the high potential customers. But though this is an orthodox type of method, they have started implementing this method. And globally, they are picking up the customers that they can target. And the sales side is contacting these customers. So fiscal year 2021 said that 30% of the profit is going to be generated from the high value added service expansion of the business. And the sales activities is increasing, so we are becoming more confident to achieve that. Thank you very much. My second question is, maybe this is something that I should ask you tomorrow. However, it's related to Docomo, the mobile communications business, ARPU. The last fiscal year's fourth quarter, ARPU before discount compared to the third quarter, I think it has declined more than 100 yen. The AHAMO service started in March, so I don't think it has impacted, too, the decline of the ARPU. So I wanted to know briefly, it's fine, but why this decline has occurred. Well, the detail, I would like to explain it tomorrow. However, it is not the essence type of a factor. It has some seasonality factor that has impacted this. So I would like to explain this tomorrow. Okay, understood. Thank you very much. Mr. Okumura, thank you very much.

We're now fast approaching the time to conclude the session. Is there any other question? Any other question? If you have a question, please push zero followed by one. Any other question? If not, then with this, we will have to conclude the Q&A session. At the risk of repeating myself, tomorrow, on May 13th from 1 p.m., we will have an analyst meeting for Entity Docomo. Please take part in that meeting as well. That completes the presentation of fiscal 2020 financial results. Thank you for joining us. Thank you, ladies and gentlemen. That concludes the session. Thank you.