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We will now start the briefing of NTT's financial results for the fiscal year ended March 31st, 2022. Thank you very much for attending today despite your busy schedules. I am Fujiki from the IR office and will be facilitating this session. First, I would like to introduce today's attending members. First of all, from NTT, Representative Member of the Board and President and CEO, Mr. Sawada, Representative Member of the Board, Senior Executive Vice President, Mr. Shimada, and from NTT Tokomo, Representative Member of the Board, President and CEO, Mr. Ii, Representative Member of the Board, Senior Executive Vice President, Mr. Hiroi. Today's briefing is streamed live online. We're also planning to stream the video on our website at a later date. Therefore, we seek your understanding beforehand. As for today's explanation materials, please refer to the presentation materials posted on our company website. On the first page of the materials, points to be considered is stated, so we kindly ask you to please go through them. After this, Sawada, President and CEO, will explain the overview of the financial results and receive your questions from the floor. Mr. Sawada, please go ahead.

Thank you very much. My name is Sawata. I want to provide you the highlights of the fiscal year 2021 financial results as well as talk about the forecast for fiscal year 2022. So we'd like to start with page four of this slide. This shows you the summary and the highlights of the consolidated results. We saw an increase in both upper income and upper income year-on-year. And operating income, operating revenue, and profit all reached record high. And profit exceeded 1 trillion yen for the first time in history. As for operating income, operating revenue, due to increased revenue, entity data, operating revenue increased 12.5 billion yen and reached 12,156.4 billion yen. Of the increased revenue, foreign exchange impact accounted for roughly 127 billion yen. As for operating income, as a result of increase in revenue, severe upgoes and cost reduction, operating income increased 97.72 billion yen year-on-year up to 1,768.6 billion yen. As a result of increasing profit linked to increase in operating income, as well as profit impact of minority shareholders after Dokom became its wholly owned subsidiary firm, and also one-off factors such as corporate tax, profit increased 264.9 billion yen year-on-year up to 1,181.1 billion yen. As for overseas operating income margin, this improved 3.3 point up to 6.3% due to increase in entity data revenue and also structural reform. The number is now 6.3%. In the following page, we show you some of the new segmentation that we are applying since this fiscal year. In January, in conjunction with the transfer of entity communications and comware to Docomo Group, what we did was to review the 21 fiscal year results. And we actually changed segmentation. So the bottom half on this chart indicates the new segment. We have created the integrated ICT segment by combining Docomo Communications and ComWare. And also, Engine Limited was taken to international communication business segment, combined with data communication business segment. So we now have four segments, as you can see. Integrated ICT business segment, regional communication business segment, global solution business, and others. Page six. This shows you The forecast summary by segment. Correction, the results by segment. The top shows revenue, bottom shows income. You'll find the entity that the global solutions business has seen very robust digital business. This has produced very positive results, as you can see. On the other hand, turning to operating income, across all segments, we saw increase in operating income across the board, as you can see. Let's now turn to page 8. This shows you the fiscal year 2022 forecast summary. Now, fiscal year 2022 is the year for the implementation toward achieving the mid-term financial target in fiscal year 23. Fiscal year 23 is the final year of the plan. So therefore, we are expecting increase in operating revenue, operating income, and also profit. And all indicators, including operating revenue, operating income, and profit, will all reach record high levels. We will see expansion in all these columns. That's for APS. on top of the increase in operating income and i'll talk about this later but as a result of new share repurchase we are anticipating 340 yen for fiscal year 2022 and turning to page nine we show you in the forecast summary by segment for fiscal year 2022 the top part shows operating revenue bottom shows operating income across all segments we are expecting increase in both operating revenue and operating income across the board, across all the segments. Next page, please. This is page 10. This is in small print, but this shows you forecast summary by company. This shows you the forecast summary for fiscal year 2022. On a non-consolidated basis, DOCOMO will see increase in both operating revenue and operating income for fiscal year 2022. Also this week, we announced about the combination of entities overseas business and entity limited. And this will start from October this year. So the plan for entity limited will include only that of the first half of this year for the purpose of forecast summary. Now, on the bottom, on the bottom of the page you will show your reference we show entity data prior to integration of overseas business entities limited for full full scare for your reference both expect increase about the operating revenue and operating income in particular for entities limited they're expecting fiscal year, they're expecting an increase in upper revenue of $165.3 billion year-on-year. In 2021, they had a lot of orders, but then because of semiconductor shortage, they were not able to translate that into business. But that profit will now be incorporated into fiscal year 2021. So orders are suddenly will come into play in fiscal year 2024 and 2020 limited. Turning to the next page, page 11. This shows you the operating income trend and operating revenue trend. This shows, too, on a quarterly basis, the trends of the operating revenue and operating income over the last couple of years. So right-hand side shows increased operating revenue and bottom shows increase. So therefore top right is the best. 18 is in blue. Public communications. went down to green in 29 because of the press reduction. Then we had the COVID-19. And in fiscal year 2020, we were in the yellow board. We started with declining both operating revenue and operating income, but we began to have quarterly improvement. Last year is in the red part. In the first quarter of the last year, we had increase in revenue but decline in profit. And we received many questions about whether or not we were on track. But then this was very much in line with our guidance and plan. At the end of the day, we were able to complete the year by exceeding our target and guidance. So where are we in terms of fiscal year 2022? This is the purple part. We're expecting increase in both operating revenue and income in fiscal year 2022. So let's turn to page 12.

This page is showing the progress overview of the medium-term financial targets. Overall, it is on track. The darker green color is showing achieving the target. In this chart, you see CapEx to sell. In FY21, it is below 13.5%, which is at the very bottom line. finished the fiscal year 13.1, so we have achieved the target. And second line from the top, overseas operating income margin, there were some concerns, I believe, but FY21, it doubled from 3.3%. It has jumped up to 6.3%. And FY22 forecast, it seems that at that year we'll be exceeding the 7.0%. So in FY22, we believe that we'll be able to achieve the target for FY2023. Where you see the red arrows is last autumn, we have revised upwards the financial targets, EPS and cost reductions. For EPS and FY 2021, we have achieved the 329, meaning that the original initial target 320 yen was achieved two years ahead of a schedule. And as for cost reduction, the initial target was 800 billion, but we have achieved. 840 billion FY 2021, two years ahead of a schedule. And FY 22 forecast is 930 billion, and the probability of achieving that is quite high. Next page, on page 13, we have summarized the shareholder returns. As for the Davidson forecast, We are expected to be 120 yen per share as the annual dividend, which is 5 yen increase from FY 2021. This was resolved in today's Board of Directors meeting. With this, we are expected to increase for the 12th consecutive year since FY 2011. Also, the Board today resolved to conduct share buyback of up to 400 billion yen in total. As already announced, the Japanese government has included in their budget to sell the shares that they hold of ours, and including buying from the open market. We are planning to conduct a share buyback of up to 400 billion yen. As for the topics, I will briefly go over them. Page 15, please. We are going to reorganize the holding company. We are going to establish the internal audit department and enhance the internal audit. And the head of our office, Ms. Fujiki, will be the head of the internal audit department. We would like to assign her to become the head of the internal audit department. And we will also be enhancing the global branding. And we will newly establish ION product design center. Regarding the third point, This is done in order to accelerate the commercialization of IOWN concept. So from the R&D stage, we are creating this organization to commercialize. And the next page is a new space business realization. This is something we have already announced. We are going to establish a joint venture company this July with Sky Perfect J-SAT. And we are going to build a space integrated computing network. Next page is promotion of sustainability. As for this, there are three themes, and we would like to embody all three themes. of these themes. And we have set the target, and this will be reflected to the director's compensation. First is greenhouse gas emission volume is going to be less than 3.075 million tons. And this is 34 percent reductions compared to FY2013. The progress is on track. And carbon neutral is 2030 for overall. It's 2040. We are moving on track. And as for B2B2X revenues, it seems that we will be able to achieve 600 billion yen. As for new female manager appointment rate, we are aiming to achieve 30%. FY21 result was 29%. As for the personnel matters, oh, okay. The next page, page 18. is showing the progress overview of the medium-term management strategy initiatives. I would like to skip that. And on page 19, I would like to explain about the personnel matters. And this summarizes the way of thinking regarding the personnel matters. As for the individual personnel announcements, please refer to the individual companies' press releases. At this time, regarding the personnel, reorganize the personal structure to establish a new management style and to further strengthen governance for the holding company. The number of members of the board will be increased from the current eight members to ten members, and out of that, five will be outside members of the board. I myself will be the representative director chairman, but I will become the chairman of the board of directors. So governance-wise, the executive side is four and the sixth will be on the governance side on the board. And in order to strengthen the corporate auditor system, one full-time outside corporate auditor will be added. And Rachel, of a female member of the board, audit and supervise the board members as senior vice presidents to be increased to over 30%. Internal control office will be reorganized into an internal audit department under the direct control of the president. And we also have established a new office in charge of economic security. The personnel, including the overall group, there are many areas that we have renewed, especially as for the holding company related matters, more than half. of the member of the board or the senior vice presidents were renewed. That is all from my side. Thank you.

Thank you very much, Mr. Sawada. I would like to take questions. If you have any questions, as we have already informed you in advance, those who have registered beforehand and those who are connected to the conference system can ask questions. The operator will now explain how you can ask questions. We would now like to start the Q&A session. If you have any questions, please push 0 followed by 1. If you wish to cancel your question, please push 0 followed by 2. From SMBC Legal Securities, Kikuchi-san, please go ahead with your question. Thank you. Kikuchi here. Thank you very much for this opportunity. Thank you. Thank you. So Entity Limited and Entity Data, I want to ask a question about Entity Limited and Entity Data. Entity Data stock prices went down, but you're fine. Your stock prices are fine. I think there's some concerns about entity data. Are there concerns that entity data's profit could be coming down? So I'm going to ask a question against this backdrop. So Entity Limited, you're pursuing structural reform at Entity Limited. Do you believe that are you in a situation where you can declare that the structural transformation of entity limited is now over? And because that juncture is over, you're now in combination with entity data. Or still, the first, do you believe that since another six months remains, are you going to take additional measures? So can you share with us to what extent entity-limited trans-social reform is over? I think second quarter and third quarter, compared to that, I think the results are different. What is the difference? What is the reason for this difference in the fourth quarter as far as entity-holder company is concerned? What support are you going to render for entity data? Mr. Houma, the president of NTD Data, he might be saying that nothing needs to be done, but I think Mr. Sawada, and you're going to be the chairman, Mr. Sawada, I suppose you're going to take leadership and you're going to try to prep up NTD Data. So what type of support are you considering to provide to NTD Data? That is my first question. Thank you. Yes, thank you for your question. With regard to the social transformation at Entity Limited, I think in principle, most of the transformation has been carried out in fiscal year 2021. I think in the past, we had a question. Social transformation is something that needs to be continued over the long term. But having said that, are we going to see a very large number of people retired? That type of program has been mostly done in fiscal year 2021. Now you asked about the situation in the fourth quarter. Yes, we had restructuring and we had some impairment loss. And so on top of that, we carried out additional structural transformation, and that translated into cost. So operating profit may seem smaller in the fourth quarter compared to second quarter and third quarter because of those results. But the basic profit, but the profit, this was severely affected by the semiconductor shortage situation. Why? They handle routers and servers. They deliver those servers and routers and receive maintenance fee from the customers. But then they had no products that they could deliver. They receive orders. But they're not able to translate that into profit and revenue. That had significant impact in fiscal year 2021. So that being the case. From October, we'll see combination with entity data. So the base is already done. Now, you talked about assistance in the second part of our question. We need to pursue combination. And because of the brand, it's important that we make sure that there's brand penetration. We had to promote that. and also people we need to support in terms of personnel. We also need to support in terms of the governance, which is at the basis of this. So as far as entity holding company is concerned, we would like to make sure that we provide strong support under the new structure. Also, this is something over the long term. I'm talking about maybe a year or two. I'm talking about the year or two term. We have ION. Products and solutions that will be developed in the context of ION will be coming onto the scene. In terms of online, documents are providing a lot of support. So next type of solutions and versions will be coming up. so entity holding company and other entity group companies together can support entity data and entity limited combination. I hope that answers your question. Yes, thank you. I'd like to turn to my second question. It's about shareholder return. This, again, divides into two parts. You carried out share purchase of 400 billion yen. maybe based on the stock price today, the part involving the government will be about 350 billion, which means that you have 50 billion will remain. Yes, 50 billion will remain after you do the share purchase from the government. So the 50 billion will be done through TOSNET and from the market, right? So you're understanding correct? Or are you Are you going to purchase from the marketplace through other means? 50 billion, are you going to consider procurement of finances to buy from the marketplace? And also in terms of the dividend, you have a plan to increase your dividend by 5 yen. In the past, you had 5 yen increase, but then after the third quarter, you increased that to 10 yen. NTD Data had upward revision, and on a conservative basis, NTD also had upward revision in the dividend. But then there is no increase from dividend revenue from data. So maybe your share increase, your dividend increase had no relevance with data's performance. Now, if this time around, if you're going to increase your dividend increase from 5 yen to 10 yen, how will you finance that? I think 5 yen increase in dividend is a bit disappointing. So can you talk about the possibility of 10 yen increase? Thank you. Turning to your first question. So are we going to buy ProRata from the marketplace? Yes, the amount is 50 billion based on the stock price today, right? So the share repurchase program is up to 400 billion. It depends on the stock price of the given time. But inclusive of the market acquisition, yes, we have set the limit of 400 billion for share repurchase. Now, at this juncture, I cannot respond as to whether or not we're considering purchase from the market aside from this authorization. Now, with regard to dividend, as you pointed out, up until now, yes, we have had cases where we have indicated increase in dividend in the third quarter. And the biggest dictating factor is whether or not we announce an upward revision after the second quarter. The source of dividend, if the situation is good, then we should, of course, return the benefits to our shareholders, and that should be continuous. So this time around, We have a very positive business plan. Of course, the global environment is tough, but we have a very positive business environment. So if the situation is good, I'm sure the new president, Mr. Shimada, will make decisions accordingly based on that situation. I hope that answers your question. Yes, thank you very much. Could I ask another question, the third question, if I may? It's about Dokomo. Now, the segmentation has changed in Docomo, and it's very difficult to have understanding in depth, but mobile communication service probably will decline by $102 billion. I think that's the plan. But still, you are anticipating $8 billion increase in operating profit for Docomo. $5.2 billion increase is the case for smart life, I would imagine. So unless you have significant cost reduction, you should not be able to enjoy increase in operating profit based on those numbers. So Dokomo's mobile communication service is on the downward trend. But how is it that you're able to secure profit, a positive profit? That's my last question. Thank you. Okay, Mr. Hiroi, would you like to respond to that? Yes, thank you. This is Hiroi from Dokomo. I would like to respond to your question. Yes, indeed. Mobile communication service revenue is declining. It's quite significant. At this moment, We are taking measures on the cost side to offset this loss. So we are reflecting, we're factoring in cost-efficiency improvement, and the driver of the cost-efficiency improvement will be the streamlining and the efficiency in the sales channel. This is already explained in the presentation material. So, for example, we'll be using online functions and through this we want to improve efficiency in the sales channel. So through that cost, we'll be able to offset the cost. Also, communications and comware have now been integrated. And as a result, enterprise business will see positive increase. So these are the positive drivers. So I believe, therefore, a new Docomo Group as a whole will be able to realize increase in operating profit at the end of the day. Thank you very much. I would appreciate your further comments later on. Thank you very much. That was Mr. Kikuchi-san.

I would like to take the next question. Next, from Nomura Securities. Mr. Masno, please go ahead with your question. I have several questions also, but the first one, the group reorganization, I believe that it has come to a cycle end, but Dokobo and communication integration in just two years will be 200. million yen, but just with video 300 million increase and you have the increase in revenue, but also the contribution to the profit or the cost reduction contribution to the profit, the remaining part next fiscal year is going to contribute by 100 – the difference of the 100 billion yen contribution to the profit difference. So this part, this fiscal year and next fiscal year's balance, can you explain about that? And also another point is that the global reorganization, before you said at FY25, you said the synergy is 30 billion yen in terms of operating a profit. So from NTT's holdings, it's about a 2% synergy. The cost reduction, I believe that's quite done in the backyard side. But to what extent is that going to have a positive impact on increase in revenue is what is difficult to understand. So this 30 billion yen cost reduction and also if the factors of increase of revenue, I would like to know. Thank you very much. Regarding the first question of NTT Docomo, maybe you should answer this question. This is E, the President and CEO. Thank you very much for your question. Yes, you are correct. In the first year, there's not that much of a contribution to the profit level. However, including the cost reduction initiatives, the profit is as you have just described. And as Hiroi explained to you before, the operation cost itself, it's not just for the sales channel cost, but the network side operation cost, we are intending to thoroughly reduce that also. And from that, the cost reduction will be generated. And the side that will be showing an increase is the smart life business. We will put some money in the investment. So the enterprise solution business growth is going to directly contribute to the profit. And also the telecommunication service business growth. Recently, we have AHA Mall and the medium bucket services have been launched. And due to that, we are seeing a return of the customers in their 20s and 30s. So the revenue is increasing on that side. So it's not just the impact of lowering the price, but we are seeing an increase in subscribers, which is contributing to the increase in the revenue. And therefore, with that, this fiscal year's synergy will be generated from this. So more than majority, the contribution will occur from next fiscal year onwards in terms of synergy. Okay. And regarding entity data, synergy of 2025, the synergy is at 30 billion yen. At this point, we are not disclosing any more additional information than that. They're not disclosing, so I cannot comment more than that. But from the holding company's perspective, this is just a starting point or the entrance. or starting the integration. Finally, the enterprise-side global business governance have unified as a group. This is the first time since then. So from there, the tangible and intangible synergies that we're not seeing at this point is going to increase, and also the reputation is going to improve. And through that, we will probably have a return, but we do not have the solid numbers. Therefore, there will be further more synergy coming forward is how the holdings look at this. Thank you very much. Mr. Lee, I have a follow-up question. I do understand the overall picture, but the synergy between Docomo Entity and Entity Communications, $50 billion or the video $30 billion, there is no contribution of that synergy to the profit for the enterprise. There's a 50 billion increase in revenue, and that's going to be a 7 billion yen profit is what we are expecting. This is the overall enterprise business? Yes. Okay. So it's not just the incremental, but including the past two. Okay. And my second question is regarding the impact to the share price. From that perspective, the mobile business price competition, what's going to happen to that is going to become a key. And each carrier is showing the decline in revenue. However, in each one of the individual brands, I believe that there's no additional decrease in the pricing. So the weighted average blended Overall, it went down, but Docomo has the 100 gigabytes, and they are shifting over to a larger capacity or focusing on the data capacity. So the environment, competitive environment, instead of having a decline in pricing for each individual brand, but... having a more added value to each of the brand seems to be the direction heading from now onwards. What is the sense of scale and what is the situation? Well, we have rolled out the 5G network investing a lot. So, Docomo is focusing on the fast 5G service. And how can we acquire the customers? One is to accelerate the network expansion and also the terminal and device, devices respond. We come up with the devices, a high-end one and a low-end one, which can use, which will function in a quick data transmission on the 5G network. and having the high and low end, then the younger generation can also use it. The market survey shows us that it's not that the younger generation, the 20s or 30s, they not necessarily have their own home router at home. spending 5,000 yen every month and having a home router, but having AHA mall, adding 2,000 yen and being able to use 100 gigabytes is more convenient is what the younger generation think. And we do believe that such a market for large capacity does exist. So we are actually targeting that group in the market, too. Thank you very much. Masuda-san, thank you very much. Next question, please.

Next question is from Dawa Securities, Ando-san. Mr. Ando, please go ahead with your question. Thank you. Ando here. I hope you can hear me. Yes, we hear you clearly. Thank you. I'd like to ask two questions. My first question is on the following point. It's about the global margin. You are able to achieve this one year ahead of the schedule. You're able to achieve operating margin target. Now, in the past, operating income margin and revenue, you set these targets, I believe, in the past. But now you have unified your target into one single target, which is operating income margin, which is global operating income margin. So at the time that you achieve this target of global operating income margin, are you going to shift your target once again to revenue going forward? Is there a possibility of changing your policy going forward? Should we prepare for any change in your target policy down the road? That's my first question. Yes, thank you for your question. At this moment... Are we going to return to revenue-oriented target or are we going to add revenue-oriented target? That is not our plan right now because there was the impact of COVID-19. And of course, this year we've had impact of inflation as well as the war. And also foreign exchange of currency is now shifting to weekly trend. So at this juncture, are we going to set a revenue-linked target? I think it's probably not the case as far as the timing. No, it's not the timing. Having said that, I forget which page it was, but NTD Data, yes, page 10 shows you the forecast by company. NTD Data. It's kind of 108 billion, and anti-delimited is considering increase of 165.3 billion yen in terms of increased revenue. So data is doing very well, and also anti-delimited has very strong order remaining. So that being the case, maybe we need to review our mid-interim plan. Maybe under the new structure, under the new team, they may consider whether or not they should consider revenue as part of the plan going forward. Thank you for that. My second question relates to the capital expenditure or capex. Taking a look at the situation this fiscal year, I think there seems to be a slight increase in your capex. That is my understanding. How should we consider that? What are the factors that are behind the increase in CapEx this time around? And also, What is the medium-term trend that we should be mindful of when it comes to CapEx? Yes, thank you. As far as the holding company is concerned, yes, real estate and data centers, these are the drivers behind the increase in CapEx. But this is demand-linked. We have a strong intent on the part of the business players to provide these services. So we have that many projects as far as the entity holding company is concerned. We want to work with financial partners and take this off balance sheet. We want to expand the pie, but then reduce the amount of investment that is required on our part, as far as the main technical part is concerned. I'm sure that this can be covered by Dokomo colleagues, but Dokomo is really emphasizing 5G investment. And conversely, they have really contained the non-5G-related investment in other areas. As for entities in the West, they are very lean when it comes to CapEx. So that is the situation. So at this stage, it's really state and data centers. These are more conspicuous. But also, Docomo is making investments so that they can expand some of their business as well. There's going to be that requirement, naturally. So as far as the trend of investment is concerned, focus is on the new areas. Focus is on investment in growth areas and areas that will generate profit. If I could add. Sorry, if I could jump in. Sorry, please go on. Okay, this is here. Yes, I agree with what was just mentioned. I think network-related investment, we will continue that over the medium term. Native communications, they are building customer networks because of the orders they receive. But that is not going to increase that significantly. So Tokomo's telecommunication facilities and other orders received, I think with the medium term, campus can remain flat. So what has increased will be investment for the future. For example, financial payment system-related investment or XR-related investment, XR-related software. The type of investments will be required in order to grow in the future. So for this fiscal year and this fiscal year, over the next two years, I think we need to make robust investment in those areas. Thank you. When we take a look at the breakdown of capex, the global business segment seems to be increasing. That's how it seems. So that's primarily data centers. Is that the case? And going forward, this is likely to increase. That is because of the robust business. Is that how we should interpret these numbers? This is Shimada here. That's where the data centers are concerned. Yes, data center investment is is increasing in the global business segment. That is true. In fiscal year 21, 175 billion was invested for data centers, but in fiscal year 2022, the number is 180 billion yen as a plan. But if we include the third parties, in fiscal year 2022, it was 180 billion investment. In 2022, it's 300 billion yen if we include three third parties because we procured from third parties 130 billion, so over 300 billion in investments will be made. So the growth in the marketplace for data centers is about 30%. It's more than 30% growth in the market. So there's that robust demand out there. So for the time being, this level of investment is going to be required. Will this continue over the next couple of years? We have to see the prevailing market situation. Okay, thank you very much. Thank you, Mr. Ando.

Thank you very much, Mr. Ando. Now we would like to take the next question. Next, from Credit Suisse Securities. Mr. Eguchi, please go ahead. This is Eguchi from Credit Suisse. Can you hear me? Yes, we can hear you clearly. Thank you very much. Regarding NTT Limited, I have two questions. The first question is regarding the fourth quarter's limited sales. Probably there is a yen depreciation effect incorporated, but to what extent is that impact incorporated? And also, regarding the semiconductor-related reason, there is some order backlog, but how much of that backlog did you have? I just wanted to know this question. How much of growth? Thank you. For limited in the fourth quarter, this is related to the data center explanation given to you before. We have sold one, and that is recorded in the fourth quarter, and that was about 10 billion yen, and that is increasing that part. And as for backlog, order backlog is 130 billion. Does that satisfy your question? Thank you very much. And this time where you said $10 billion, is that a one-time recording or next fiscal year onwards? I have heard that there's a strong demand for data center, but is such a situation going to continue? And also, can you talk about the semiconductor? First of all, this $10 billion... The situation, it's not that we sold everything because the situation satisfied, it's just we were working on the off balancing. So we sold it. So it is a one time for this time. But this type of sales is going to continue moving forward. As Mr. Shimada mentioned before, with 300 billion, the third party capital will be 120 billion. This scheme will be what I was talking about moving forward. And as for the semiconductor, the Cisco routers, selling that to the customer, that type of order backlog is what we are talking about. So, of course, FY22 Well, this fiscal year also such a backlog will remain. But we will resolve this backlog. But once again, create a backlog. Probably this is not going to reach $130 billion for FY22. It will be lower or smaller than that. Okay, if that is so, then the new fiscal year's entity limit is increase in profit. The structural reform positive effect is the majority. and the product mix or the actual profitability improve, how are those incorporated? It's an 8 to 2 ratio. Structural reform is 8 and the expansion of customer or expansion in demand, the sales side is 2, 20%. It's probably how you should look at it. Thank you very much. My second question is regarding the entity limit is incorporation to entity data. I don't know if Mr. Shimada is going to answer it, or I don't know if I should ask Mr. Shimada, but when I listen about your explanation of the structural reform, it has not completed yet. And you have done things in order to improve the profitability is my understanding. But entity limit is a profitability. There's a high value added services where you have switched the direction towards. But still, what is lacking? And in order for you to compete in the global arena, what do you need? And do you need to improve other areas than improving the fixed cost? What are the areas that you need to further change is what I would like you, Mr. Sawada, to explain. Mr. Shimada was preparing to answer that question, but I would like to hear a word from, of course, Mr. Shimada too. But I myself, what I think is that NTT Limited shifting over to a higher profitability service, they are still in the midway of that. and the high revenue services managed service or security services or edge to cloud type of advance cloud type of services. But that changes every day, meaning that one after another new technology, new services need to be incorporated and we need to change ourselves to enable that in our process model. And when you think about the regional sales activities of a limited, in order to sell a certain product, there are professionals. But when a new product comes in, then a structural reform will be unnecessary again. I think that type of cycle is going to continue is what I mean. And Mr. Eguchi, as you have explained, the areas that the fixed cost will be reduced moving forward is our own DX cost. And the IT, we will be providing Edge to cloud to the customers, but we will provide that to ourselves too in order to enhance our own capabilities. Mr. Shimada, do you have something else? Well, for the foreseeable future, the profit growth will be generated from data center and managed service. If you look at the appendix material of the financial results, data center is the 38% of revenue growth and managed service is a 23% growth. And from here, there are returns. And that area is going to be the growth area. And for entity limited, what they're newly working on is the private 5G Well, turning the whole factory into complete private 5G type of product has already started. So as Mr. Salada mentioned, the next new profit source, we need to create such a thing simultaneously, in parallel. Of course, cost reduction or unprofitable business areas. I did mention this in the third quarter. Withdrawal from the unprofitable areas is something that we would like to do during FY 2022. So the profitable area and withdrawing from the unprofitable business, those are the rationalization and streamlining that we would like to do. Thank you very much. Thank you very much, Mr. Eguchi.

Next question, please. Next question is from Israel Securities. Mr. Hori, the floor is yours. Hori-san, please. Thank you. My name is Hody from Mizuho Securities. I would like to ask just one question, if I may. I wanted to ask about NTD Limited and NTD Data and the combination of the overseas business between these two companies. So let's take a look at the scheme. Over the short term, it seems that this is disadvantageous to the shareholders for NTD Data, but more advantageous for NTT. But you said that this was simply a starting point. You also talked about IOWN, and you mentioned that the overseas companies should be promoting IOWN. So if that is the case, Data will own 55%, entity will own 45% of the new overseas operating company. This ratio, is this close to the final structure, the ultimate structure, or is this ownership structure subject to change going forward? What about the division of roles? In this slide presentation on Monday, application and platform will be done by Data Unlimited, and the base technology will be held by R&D team of a data holding company and the R&D team. If that's the case, maybe. the equity ratio for the new overseas operating company could change as a result. What are your thoughts? Is this the ultimate structure? Or is this subject to change? In line with the progress in the structural transformation, can this ownership structure for the new operating company for global business change over time? Yes, thank you for your question. Actually, we had the proposal where data would have 100%. Then we have 55% to 45% structure this time around. We want to support the overseas global service strategy that NTT data would like to implement. So if we have new products, or should they be acquisition down the road, or should the market environment significantly change? Maybe I think we have to consider whether or not these numbers should remain the same. That is our thinking. I see. Well, from the perspective of NTT data, well, data at last has to be pursuing such a transformation of global business of the past. And now they're in a profitable situation. They're able to generate very comfortable profit right now. And this owes to the efforts made by Entity Data. Entity Data made efforts to improve the profitability. But then, in this new global business, global operating company, 45% of the company's profit will be taken away by Entity Holding Company. So once the profit structure, once the profit level expands, maybe data would want to expand their equity ratio. If that request were to come from data, how does anti-holding company intend to respond to that request? Well, it depends on the circumstances at the time. If the request is reasonable, we may consider, but conversely, We also have shareholders of our own. It means that our take of the profit will be coming down if the structure change. So if that should have a negative impact on the EPS, then that's a policy which would be difficult for us to take. So both companies are listed. NTD Data's largest shareholder is actually an entity holding company. We are the largest shareholder for NTD Data. But we should not use the term minority shareholders, but there are other shareholders as well. We also have other shareholders of our own. So how will the situation be perceived by other shareholders? I think both sides need to consider and make their respective decisions accordingly. Also, one other point. As for NTD Data, at the time of the current meeting term plan, they have set the target of operating income, and they're considering possible EPS target down the road. But at this juncture, I think Entity Limited, by consulting Entity Limited, their profit and revenue will improve. That is the situation for Entity Data. So as you mentioned, Mr. Ohori, at the outset, the advantages are not skewed toward Entity Holding Company. I think that is not how Entity Data sees the situation either. I see. Thank you. That is very clear. Thank you very much.

Thank you very much. Mr. Hody, would you like to take on the next question? Next. From Okamura-san, please go ahead. Thank you very much. I am Okumura from Okasan Securities. Can you hear me? Yes, we can hear you. Thank you very much. I have two questions. The first is related to NTT Docomo. Non-consolidated Docomo, it seems that they're increasing their profit. The mobile customer base, it has expanded, but I would like to ask you about the outlook and forecast. At the finished fiscal year, Due to the OCN, we cannot do an Apple to Apple comparison, but with that included, were you able to expand the customer base? And with the customer base expansion this time, are you also incorporating the net ads in the forecast that you have this time? This is Yi speaking. Thank you very much. Actually, as far as OC and mobile, the lower capacity, lower price menu was from last October onwards, or in reality from December, so we were a bit late. So that part, the customer base recovery was falling a bit behind. But compared to the year before, MNP has been improving, converting into numbers against the previous year, about 20 billion yen recovery shown on the revenue side. And this fiscal year, furthermore, We are going to enhance it more. So, and then it's a positive side. So if we increase the power of the medium bucket and the smaller bucket, it will totally become into the positive side, and that's what we were aiming for the long time, and we believe it is going to be such. We'll be okay. Okay, then having that as a premise, the competitors... in a way are sacrificing their profit for short term but still going after subscribers. But for you with the service lineup, with the current ones, you can expand your customer base or are you thinking that you need to come up with some new initiative to be launched? Well, in that sense, the new menu or new price plan, we're not to think about that. We're not at that stage yet. We are going to continue the medium bucket. We have the type of new option added to that. The higher ARPU menu customer base is what we would like to increase. So the lower price. type of ARPU lower type of customer. We shouldn't spend the cost to acquire the low-end customer. So based on this way of thinking, we are putting our efforts in the marketing side instead of launching more new menus out into the market. Thank you very much. The next question regarding ION, I would like to ask Mr. Sawada. Sorry, it's qualitative, but this time you are nearly establishing the product design center. And you will be developing the services from now onwards. From till now, when you think about the monetization of ION, what are the areas that you think you can monetize? Or if there's something that you are already thinking of in terms of that area, can you share with us? Thank you very much. From last year, we started a trial And this year, NTT East Saimo, even though the performers are located in separate locations, simultaneously they can perform the music. So the latency is very short. service, and that is comprised by all Photonics networks. So it's not digitalized, but the video information is transmitted, not being digitalized. And I want that to be made dedication network. And so the low latency dedication network, the electric signal will be applied and through that a more secured backbone or service will be able to provide the quantum dedicated, quantum communications dedicated network. Ion's optical fibers advanced service kit is such a thing. And also FY 2025 we have the World Expo. So even though we say that it's only two years plus from now, and at that point, the disaggregated models service within the data center, we are thinking whether we will be able to prepare that or not, and we are working on it. Of course, the photonic electronics type of technology will be applied there. Therefore, that type of a full-scale type of a tent will occur in the FY24-25 period. And also, as I have explained, we are looking at space, the optical transmission method, and this is one of the ION technology. We'll be using that in this space, and if possible, Next year or two years from now, we would like to commercialize it, and we are considering it right now. Thank you very much for the detailed explanation. That's all from my side. Mr. Okamura, thank you very much. Next question, please.

Next question is from Thank you very much. I would like to ask this question, if I may. So, Docomo and NEC and AWS are now going to have started public cloud testing since March. By the end of the year, are you able to achieve results of these tests? I think you have such plans. But what about the capital investment? Once these tests are successful, will this have an impact on our CapEx plan going forward? That's my first question. I would appreciate your response. And also, should I go on to my second question as well? Can we take questions one at a time, please? Okay, yes, one at a time. Thank you. This is Hiroi here. I'm not a technical expert, so I'm not well versed. But having said that. AT&T recently is now. Trying to sell their core network to Azure Microsoft. So court with regard to core network. How are they going to incorporate the Utah's public network? I think that has emerged as a very hot topic in the mobile industry. It's a very hot issue right now in this industry. So they're trying to consolidate based on economy of scale. AWS and public cloud players or one such option. Now, there's going to be a lot of user information, so processing that information at the edge, if that is the case, then you don't need AWS and other public cloud functions. I think there's still many discussions among the mobile industry as to whether or not which of these options are best. So we want to gain knowledge and information through this testing. Now, we're not sure at what timing the results can be achieved through this test. But with regard to impact on the capital investment, this is something that we need to consider down the road. That is my response. Thank you. Okay, thank you very much for that. My second question is this. I think this relates to the previous question as well. It's about IOWN. So with the photonics electronic convergence, you're able to create data centers through photonic transmission route. If that environment is achieved, then the capital investment required, will it change? We talked about data center investment increasing 30% per annum. I think we're seeing very excessive investment competition. If this type of excessive competition continues, then we're going to have such capital intensive situation. At the end of the day, although we're talking about zero carbon in our society, You have players that are using so much energy, so that risk is there. So therefore, data center project within Aion can translate into cost reduction, I suppose. So against this backdrop, if you have already carried out a calculation, what will happen to data centers? How much cost protection can you achieve if you have photonics-based data centers compared with the current data centers and silicon-based data centers? How much cost protection can you achieve? And also, what challenges remain? I think this is a major game-changing technology. So to the extent possible, if you could share with us what you see as the possibility. Thank you very much. This is Sawada here. So with regard to photonics-electronic convergence, What this entails is within the LSI package, LSI memories will be connected to the LSI next door, and photonics will be utilized. That is what photonics-electronics convergence is all about. Now, photonics semiconductor is used to complete semiconductors. So, power consumption is supposed to be 1 in 100. This involves photonics semiconductors. This is something for 2030 onwards. In the case of electronic convergence, power consumption will be reduced to 1 in 10. And this percentage will improve. So servers that utilize technology or data centers that utilize this technology need to be built. And also you need software that can run on top of such technology. So to be quite candid, we're not sure how much cost can be reduced. We have not been able to calculate how much cost reduction we can achieve. because we are not yet at a juncture where we can create such a system per se. So what this means is that it's difficult to discuss how much capex will be involved. But as far as the capex that we have right now, This is geared toward the power percentage required for data centers. What ION is looking for is servers and systems that are incorporated into the data centers. So as far as we're concerned, this is not double investment. This is not a duplication investment for NTT. So we want to work together with partners, and we're trying to build servers and switches. This has to be done from the semiconductor level. So that's what we're trying to implement together with our partners. So right now, we're not able to calculate the cost and the effect at this juncture. We're not yet at that juncture. I see. If that is the case, so from 2020 to 2025, the second stage will begin. And in 2030, you'll be able to switch to photonic semiconductors. We're talking about five years' plan. So within the next 10 years, can we expect major structural change as a result of the progress in this technology? So inclusive of how you invest, things may change over the 10 years' time. Is my understanding correct or wrong? Yes, that is how we see the situation. So yes, you are right. Okay, thank you very much.

Mr. Ishino, thank you very much. With the next question, we will be answering all of the questions that we have received. So we would like to take on the next question. Morgan Stanley, MUFG Securities. Mr. Tsusaka, please go ahead with your question. This is Tsusaka. Hello. First of all, the overall management design, so to speak, or the design of the profit. Moving forward, what kind of a company will NTT become is what I would like to know. In the last one year, about 100 billion yen of the mobile revenue decline has occurred. But at the same time, the global business and the solution business, you have surely established a profit. And this fiscal year, the profits increase. The contributing factors, it seems that the majority is coming from the solution side. And from next fiscal year onwards, the scenario of the ARPU largely increasing at this point is probably difficult to come up with because you don't know what the competitive environment is going to be. If that is so, the profit design for the overall NTT seems that the consumer part is maintaining the status quo or try to not make a loss or have a loss generated, but more getting closer to or focusing more on the enterprise side of the business. It seems that in the last several years. From the management perspective, I believe we would like to increase both sides. But looking at the last two years, it seems that the focus is on... is as such. But making more investment and increasing the profit, what are those areas or is there a particular area that you would like us to focus on or you would like to focus on? Can you share that if such a thing does exist? Thank you very much. This is Sawada speaking. As you have pointed out, the consumer side of the business Well, it seems the enterprise is stronger, but the consumer is a flat. But more than consumer, I think you're talking about telecommunication services. In Docomo's perspective, finance services, financial services, or the so-called smart life business area, the applications or the personal solutions. type of service and next time the XR business will be expanded so the handset or the devices included In that area, the ION element can be incorporated. So consumer, instead of saying it's a flat, but the telecommunications consumers will be flat, and the smart life business area, including the global business, will increase. And in order to achieve that, we will invest and acquire and expand this business. That's one perspective. And for the enterprise, for the global enterprise, uh limited and data will be integrated and including the edge to cloud technology this is the area that still has room for growth so it will require uh investment from midterm to long term the devices that we generate from the ION technology and the systems that the technology is embedded and the software that will use those devices, to what extent can we prepare all that? Whether we'll be able to do that or not is going to determine whether we'll be able to expand the business or not. Shimada-san, anything to say? for the foreseeable, near foreseeable future. Maybe this is better that you, Mr. Sawada, answers, but there's a smart life business area and the enterprise business area. Improving and increasing the profit will be the base. The consumer business side, as Sawada, the President and CEO mentioned, and the telecommunications business side, stacking up the profit further is quite of a hard challenge to take on. Therefore, on the enterprise side, how much can we increase and expand that business is going to be the challenge we need to take on for the next year or two. So on the consumer side, The smart life business, from that perspective, there are a variety of businesses, is what I think. And the internet type of companies, there are companies that specialize in that area, and there's quite a strong competitor out there. And NTT, Docomo's smart life business or new initiatives, compared to the existing strong players, and these areas are able to differentiate themselves. If such a thing does exist, can you share that with me? This is Yi speaking. Thank you very much for a difficult question. Yes, as you have rightly pointed out, our competitors, if I may name the company name, SoftBank. They have an e-commerce platform based as Yahoo. They have an EC platform, meaning that they have a cash cow platform, Rakuten as well, but we don't have such a thing. So the general consumer type of business, maybe we cannot do such a thing, but we aim for the more niche market. like pharmaceutical drugs in the medical and healthcare area, not selling just the pharmaceutical drugs, but have the clinical checkup or link that with the personal health data, having such added values. As the product sells, we will sell the drug products. pharmaceutical products. If we try to do the same thing, that's not, that doesn't have a meeting, but it's more reasonable if we team up with a partner that specializes in those areas. So the 87 million Dokomo's D point members is the base for us. and what we're expanding right now is for the enterprise we have the business a d point a custom platform we have only about 4 million at this point but we will expand that we will link an id to our customers and through that the purchase behavior and such data can be collected and can be analyzed, and then we can launch advertisements, specific advertisements for that, or we can use that data for product development. So we will focus on such an added value part. And for the competitors, they don't disclose such customer data or make it openly available. They're using them on their own, but we are actually doing the opposite to the customer. We will create the virtual customer database for our customers. And we are actively working on providing such service to our customers. So the majority of the revenue will be like an advertisement revenue model. Thank you very much. And the last question is that... Dokomo experienced a 100 billion yen decline in revenue. However, it will continue to increase the profit. And to do so, I'm sure there were very measures that were devised. This year, 100 billion yen decline. Next school year, I'm just rounding up the numbers, but still, they will increase the profit. seems that the way they are conducting the business, even such a situation, they are recovering their competitiveness. And so when we think from that perspective to the conventional way of doing business by adding some change, it seems that they are able to conduct a business that is more efficient and more effective and good profitability. Looking at the overall entity group, the improvement or kaizen that Docomo achieved, meaning, or the optimization of the way they conduct business? Is there another organization within NTD Group that has such an opportunity, or has all of the group companies done what they could do? I think there's still room for all of the group companies to do a similar thing as Docomo. As you have mentioned, Docomo has put their whole effort. The mindset or the structure or the profit-generating structure is changing. But including the global side, how are they going to conduct their business moving forward? And entity East and West is changing to an increase in both revenue and profit. just providing in one region, but also going into revitalizing the local economy. Maybe they can go into that area or the system side or the DX area. Their processes are still old or obsolete, and they are fiber-centric. Many of those countries are labor-centric too. So I believe 100,000. We conducted a survey to 100,000 employees and And we will be able to understand the various issues that we need to understand that there's still various issues that we need to tackle and take up on the challenge. What do you think Mr. Shimada? Well, for NTT East and West part, as already shared with you, up till now, they have been accumulating the cost reduction efforts. And the process, majority of the process is conducted by people. And it probably will take us several years still. However, automating that type of work, if we take it up to that stage, there's still quite a bit of room for improvement. Therefore, in that sense, The areas that the efficiency will improve, there are still areas remaining in Dokomo and also remaining in NTT East and West is our understanding. Thank you very much. Sorry, Mr. E, do you have something to add? I thought that you were complimenting us and listening to your comments. Thank you very much. As you have pointed out, we have to change the mindset quite a bit. meaning that at what timing are we going to shift the conventional way of thinking. And we kind of did a radical treatment to the organization. And of course, I'm sure there are some dissatisfactions towards me by doing that. This fiscal year, all of the fruits can be picked of what we've been doing. I think it's just the thing that what could have been done has not been done until now. It's not that we're doing something that is impossible. They just had room, saying that they didn't have to – they still were able to be in a good situation without doing things. Just the cost reduction alone is not sufficient. What does change mean? The management needs to thoroughly convey that, need to have a specific image. Ahamo is a good example. Buying the service only on online, it's the opinions like, are you trying to make the docomo shops go bankrupt? But the docomo shops also think, oh, we can't stay as like this, not doing anything. We have to do something else too. So if we... Like the fire, Dokomo has many forward-looking employees. So once we give them one nudge and push, they will move forward. And the rest, I would like to leave it up to Shimada-san. Thank you very much. Mr. Tsusaka, thank you very much.

We have responded to all the questions. So with this, we'd like to conclude the presentation of the financial results for fiscal year 2021. Thank you for joining us today. Thank you very much.