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We will now start the briefing of NTT's financial results for the three months ended June 30, 2020. Thank you very much for attending despite your busy schedules today. My name is Hanaki from the IR office that I will be serving as the facilitator from this time. First, I'd like to introduce today's attendees. Mr. Hiroyu, Representative Member of the Board, Senior Executive Vice President, Mr. Nakayama, Executive Officer, Head of Finance and Accounting, and Mr. Taniyama, Executive Officer, Head of Corporate Strategy Planning. Today's briefing is streamed live online. We are also planning to stream the video on our website at a later date. We seek your understanding beforehand. As for today's explanation material, please refer to the presentation materials posted on our company website. On the first page, the materials points to be considered as stated, so we kindly ask you to please go through it. After this, Mr. Hiroi, Senior Executive VP, will give you the overview of the financial results, followed by receiving your questions. Mr. Hiroi, please go ahead.

Thank you for the introduction. My name is Hiroi with NTD Holding Company. I have come back from NTD Docomo. I look forward to your kind support at NTT Holding Company going forward. So allow me to start by talking about the status of the results for the first quarter of this fiscal year. We saw operating income profit all increasing year on year for operating revenue and profit. This reached record high level as the first quarter ended. So let me start with the operating revenue. This increased 176.3 billion yen year on year. And the drivers were primarily increased revenue and entity data and entity limited. Now the impact of foreign exchange was roughly 57 billion into positive territory. As for operating income, this also increased like the case of operating revenue. This is also due to the increased revenue and entity data and entity limited. So these are the drivers of growth So operating income went up by 17.1 billion year on year. Let me now talk about the profit. On top of the increase in operating income, we were able to record tax deferred assets. So as a result, profit increased 28.6 billion year on year. So the increase was somewhat large. As for overseas operating income margin, This improved due to increased operating income at NTD Data and also cost reduction at NTD Limited. So this improved by 2.1 percentage points, up to 6.1%. So please go on to the following page. I would like to talk about the contributing factors by segment. Let me start with the integrated ICT business segment. As far as the operating revenue is concerned, enterprise business and smart life business recorded increase in revenue year on year. But there was price reduction in the consumer business, so the segment as a whole recorded decline in the operating revenue. But having said that, this group was offset by cost reduction, so therefore we were able to deliver increase in operating income. Turning now to regional communication business segment here. there was decline in fixed-time voice revenue, and this trend has not changed over time. However, in the previous year, we were able to record gain from sale of real estate, but we do not have such benefit this fiscal year. So compared with the change in operating revenue, the change in operating profit seems somewhat large, but on a full-year basis, we expect increase in both operating revenue and operating income through increased revenue from system integration and other growth service, And on top of that, we expect rigorous cost reduction to be realized. So as a result, for the full year, we expect increase in both operating revenue and operating income. As for global solution business segment, at Entity Data, we enjoyed increased revenue from robust digitalization demand. And also at Entity Limited, we were able to increase revenue from value-added services. And also, we were able to realize cost reduction from structural transformation at entities limited. So, therefore, this segment recorded an increase in both operating revenue and operating income. As for the others, this includes real estate and energy and others. This increased. They were able to increase revenue because operating income from increasing agency business and it was realized. And also, There's increase in revenue from electricity charges reflecting the rising fuel price. But that hasn't had too much impact in terms of the operating income. So that is the highlight of the financial results. So overall, we were able to incorporate DX demand both in and outside Japan. And we have a strong portfolio that can accommodate the increase in DX demand both in and out of Japan. And also, we were able to pursue progress in structural transformation We have to reinforce our portfolio and also generate increase in profit. So that is the assessment of the overall financial results for the first quarter of this year. And let me now turn to some topics, if I may. Please go on to page seven, promotion of medical and healthcare business. Here. We have entered a capital and business partnership with a company called Genesis Healthcare Company, a pioneer in genetic testing, research, and data analysis, and we have acquired 19.0% of this company. We have a company called NTD Life Science, and we were involved in genetic database creation, analysis, as well as genetic testing as well. So we have been involved in this business, but on top of that, we now have the alliance with Genesis Healthcare Company. So, we can add the genetic database from Genesis Healthcare, whereby we'll be able to improve the quality of our service in this area. So we can provide this to pharmaceutical companies as well as to medical institutions. So data analysis, and they will be able to receive data analysis, and also increase revenue from the pharmaceutical companies and medical institutions as a result.

Next, next page please. is regarding the decentralization of the organization. And regarding this, from the resilience perspective, the holding company's function, we have been working on decentralizing it, and we have been reviewing this up to now. And now, in Takasaki City and in Kyoto, we will be establishing the decentralized offices. And we will start the trial from October this year. And next is page 10. This is regarding the field testing for the mass and stable transportation of hydrogen. When hydrogen is transported, NTT's civil engineering work, can it be used or is it reviewed? Based on NEDO's research study request, together with National Institute of Advanced Industrial Science and Technology and Toyota Tsusho, we will be conducting this fuel testing. So the hydrogen power generation, which we are considering right now, by having such a system realized, we will be able to have flexibility in that area, so we would like to participate in this field testing. Next is page 11, New Solutions Development with SAP. At NPT Data, jointly with SAP, they have developed a new cargo shipment message. It will be tracked through IoT sensors to facilitate the insurance procedures. In a more easy way to explain, when cargo is transported, there are cargoes that are fragile. For example, wine or medical, pharmaceutical products. Wine is very vulnerable to vibration, and for pharmaceutical products, they're vulnerable to temperature. So within the cargo, we have placed the IoT sensors, and through that, the temperature, the shock, or the vibration changes. will be able to be sensed. And within that, when the cargo is damaged at some point, at what point do they become damaged? Is it at loading the truck, or unloading, or was it in the ship or vessel? We'll be able to identify within the supply chain process who is going to be responsible for the damage and loss will become more clarified, and so by establishing such a system, the compensation for damage procedures for insurance can be simplified. It's like the drive recording system on a vehicle, and using such a system will lead to improvement and better efficiency. and the logistics and also insurance procedures of business. Lastly, overview of VDM term management strategy initiatives. If you can read through them, that will be appreciated. I would like to skip the detailed explanation. That is all from me. Thank you.

We will now take your questions. As we have already informed you beforehand, we will be receiving questions from those of you who have registered beforehand in advance and who are already connected to the phone conference system. The operator will now explain how we're going to take questions for the Q&A session. We will be starting the Q&A session. If you have any questions, please post a zero followed by one. If you wish to cancel your question, please push zero, followed by two. So from SMBC Niko Securities, Kikuchi-san, please go ahead with your question. Thank you. Kikuchi here. Good afternoon. I would like to ask about DOCOMO later on. I would like to ask a question about NTT Limited at this juncture. With regard to top line, And also, I would also like to ask about the profit. So let's start with the top line related question. On a conservative basis, you mentioned the 57 million was the impact for foreign exchange on conservative basis. Entity data had 30 billion yen, I believe. So I think foreign exchange had the impact of maybe 10% impact on your overall operating profit. So having considered all that, with regard to operating revenue, this time around, The data center business, even if it's actually for an exchange, I think the data center business should enjoy the growth. So what's the factors behind the growth, the positive growth in data center business? And can you talk about the outlook for data center business with regard to high added value services? I think there's a drop in the network. In the first quarter, network was in the negative territory. So it seems to be a very large drop in the network business. What are some of the elements behind this drop? And also with regard to equipment sales, if you exclude the impact of foreign exchange, I think it's probably a slight increase. There's the semiconductor shortage and also the impact of the lockdown. So how do you see the trend of this business in the second quarter onwards? I would like to ask your assessment about the top line going forward. Thank you. That is my question. Thank you for your question. So let me respond. I would like to respond to your question, if I may. This is Hiroi. As was commented by yourself, Mr. Kikuchi-san, yes, at Entity Limited in the first quarter, the revenue structure is exactly as you have assessed. So I think you have the right assessment of the revenue at Entity Limited with regard to value added services at Entity Limited. As you pointed out, there is the impact of foreign exchange of currency. But data center really drove this business, and this led to increase in operating revenue. So that was the largest contributing factor to the increase in operating revenue. With regard to the data center business, we have been investing in this area for many years, and now the data center business has begun its operations. So we made the appropriate preparations, and we were able to accommodate the very robust demand for DX. So I think data center business has really begun its operations in full. With regard to equipment sales, as you pointed out in your question, the growth is somewhat lackluster. That is true. Now we're talking with physical hardware sales. So we have to consider the impact of the semiconductor shortage. With regard to receiving orders in the fourth quarter and the first quarter, we've been able to have very strong order taking, but the reality is that in terms of the actual shipment, because of the shortage of semiconductors, we're not able to deliver. So the contribution to sales has become somewhat weaker from the segment that is the reality. As we head toward the second half of the year and also toward the end of the full year, we have to see how much improvement there could be for the semiconductor business at that time. It's important that we deliver the orders we received and make sure this can translate into contribution for sales. So it's important that we go ahead with such initiatives. Thank you for your response. If I could turn to my second question. With regard to operating income, roughly 6 billion yen is the number, but on the other hand, profit itself is 18 billion yen. So these are the numbers that we see. I have two questions about this, if I may. Well, this is clear. $30 billion is going to be the structural transformation, and the second half, this is going to have positive impact, right? But for the first quarter, how much impact did you see from structural transformation? And if you subtract that, the operating margin and profitability has really begun to improve. Is that the case? Is my assessment correct? And also, if I may add, one of the reasons why The net profit is so high. If you could explain the drivers. Thank you. Let me now talk about the structure behind our profit. I would like to talk about that. With regard to operating margin and net profit, what is the difference between the two? Well, for one thing, I mentioned this in the first part of your question. The tax-deferred assets were reflected, so that impact is there. And also, partly, we had... gains from sales of shares in some of these subsidiary firms. So that has also had an impact. Now turning to NTD Limited. Since last year, we've been improving the operating profit at NTD Limited. When we invested in Varia, we had a tax credit, so we're now able to recall that, collect that. which means that we're able to record larger tax deferred assets as a result of being able to collect some of the investment into Vario in the past. There's one other factor with regard to cost for structural transformation. As far as this matter is concerned, on a four-year basis, we anticipate 38 billion yen roughly. That is the amount we expect on a four-year basis. As far as we're concerned, this is in line with our expectation. The progress there is in line with our initial projection. So it's important that we fully go ahead with these initiatives and we have to be in time. It's important that we carry out structural transformation on a full year basis. And from 2019, structural transformation will be completed for the fiscal year. We have to be able to complete the structural transformation and be able to drive profitability as a result of the structural transformation by the end of this fiscal year. Thank you for that. As far as structural transformation is concerned, 38 billion is the number, this is more skewed for the first half. So even if there is impact of 12 billion, you will be able to go ahead with the structural transformation. But if you subtract the impact of structural transformation, the operating margin will actually be around 5 or 6%. Is that the case? Is my calculation correct? That means that as a result of structural transformation, profit will improve. So if we Or is it just the case that you were able to win for profit for the second quarter onwards? Do you believe that this situation will be very difficult for you for the second half? So can you talk about the outlook of transformation? It's very difficult to determine at this juncture. The social transformation during the first quarter, how do we see that? We've had social transformation in relation to personnel and also been able to migrate some of the services or stop some of the unprofitable services. And we've been spending costs to realize structural transformation. As you point out, we are off to somewhat slow start if you take a look at the general picture. So maybe that has had a positive impact on profitability at the end of the day. But the effect of the structural transformation, some of the results will be seen in fiscal 2021. We will see some of the impact from structural transformation in the first quarter to fiscal 2022. So we do see impacts on the positive impact of the structural transformation across different years. So as we head toward the second quarter and the third quarter, We'll pursue further structural transformation, and we hope that we'll be able to deliver results and be able to meet the full year guidance. That is what we are aiming for. Thank you. That is all. Thank you very much.

Can we move on? Okay, then we'd like to take the next question. From the MUDEL Securities, Mr. Masno, please go ahead with your question. This is Musno from Nomura Securities. I myself would like to ask a question about NTT Limited and the integrated ICT business segment, if I can ask here. Regarding NTT Limited, the data center demand, globally I'm sure there's a difference up and down, but still there's a continuous strong demand. And are you having an outlook that this strong demand is going to continue? And also the capex in the gross amount, it's about a 200 billion yen level, including others, and it's a physical investment. So as a holding company, moving forward, this is an actual investment to a physical building. But moving forward, in what way are you planning to manage or control such a data center is what I would like to know. Okay. Okay. The demand for the data centers, it is very difficult, but basically, from our perspective, we believe that the demand is continuing to be strong. However, having said that, recently, since the end of last year, the macroeconomic situation changes is occurring. And based on that, the investment or the data center investments on the customer side may be impacted by the changes in the economic situation, but the degree of focus that we pay attention to may have to be increased. But looking at the recent situation, the orders received from the customers and looking at the demand situation, it seems that this strong demand is going to continue, so we would like to surely capitalize on this strong demand. And also, and 200 billion yen of investment. So as a holding company under the new structure, what are your perspectives regarding the data center investment? This is Taniyama from the corporate strategy planning. Regarding the data center investment for this fiscal year, we are assuming about 300 billion. And 60% we will be investing. And for the third party, capital investment is 40%. Currently, regarding the data center, we have the third global ranking market share position. So the investment compared to others is low. Therefore, this 300 billion yen investment utilizing off-balance As Hiroi mentioned, keeping an eye on economic situation, we would like to continue investment in data centers. Okay, understood. So that type of decision making, the holding company getting involved within the global business environment, is that the correct way of thinking about this? Yes, that understanding is correct. Thank you very much. My second question is regarding the integrated ICT business segment. Different from the financial results from July, you'll be integrating the functions and under that the services or cost structure reforms are already starting is my understanding. So what has started and looking at the most recent situation, what is your outlook towards the second half of the fiscal year? If you can comment, can you share your comments please? Well, regarding the details, that will be explained Can you please ask that in the Docomo session following this session? But as the holding company, if we may share the evaluation of this situation, starting from July the 1st, I think they have started in a good way. And the highest expectations towards this energy is the strengthening of the enterprise business. And for us, too, more recently, Forma Docomo and Common Conway are working together and conducting activities towards the large corporations where they are covering overlap. So the cross-selling of the products that each entity has and also Office Link or PVX, that is going to be provided in an integrated manner to the customer is what has started also. And also for the SMEs, The degree of the advancement of the companies differs, so we would like to make a thorough approach by customer, visit them, and then cross-sell each entity's products. And that is what they're going to do in July and August, is what we have heard. And the employees are working on it with a high level of motivation. Therefore, we would like to keep a close eye on how it goes. And thank you very much for the result.

Thank you very much. And I'd like to go on to the next question. Next question from UBS Securities. Tamada-san, the floor is yours. from UBS Securities. Thank you. I would also like to direct the question about NTD Limited. Earlier you mentioned that non-operating loss and tax deferred assets were reflected. If possible, can you talk about the actual numbers? And also, in terms of your full-year plan, I get the sense that this is going to have a negative impact. I think that was your full-year guidance. Is this in line with your projection and business plan, or was this outside your expectation? If you could share that information, I would appreciate it. Thank you. And if it's within your plan, then it means that from the second quarter onwards, the negative impact is going to be very large. That will be the impact of your business plan. When you have consolidation with entity data, I think there will be financial liabilities, and the cost will be reduced. Does the entity holding company have any plans to actually reduce the impact through consolidation with entity data? Thank you, Nakaima. In relation to finance and accounting, let me direct a response with regard to the sales. We had 10 billion yen impact from the gain of sales of shares. In regard to tax deferred assets, the impact is roughly 10 billion yen. That is the level of the impact. Now, what about the relation to the business plan? with regard to the sales and gain from the sales. We're always on the lookout for such opportunities. So this is very much within the line with our business plan. Also with regard to reflection of tax deferred assets. Well, the performance at FTT America was very strong in the recent month and that became very visible. So that being the case, we are seeing this in the context of the overall business plan. So that is all from my response to your question. Have I fully responded to all your questions, sir? Thank you. If I could follow up. So from the second quarter onwards, in the context of the full year plan for the second quarter onwards, you are envisioning very strong negative impact. Is my assessment correct? Is my understanding correct? Are you looking for negative impact from the second quarter onwards? Well, I don't think we see potential negative in terms of operating profit. Well, you have the full-year plan, and in the non-operating laws, you're anticipating negative $12 billion, right? With regard to corporate tax, I think you're envisioning negative impact of $23 billion. I think that was the full-year plan. But if the first quarter was positive, it means that from second quarter onwards, if this is in line with this plan, you're envisioning very strong negative from the second quarter onwards in these categories. Is that the case? Is my understanding correct? Correct. If I may, we're in the positive territory right now. This issue there from second quarter, we're going to be in the negative territory. And are you talking about how we see the interest bearing debt? Is that your question? Yes, that is the case. I see, thank you. With regard to interest bearing debt, right now our full year guidance is roughly 60 billion yen. We're looking to reduce this by 60 billion yen on a full year basis. then we have certain assumptions behind the $60 billion reduction in interest-bearing debt. For example, buyback, and also we are looking for possible capital investment. If this goes as planned, then we are anticipating the results at the end of the year will be very much in line with what we expected in the beginning of the year. But the thing is, with regard to the range of the interest-bearing debt, is somewhat less than the previous year. So we have to take into account the capital policy and if a possible investment. So there could be some fluctuations along the way as far as the full interest-bearing debt is concerned on a full year basis. Okay, thank you very much for your response. If I could turn to a second question, if I may ask. You have not clarified the timetable, but with regard to the acquisition of entity data shares for $100 billion, can you talk about the timeline for acquisition of entity data shares to the extent possible? Thank you very much. Thank you. Hiroi here. Thank you for your question. I'm afraid with regard to details as far as timeline is concerned, we're not able to comment on this matter. I would appreciate your understanding. We're not able to comment on the specifics on this matter. Thank you. Point taken. Thank you very much.

Thank you, Mr. Tanabe. We would like to take the next question. The next question is from Dialogue Securities. Mr. Ando, please go ahead with your question. This is Ando speaking. Can you hear me? Yes, we can hear you. Thank you. I have two questions also. The first question is regarding the first quarter and the consolidated basis Was it above your expectations? And by a business segment for overseas, depending on a situation, it was way beyond your expectations? Or were the areas that did not reach your expectations? And the regional communications business was not reaching your expectations? If you can intentionally explain the differences and nuance than what was announced. This is Hiroi speaking. That is a fairly difficult question to answer. I myself have reviewed the various numbers, but there wasn't that much of a large change. And overall, it was in line with the expectations for each business segment is how I think. And as for Docomo, the revenue trend, maybe I want the enterprise business segment and smart life to put more effort into it, but we have a clear visibility and they're still working on the cost reduction that is in line with the plan and regional communications business. As you know, there's no large changes, so there's no surprise. And for the global businesses, as I have mentioned before, we will surely obtain the sales and we are changing it to be a profitable organization. And that speed is becoming quicker, and we have a wish that we want to largely change the profitability. But as the transition point for the first quarter, I think it is in line with our expectations. Therefore, sorry, there was no big surprise for us, so to speak. So I think that that's probably how you can look at this. Thank you. Thank you very much. My second question is regarding the power business or power, electrical power. My understanding, your company, you are one of the largest power provider and you are in the position of the electrical power provider and Docomo has started the service providing the electricity. But looking at the recent crude oil prices or the power prices situation? I want to understand that situation, so what I want to ask you is that for your company, not just Enet, but how much of the total electricity sales do you have, and how much are you procuring? And looking at the recent electricity price increase, how much of the impact will you bear, if possible, Can you share rough numbers in a quantitative manner? This is Hiroi speaking for the electrical power. Structurally speaking, we have three types. The first is that we have the proprietary network. To provide the proprietary network, we are using power and operating the base stations and also the network itself. And when the electricity prices go up, we cannot pass it on to the customers immediately. Therefore, such an element will impact the profit level immediately. And the other is at the center. We have the enterprise retail power sales business. And that we do procure the electricity to a certain degree and provide it to the customers. And this is similar to a financial transaction, meaning that to a certain degree, we have the mid-term and long-term procurement secured and have a hedge over that transition. And the third is the business towards the consumers, which is like Dokomo Denki. And this is similar to the enterprise business, meaning that we will procure to a certain degree and secure. keep it in a way that the cost does not vary that much and being able to provide it in a stable manner to the customers. And the first part, regarding the network, for us, an annual basis, about 20% we thought will be the electrical power increase, but recently it's about 30% increase. And the speed of this increase is quicker than what we have expected. Therefore, that part is going to be a down pressure on the profit, is what we think, and also the latter part for the enterprise customers and also the consumer retail business part. As I have mentioned, to a certain degree, we are already hedging the procurement. Therefore, in that sense, whether that's going to become a large risk this fiscal year, that is not the case because we believe we'll be able to manage it to a certain degree. but in a medium-term perspective, we cannot infinitively continue to secure the power supply for long-term. So that risk may be similar to the market risk and have an impact to our business. I think that's how I'd like you to understand it. Okay, so in that case, for example, your company's profit significantly being impacted will be 10 billion and above. That will be the minimum level of the significant so-called impact. But for this fiscal year, do you still have a risk? Yes. As I said before, what will probably impact the profit directly will be our own usage part. We did expect that in the plan, but the degree of the increase in the price is quicker than what we expected. So we are putting efforts in saving energy, and we need to have a more strict control so that we'll be able to minimize the impact. And that's how we would like to operate at the second half. Thank you very much.

Thank you. Next question, please. Next question is from Goldman Sachs Securities, Tanaka-san. The floor is yours. Please, Tanaka-san, go ahead with your question. Thank you, Tanaka, from Goldman Sachs. Can you hear my voice? Yes, we hear you. Thank you very much. Now let's ask about NTD Limited. Two broad questions about NTD Limited. The first question is about the demand environment. If I could talk about a different perspective, can we see across different regions? I know that you're globally active, but can you talk about region by region? Is demand strong across the board, or are there differences from region to region? If you could give us your assessment of the demand among the different regions. I think you still have the network equipment, but then there's the impact of shortage of semiconductors. So compared with the situation three months ago, do you see signs of improvement in semiconductor, or is the environment still harsh? If you could talk about possible changes. That's my first question. Yes, thank you for your question. First of all, let me talk about our assessment by region. Well, generally speaking, well, starting from Asia, in Asia, I think we see very positive trend generally across the board in Asia. If we talk about the macro situation, be it the United States and also in Europe, I think this situation is very strong in these regions. Having said that, how much have we been able to benefit from the strong demand available in these markets? In the case of NTT Limited, as a result of integrating NTT communications business in Asia, Asia's portfolio expanded for NTT Limited. So therefore, inclusive for the data center business, we see very robust demand in this area, in this region. In the case of the United States and Europe, relatively speaking, the competition is very tough. So compared to the situation in Asia, the trend is somewhat weaker in U.S. and in Europe. I think that is how you should see the situation overall. Thank you. What about the impact of semiconductor shortage? Has the situation changed over the three-month period? Okay, Mr. Taniyama will respond to your question. Yes, thank you. With regard to the semiconductor situation, if I may comment, as was mentioned by Mr. Healy earlier, the supply chain for semiconductor is trying to see Our expectation was that this will be improving. However, the speed of improvement in the supply chain for semiconductors is somewhat weaker, as was mentioned by Mr. Shimada in the press conference. We have 130 billion yen residual demand. Right now, the residual demand is 160 billion, which means that we see order taking improve or increase. So how do we... respond to the backlog of demand. This is something that we really need to scrutinize and monitor. So the impact of semiconductor shortage is still evident in the first quarter. How this will play out in the second quarter, this is something that we want to scrutinize very carefully over time. Thank you. So you're saying that the improvement is not in line with the expectation, but on the ground, it's still very difficult. You do not see significant changes in the marketplace. Yes, that is the case. Compared with the fourth quarter of the previous year, this situation is not improving. That is our understanding. Okay, thank you for that. They could ask another question. From the second half, entity-limited and entity data's overseas business will begin to integrate. So that being the case, what about the PMI? As you see, can you talk about the priorities for PMI? How much improvement would you like to realize as a result of this integration? You could talk about this in qualitative terms, but if you could give us an outlook for the PMI for the two businesses. Yes, thank you for your question. At the press conference, I think Mr. Sawada and Mr. Homa already talked about this in previous press conferences. So we need to identify which areas we need to reinforce. I think that at the end of the day, this is what we should focus on. And as far as the customers are concerned, the customers are not just an application, they want network and data center managed services. They want all these functions to be provided in an integrated fashion. So the customer's demand cover all of these areas. That is their expectation. So it's important that we be able to deliver those services in a one-stop fashion. So that is why NTD Limited and NTD Services and other data-related subsidiary firms are now being integrated. We want to make sure that we enhance our service capability through the integration of these different functions. As far as anti-data is concerned, they have strength in consulting expertise. They have strong customer base. So it's important that we leverage those to capacity and also be able to reinforce our platform capacity and also improve connectivity, offer full stack connectivity. But I think all those anti-data can make strong contribution in these areas. So if we can maximize our capability to integrate our services, then this will translate into strong PMI. This is a qualitative response. I do apologize. Thank you. Taniyama here. That could add. As was explained by Mr. Hida, yes, we want to offer full-stack solution. On top of that, it's important that we offer, carry out cross-selling investment into consulting services. We have different systems across different companies, so it's important that We integrate these networks and leverage synergy as a result of these integrations. Okay, thank you. That is clear. Thank you.

We would like to take the next question. The next question is from Citigroup Securities. Mr. Zidul, please go ahead. This is Zidul from Citigroup Securities. Can you hear my voice? I have two questions. Yes, we can hear you. Thank you very much. First is regarding the progress of the cost reduction. Looking at the overall results, it's in line as planned, but as written in the material, the progress of cost reduction, the first quarter, it went down by 30 billion yen, and from the full year, it seems that it is front-loaded, or it's quicker than planned. And with the integration of KOM and Docomo, there will be a synergy that's generated. So through these three companies, how much is the cost reduction going to be accelerated or maybe not? But recently, this 30 billion yen of cost reduction, can you mention the main items or areas? This is Taniyama from Corporate Planning. I would like to answer. As you have mentioned, Mr. Tsudo, right now, this fiscal year, We have accumulated up to $870 billion, and annually it's $930 billion. So from $830 billion from last fiscal year, we are ahead of plan than $30 billion of cost reduction. Basically, the personnel cost reduction, facility cost, and sales promotion is 1 to 4 to 5 in terms of a ratio. That's how we are planning the cost reduction. And within that situation, the improving efficiency of network improvement, the 3G ahead of plan, we are responding to it. And in Docomo, we included a web and a digital channel. We have utilized it more. And for Docomo and communications operations, improvement in efficiency, those are the elements that are going to be embodied for cost reduction. So annual of 930 yen cost reduction, we will thoroughly work on this moving forward. And one thing I would like to confirm, in the second quarter or the third quarter, when are we starting to see the drop, the large drop in cost reduction in reflecting the synergies? Specifically speaking, we are implementing these initiatives So I cannot tell you exactly at what timing you'll see it, but from the direction wise, I think there's going to be more weight of the cost reduction in the second half. Thank you very much. The second question is regarding free cash flow. I have the information for Docomo is a free cash flow, but for your company, I don't probably. Your company overall free cash flow situation is what I'd like to know. In Docomo, the networking capital is generating a lot of free cash flow. So this may involve Dokomo's question too, but overall can you explain about the free cash flow situation? This is Nakayama from Finance and Accounting. First of all, the consolidated basis of cash flow situation. Today at the beginning, as Mr. Hiroi explained to you, for the quarter financial results briefing session on page 20, there is the consolidated cash flow numbers. Oh, excuse me. And if you look at that situation page, for free cash flow as a result, it's almost at the same level as the last fiscal year. And the consolidated cash flow and investments, cash flows from investment activities for the consolidated cash flow compared to last fiscal year, the plus amount went down for about $150 billion. What is at the base, which is EBITDA, is increasing, about 20 billion. Therefore, the base of the operating activities, there's no specific problems. However, the decreased amount part, last fiscal year, as you've seen the note number two, DOCOMO, Decrease in corporate taxes in March, that was lower than expected. And also the working capital last fiscal year, the various education-related projects occurred. And the cash in from that in the first quarter was quite a large amount. So compared to that, the cash inflow is decreasing. Therefore, there are some specific special elements. that caused this variance. And next, the cash flows from investing activities. That is a bit more simple. Compared to last fiscal year, the investments were less. And this fiscal year, as I have mentioned before, the subsidiary company being sold The sales of Sazeri stock, the increase is about $10 billion, but we had about $40 billion. So that has an impact. So plus and minus, it's as you see here. Okay, thank you very much.

Thank you. Are there any other questions at this juncture? If I could go back to the earlier question by Tanabe-san. This is Hiroi. It is true that right now we are disclosing NTD Limited performance. We are disclosing the performance of NTD Limited. It is true that net profit is supposed to be zero for the full year. So I think we need to check on the full year guidance once again. And also in line with the disclosure rules, if we need to make adjustments based on those rules, we want to respond in a suitable manner. Thank you, that is all.

Thank you very much. With this, we would like to close the fiscal year 2022 first quarter briefing of the financial results.