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Thank you very much for gathering today despite your busy schedules. From now, we would like to start NTT's briefing session on the fiscal year 2022 second quarter financial results. My name is Hanaki from the IR office. I will be serving as the facilitator today. At the start, I would like to introduce the attending members on stage. Representative member of the board, President and CEO, Shimada. Representative member of the board, Senior Executive Vice President, Hiroyi. Executive Officer, Head of Finance and Accounting, Nakayama. Executive Officer, Head of Corporate Strategy Planning, Taniyama. Today's briefing session is streamed live We are planning to stream it on our website at a later date, so we seek your understanding beforehand. Regarding today's explanation of materials, please refer to presentation materials posted on our IR website. On the first page, points to be noted are listed, so please go through it as well. From the President's CEO, Shimada, I will explain the outline of the financial results, followed by Q&A from the floor. President Shimada, please go ahead.

Good afternoon. Thank you for joining us at the financial results for the second quarter. Shall we start with page four of the material, please? Operating revenue increased, operating income decreased, and profit increased year on year. Operating revenue and profit reached new record high level as the second quarter. Operating revenue increased 398.5 billion yen year-on-year up to 6,286.2 billion yen due to increase in revenue at NTD Data and NTD Limited. Of this increase, foreign currency accounted for 135 billion yen. As for operating income, although there was positive impact of increased revenue, this was not enough to cover increase in electricity costs. So operating income decreased 12.7 billion yen down to 996.5 billion yen. From the first half, we have taken cost reduction measures to cover rising electricity costs. and we intend to realize the benefits of these measures during the second half of this year, so we want to achieve our annual guidance through these methods. As for profit, it increased $20.8 billion year-on-year, up to $696.6 billion due to one-off positive impact related to corporate tax. As for overseas operating income margin, it increased by 1.1 point, up to 5.8 percent, due to increased profit driven by increased operating revenue at NTD Data and NTD Limited, as well as cost reduction through structural reform at NTD Limited. So that is the situation. Let me now turn to contributing factors by segment. Starting with integrated ICT segment, while there was negative impact from press reduction in the consumer segment, it was offset by increased revenue at enterprise and smart-led businesses, so both operating revenue and operating income increased in this segment. As for regional communication business segment, both operating revenue and operating income decreased because one-off positive factor from the previous year no longer applies, and also because of the unexpectedly high increase in electricity cost. We will accelerate our cost efficiency program and increase revenue from system integration and growth business so that we can achieve our annual guidance of increasing both operating revenue and operating income. As for global solutions business segment, in the case of entity data, while operating revenue continues to grow from robust demand for digitalization due to increase in investment for growth, and also in part from unprofitable project in Japan, operating revenue increased and operating income decreased. As for entity limited, both operating revenue and operating income increased due to increased revenue from value-added services, as well as cost reduction through structural reform. The second as a whole recorded increase in both operating revenue and operating income year-on-year. As for others, real estate and energy, operating revenue increased due to increased electricity agency business at ENET and also increased revenue from electricity business reflecting rising commodity prices. Let me now turn to some of the topics on hand. I would like to introduce five. Please turn to page seven. increase in starting salaries for new graduates. I would like to explain this matter. In order to hire more highly skilled talent, entity group major domestic companies are increasing the standard starting salary from April to fiscal year 2023. Also, we'll begin offering higher salaries based on higher levels of expertise at the time of hiring. Page eight talks about the new They review a solar system for regular employees. This will take place from next April. So we want to have a solar system with promotions based on expertise. Page 9.

Next, I will explain about establishing a new company in the field of human capital. We will establish NTT Human X Corp in December 2022. We will establish a new company that uses human capital data analysis to provide comprehensive support from consulting to system integration. Based on NTT Group's knowledge of pioneering human capital reforms, we will leverage NTT Group's personal data infrastructure and AI analysis to support company work style reforms, environment building, and improvement of Engagement for Career Development of Employees. Next page, please. Next, I will explain about development of technology that enables high-speed wireless underwater communications. As the technology that will enable stable high-speed underwater acoustic communications, we developed two technologies, spatial temporal equalization technology and environmental noise immunity improvement technology. We have established a technology that suppresses the impact of delayed waves caused by sea surface reduction and noise from marine biologies in a shallow water area that is about 30 meters deep, and successfully conducted a transmission test with transmission speed of 1 megabits per second, which is over 10 times of conventional speed underwater over 300 meters of distance. We apply this technology to realize a wirelessly controlled underwater drones. Moving forward, we will proceed in-field demonstration for practical usage and aim for being used in infrastructure inspection of port facilities and fishery industry field for marine environmental survey for aqua farming. Page 11, please. As for the overview of medium-term management strategy initiatives, it's as shown here. However, I will explain three main initiatives. With the objective to further promote NTT Group's XR business, NTT Docomo has started the business of the new company, NTT Konokyu, from October. As announced last May, based on our business integration plan of NTT Data and NTT Limited, NTT Data Inc., No, it's not last year. It is this year. Based on our business integration plan of NTT Data, NTT Data Inc. was established as overseas business company under NTT Data in October. And NTT East and West, to further increase Hikari demand, they are planning to lower wholesale price for wholesale Hikari service during fiscal year 2023. And please refer to page 12. In order to improve capital efficiency and enhance shareholder returns, we have resolved in today's Board of Directors meeting to buy back shares of maximum total amount of 150 billion yen. That is all from my side.

Thank you very much, Mr. Shimada. I would now like to go on to the Q&A session. We will first take questions from the members who are here on site. We will also be taking questions from people who are connected to us on a remote basis. You will be able to take questions from people who are connected to the phone system who have registered beforehand. So we would like to start with the members who are present on site. Please wait for the microphone to be brought over to you. So please raise your hand if you have any questions. Please state your name and affiliation and go on to your question. So let us start from the gentleman in the first row. Thank you very much. Masano from Nomura Securities. Thank you. I would like to ask about the second quarter results, just the three months for the second quarter. We could focus on three months. Can you give us some response for each of these business segments for these three months for the second quarter. Let's start with the global solutions. Entity Data has already made an announcement about the results. And on a quarterly basis, Entity Data, we knew that there was, with regard to revenues, I suppose NTD Limited, when we take a look at this number compared to the second quarter of the previous year, the margin seems to be coming down, profit seems to be coming down. Maybe it's because the profit was so high in the previous year. How do you see the outlook for the second half? How do you see the outlook for the global solutions in the second half? How do you intend to improve and expand your profit for the global solutions business segment for the second half? And then I wanted to ask about regional communications after you respond to my question about global solutions. Okay. Thank you, Mr. Masuno, for your question. Let me start with MTT Limited. Now, this time around, we have already plans for the second half. Yes, we are slightly behind the outlook for the second half. And the major driver for this is as follows. We call this The system integration related services, the sales of system integrated services has been affected by the semiconductor shortage. The pipeline is building up. The pipeline has been expanding. Toward the end of the year, 27 billion yen has been built up at the end of September. And I think the scale will be roughly 170 billion yen at this moment. So that indicates revenues have been affected. So that means that the profit relation to this revenue has not been achieved. So that is why the profit for the second quarter has not reached our plan. Now, aside from that, in the indicates of value added services, We've already disclosed the numbers, but we have seen the growth in data center business and sales has been increasing by 160%. So we see very robust growth in data center business. And although we have not disclosed the following number in comparison with the full year pipeline, 90% of the full-year pipeline has now been translated into revenues for data center business. So from the third quarter onwards, maybe we need to increase the investment in the data center business because we'll not be able to accommodate the customer demands. That is the situation pertaining to our data center business right now. So I think we need to be mindful of several issues. First is the handset sales, equipment sales. We have not been able to progress as much as we had anticipated. So that is the issue on hand. Thank you for that response. Could I turn to regional communication business segment? If we see just third three-month alone, the profit seems to be coming down. This is probably affected by the electricity, I would imagine. You mentioned that toward the second half, you want to introduce efficiency program and be able to absorb and make recovery in the profit. May I take it that is the correct assumption? Well, thank you for that. The situation varies between NTT East and NTT West. In the case of NTT East, as far as profit is concerned, last year we had the Olympics and Paralympic Games. So there was a temporary impact that accounted for roughly 15 billion yen in terms of revenue. So revenue has been affected by that. So this is a downward trend in the revenue, and also because of the rise in electricity prices, operating income has also fallen as a result of these factors. Now, on the other hand, turning to NTT West, The cost efficiency program is more skewed toward the second half. So therefore, because of the rising electricity prices, we have to consider that. Also, last year, we also had a different transitional factor, temporary one-off impact for NTD West. Because of COVID-19, our call center business was affected. So that factor no longer applies this year. So that is going to have a negative impact on operating income. And also electricity increase has not been covered by cost efficiency program. But then as far as the second half program is concerned, we have a plan. If we are able to meet the plan for cost efficiency second half, we believe they will be able to meet the annual guidance of increasing both operating income and operating revenue.

Thank you. So the gentleman in the second row, SMBC, NICO Securities. My name is Kikuchi. Thank you very much for today. I have two main questions. The first is regarding NTT Limited. It's kind of the continuance of Mr. Masno's question just asked. Structural reforms this term, you have planned $38 billion. First quarter was $4 billion. Therefore, the second quarter, how much have you spent? And for the second half, how much more are you planning to spend? Originally, you had planned for $38 billion, but looking at the progress of the first quarter, it seems that it is a bit behind. In the second quarter, is it behind, too? Do you really need to spend all of it, or do you need to add more to it, is what I would like to note. That's the first question. And also, regarding the data center, Probably it has increased in revenue, therefore it has increased in profit as well. And you are making investments in advance quite a bit, and where you were explaining, I think the cost at the front is probably heavy, so is that also increasing as well? Regarding the structural reforms, At the first half, actually, we have not done even half yet. Probably around 40% is correct to understand. Therefore, in the latter half, there will be about 60% of the structural reform expenses that is going to be recorded. As I have been saying before, unprofitable countries or unprofitable services, we would like to withdraw from those. And also, currently we are using outsourcing in the delivery area or the overhead areas. Therefore, those operations are working on improving the efficiency. Therefore, the headcount optimization is going to incur cost in the second half. And throughout the year, the low profitability services, especially the cloud services, we are reducing it so it is showing on an equal basis. But the two points that I've mentioned right now is going to be more loaded at the latter half of the year. And also regarding the data center, Thanks to everybody's efforts, the sales is steadily increasing. And as mentioned before, in terms of the orders received originally, We have reached already 90 percent of the orders that we have expected at the beginning. And we also have plenty of pipeline as well. Therefore, in that sense, capital investment, we'll probably have to spend more in the second half and also for next fiscal year. It seems that they're not feeling the impact of a recession yet, and even in Europe as well. they're not feeling the impact of recession yet. Therefore, in a little bit more continuous matter, we need to make investment is what we are thinking. So in that sense, making investments on our own right now is going to surely link to the later return. And actually, we have many hyperscaler contracts, so the contract period is quite short. Therefore, we are having an increase in the contracts that have a low risk. Therefore, even though we make our own investments, we would like to further expand the business. Thank you very much. And regarding the structural reform, I don't know if I should discuss the detailed numbers. However, you said you have progress about 40%. So in the second quarter, it was about 10 several billion yen of structural reform that you have done. So if you add that back, last year's second quarter structural reform was around 3 billion. Therefore, limited profit excluding structural reform and added back, you'll say in profit terms that it is improving. Is it correct to think that way, or is the data center driving the numbers? Well, last year's structural reforms expenses, it was about $44 billion. What we've done in the first half is only one-fourth of that, and the second half was the three-fourths of it. So this year, compared to last year, in the first half we have spent Therefore, that amount is absorbed and reflected in the current profit situation. The profit is behind the plan, and the reason of that is about the equipment sales. Our business is not doing well, but the others are in line with the plan. Understood. So the second half for NTT Ltd., right now it's a part of entity data inc so you may not be able to extract the second half numbers so first half 10 billion uh second half 25 billion was the operating income plan after you subtract the structural reforms that is not going to change no it will not change understood thank you very much well not change but whatever was behind in the first half they will catch up in the second half we need to catch up in the second half Thank you very much. Regarding my second question, towards the next fiscal year, what is going to be the cost increase, the factors, or the factors to reduce revenue? You have mentioned that you are reviewing the salary amounts and also the expenses amount. You were saying that the new graduates, but I believe that overall the younger generation employees, will be impacted by that. I don't know to what age range it's going to impact, but overall group-wise, I think you don't include overseas employees, but you do have quite a number of employees in the younger generation group. So it seems that it is going to be quite of an expense. So is that going to become a factor that is going to reduce the profitability? And for NTD East and West, the wholesale price, you said that you will be reducing that. And that is directly going to be a reduction in profit factor. So for next fiscal year, how much should we expect for the standard salary, starting salary increase? We said young people, but the background is second-year, third-year employee. So the cost increase factors is only – it's not that large. It's quite small. It probably will not reach even 1 billion yen. Therefore, I don't think you need to be that concerned about that point. And also, what was your question? Oh, the wholesale price reduction. Regarding the wholesale price reduction, it's not clear yet at what timing that we will be doing that because NTT East and West haven't decided yet. But depending on the timing, the degree of impact will change. This time, well, conventionally, If we do this, it will be the fifth time next fiscal year. We have done this already four times in the past. Therefore, basically, it will be probably the same level of price reduction. If that is so, thank you. The net ads are not that bad recently, therefore, for the FTTH. So I believe that it's not going to be that much of a reduction. Yes, well, lowering the wholesale price and have the collaborating partners to promote the sales more is what our intention is. Thank you very much.

Any other questions? We'll go to the person in the third row in the back section. Thank you. Tsudo from Citigroup Securities. My first question is this. $150 billion share buyback. Appreciate the announcement of the share buyback program. Income is roughly $300 billion. Out of that, $150 billion will be allocated for share buyback. Can you elaborate on how you reach this amount? So this year, it will exceed $500 billion, and I think the actual track record will probably exceed $500 billion. Are you going to use the remaining capital for dividend? Can you talk about the plans for next fiscal year as well, to the extent possible? Well, thank you for the question. In the past couple of years, among the past couple of years, this fiscal year, I believe, represents the year in which we'll be carrying out the largest share buyback to date. So that indicates the shareholder return ratio will be 77%, I believe. But having said that, We don't want to increase the return ratio in such an extreme fashion. We want to pursue a more stable increase in shareholder return. So that being the case, we felt that this was the appropriate level for us to be quite candid. I believe the current level is quite appropriate as far as our thoughts about possible increase in dividend. I think we need to monitor the progress of our business performance overall. And so we need to monitor the progress in our operating income. And based on that, we'll make our decision in any event. Under the current medium-term management strategy, we are going to be seeking increasing dividend as our basic policy, so that policy remains unchanged. That is my response. Thank you very much. So I will not ask about share buyback in the next fiscal year then. Then let me go on to my second question. It's about the pace and the speed of your cost reduction efforts. In this quarter, $875 billion so improvement of roughly 5 billion compared to the previous year. But compared to the previous year, the pace of cost reduction has been slowing down. I don't know how you are going to make the announcement, but is there a possibility that cost reduction efforts will be delayed by pressure on prices? Can you share with us how you see the challenge? And to the extent possible, since there was a comment about electricity price, to what extent will this have impact on your overall performance for the group? I would appreciate your comment. Thank you. Well, thank you for the question. As I point out, the pace of cost reduction is not slowing down. and carry out cost reduction efforts. But then there's the impact of increasing electricity prices. For example, in the case of NTD East and West, they need to absorb such cost increase. They also need to make further cost reduction efforts to absorb such cost increase. So this goes back to what I mentioned earlier. As far as the measures are concerned, I think the measures will be more loaded or skewed toward the second half of the year. So we hope we'll be able to cover the increase in such – we hope we'll be able to cover the increase. And we would like to really make an effort for cost reduction in the second half in order to absorb those costs. Thank you very much. That is all. Thank you.

Thank you very much. The center – second from the front. Second row from the front, please. Mitsubishi UFJ Morgan Stanley Security. My name is Tanaka. Sorry, I have three questions. The first is related to NTT Limited. structural reform expenses was already mentioned for the effect of the structure reform and the first quarter was about 7 billion and that impact or effect in the first half in total how much was it and the equipment procurement Industry-wise, it seems that the situation is easing a bit, is what I feel. However, once again, I'd like to ask you about your outlook. I believe you have your pipeline, but do you think the situation is going to be resolved within the fiscal year? Regarding the structural reform, on an annual basis, it's about 9 billion is what we are expecting for this year. And from next year onwards for the full year, we are expecting about 12 billion of structural reform positive impact to the profit line. The first half, how much? What Shimada explained is this fiscal year's structural reforms, and there was an effect of last fiscal year. The first quarter, it was 7 billion, and the second quarter, accumulated basis, it was 14 billion yen. That is the total of last fiscal year and this fiscal year. In total, it's 14 billion, and on an annual basis, it's going to be around 20 billion. So the first half is 14 billion and annual basis is 20 billion. So the second half, it seems that the pace is going to slow down. Well, what we've conducted last year from the third quarter, it's going to be the same amount. So against the previous year, the effect is not going to show that much. So what we are conducting, uh, conducting a structural reform right now, we will be seeing that effect in the second half. So on an annual basis, $20 billion, and next fiscal year, simply thinking it's an additional $12 billion. Okay, next fiscal year, $12 billion plus additional. And in fact, the semiconductor supply situation, the equipment procurement or equipment sales will be impacted by that. The semiconductor industry's situation looking at the second quarter, as explained to you, It is starting to glut, meaning that how much of products can be manufactured at the vendor side for Entity Limited, Cisco's supply? How much will that recover? It's all dependent on that, at least. The current situation has not recovered to the level that we want it to, but we are hoping that the second half will start to improve even more. At this point, it is not clear whether we will be able to respond to all of the pipelines that are accumulated. Thank you. Well, NTT Limited is the distributor from the Dimension Data Days. Well, in that sense, it is a company that's buying the most. So I cannot share you with the content, but we are receiving the supply that matches that position. Thank you. The second question regarding this human capital, this company, HumanX. This is consulting and system solutions is what you have mentioned. But for the talent of this company, is it going to come from NTT Data and other group companies? And are you going to pursue the businesses in AI, or are you going to use the research institutions, or are you going to bring in other talent? This NTT Human X Corp, basically, is going to be comprised by HR talent and combined with consulting, so business associates and entity learning talent. The HR of the group or salary or benefit is done within the group by these companies that the talent will be coming from. So the HR consulting talent, we are depending on the business associate, entity business associates. So we will be rolling out the talent from there into this company. the system composition of Zero Trust and that part, we will be utilizing the entity communications capabilities as well. So at the frontline entity Human X people will be working, and behind the scenes, various resources within the group will be leveraged. Okay, thank you very much. And, of course, the sales channel, we would like to leverage the group's sales channel as well. Thank you very much. My last third question is on page 11 regarding the... Medium-term management strategy, where it says promotion of the ion development rollout plan. So the digital coherent signal processing circuit and optical device is mentioned here. Will the sales be recorded? What's the timing that it is going to positively impact the P&L? I would like to have more of an elaboration on this. Well, regarding this area, at the end of this fiscal year, the 400 gigas will be packaged product is what we expect to be able to launch as a product at the end of the fiscal year so as the uh being provided as a full-scale product will be from next fiscal year onwards from 2025 i would like to have a 500 gigabps product 800 excuse me 800 gigabps It's for a specific purpose, so it's not something that we're going to see a sudden increase in the demand. So the eons. For the photonic, photo-electronic converted product, APN, it's a timing to supply APN, then the volume of that will increase. So we would like to have more expectations from that timing onwards. And for the other detailed information in next week's R&D forum, we will be able to give you more detailed explanations. Thank you.

Thank you. We'd like to take questions from members who are connected to us through online. For those of you who are connected on a remote basis, please push asterisk and then push one. Please push asterisk and then one. If you want to cancel your question, please push asterisk and then number two. So we would now like to take questions from people who are connected to us online. Are there any questions from attendees who are participating through online? We'll take your questions now. Okamura-san from Okasan Securities, the floor is yours. Please go ahead. Thank you. Okamura from Okasan Securities, can you hear me? Yes, we hear you, sir. Please go ahead. Hello? We hear you, sir. Yes, we are hearing your voice. Please go ahead. Okay, thank you very much. My apologies. I just have one question. It's about anti-limited operating income. In the three months of second quarter, I think there was a drop of $5 billion on a year-on-year basis if you compared with the previous year. Now, you mentioned that the cost of structural transformation had a negative impact of 8 billion. But on the other hand, there is also the benefit from structural reform, and the amount is equivalent. So what are the factors? If you exclude structural reform, the remedy will be 4 billion yen. So we cannot visualize the positive contribution from increased and validated services and energy limited. Can you talk about the positive impact of increased and validated services on operating income? Well, we are behind by roughly $3.6 billion because the plan was $10 billion. So that is the amount that we are behind. So in principle, as I mentioned earlier, we need to focus on the equipment sales, the revenue from equipment sales. are not progressing against the plan. So that accounted for 50 percent of the impact. So data center business was a positive contribution So that was able to offset the negative factor. So that is the equation here. Okay. I see. Thank you. So where the added services are making positive contribution to operating income, but in the case of others, the other part is declining. So overall, the operating income is in the negative territory. Yes, that is how you should understand. Okay. Thank you very much. That is all for my question. Thank you. Thank you very much.

Thank you very much, Mr. Okumura. Next, BOFA Securities. Kinoshita-san, please go ahead. This is Kinoshita-san, BOFA Securities. Regarding the cost increase part, if possible, I would like to know in numbers. Electricity? In your presentation materials on page 18, it says the increase in electricity expenses. It says that $318 billion over on the group. On the group basis, what percentage is from electricity increase in an annual basis? How much of a compression impact is that going to have? in numerical terms i would like to know if possible mr kinoshita thank you very much The electricity price hike first half is 30 billion yen impact. So about 40% increase occurred in the price. And probably second half is going to be at the same level. Therefore, on an annual basis, in total, it's about 60 billion of a cost increase is how you can understand it. Thank you very much. And including that, Regarding the plan at the beginning of fiscal year, well, at that time from last year, the electricity price has been increasing. But this impact, has it been incorporated to a certain extent? Or regarding the electricity price, you were not paying that much of attention? Or if it settles within the $60 billion range, at the way you think right now it could be absorbed. However, moving forward, if the electricity price goes even further up, is it going to be enough by implementing measures at that point? well first of all when we plan for this fiscal year we expected about the 20% of increase but right now it's 40% so it has increased twice than what we have expected at the beginning therefore let's say the annual basis it goes up by 60 billion then we have expected 30 billion but 30 billion is we have not expected. So that part we need to absorb by increasing the efficiency and the cost side. Regarding the fiscal year, within the fiscal year, we have a contract. And of course, there is the fuel price adjustment issue as well. But probably around 40% is where we will settle. However, for next fiscal year, Currently, we're in the process of negotiating the contracts. And more than this fiscal year's contract situation, the environment is becoming more severe. When I'm saying severe, it's not that the price is going to increase, but rather, conventionally, we're able to have a long-term contract. But recently... With the electricity companies, having such a contract is becoming difficult. So regarding next fiscal year's plan, we need to carefully pay attention to that. And again, next fiscal year's business plans, how much can be absorbed through cost reduction is something that we need to thoroughly think of. The electricity prices, well, next year or next year for about two years, there's a possibility that it's going to continue to increase. So we need to be dealing with it cautiously. Thank you very much. Thank you.

Next question from Missile Security's Hori-san. The floor is yours, Mr. Hori, please. Thank you. My name is Hori from Mizuho Securities. Thank you for this opportunity. I want to ask about NTD Limited. NTD Limited, if you have any numbers pertaining to foreign currency impact on NTD Limited on a standalone basis. So the decline in revenue for equipment sales and also increase in value added services. I want to identify these numbers as much as possible. Well, if you take a look at the materials that have been disclosed, there's a supplementary data in the disclosed materials. So the value-added services ratio among the overall sales in the first half, is about 232 billion, so that represents 28.6% increase on a year-on-year basis. Now, of that, data centers accounted for the largest bulk in terms of the growth, 124 billion yen, that is the number for data center, that represents 40.52 billion yen increase year-on-year. So that accounts for 67% of the increase on a year-on-year basis. Now, on the other hand, as far as the equipment sales are concerned, 320 billion yen is the revenue. So that's roughly 27 billion yen increase. That represents an increase of 9.3%. But in the previous year, because of COVID-19 impact, the sales itself was very low. So I suppose it's a reaction to that. So that being the case, It is not yet back to the level which we expected. That is how you should interpret the situation. Okay. So I'm looking at the breakdown numbers in the supplementary data, but what about entity limited? What is the impact of foreign currency for entity limited on a standalone basis for the first half? Okay, let me respond. In total, $62 billion is the total impact of foreign currency for NTD Limited in the first half. I see. Thank you. Now, turning to data center. In the case of NTD East and West, I suppose they were significantly affected by electricity. In the case of NTD Limited data center, you're sending bilateral contracts. So I suppose you end up susceptible to cost pressure going forward as well. You'll be able to pass on the cost to the customers. So may I take it that electricity will not be a negative factor pushing up costs for NTD Limited going forward? Well, as far as data center is concerned, it depends on the customers. In principle, 50% of the customers are hyperscale clients. So if we make 50%, we're able to pass on the electricity price increase to the customers. So the customers will be bearing the cost for electricity. In the case of large-scale enterprise customers, many of the customers are able to pass on the cost to the customers. But in terms of contract with Asia, inclusive electricity, we have covered that in the contract. And this also applies to some contracts in Japan as well. As for those type of contracts, when the contracts are up for extension, we hope that we'll be able to pass on the increasing electricity costs to the customers. That is our position right now. So a significant portion of the increasing electricity costs will be able to pass on to the customers, and that is the case for NTD Limited. Okay, thank you very much. Thank you.

Thank you very much. Once again, we would like to receive questions from the floor. For those of you who have a question, please raise your hand. The third row in the center. My name is Ando from Daiwa Securities. I have two questions. The first is regarding the second quarters. Each company's the assessment of the profit progress from the holding companies' perspective. NTT Limited is short a little bit, or East and West is impacted by the electricity price. But other than that, Docomo and other companies' progress assessment is what I would like to know. First of all, regarding NTT Docomo, Regarding the consumer business of theirs? Well, you can ask them from now onwards. The second quarter, there were some seasonalities. It's 4,080 yen in terms of ARPU. And within the year, it is going to hit the bottom probably. And regarding the subscribers, the number MNP this year is steadily progressing. Therefore, in that sense, the consumer business... They have a decline in the profit, but we are seeing signs of heading towards a recovery trajectory. And for the enterprise business side, the reaction from the customers is very good. Therefore, the expectations from the customers is quite high. So towards that expectation, providing the mobile solutions surely is something that is asked for communications as well. So we can have expectations towards that. And as for the smart life business area, thanks to the efforts in the finance side, they are experiencing an increase, and for the other businesses are also experiencing an increase. The only one that is a bit of a concern is Dokomo Denki, Dokomo Electricity. This year's electricity contracts have been all covered, but for next fiscal year onwards, I believe that there are still issues that remain. And regarding that point, I would like you to ask Mr. E later on. They need to, once again, reexamine this year's plan. and probably maintain this year's number of customers. And as for NTD East and West, as I mentioned before, it is as explained to you. So towards the second half, we need them to work on the cost reduction. For the NTD East and West, other than electricity, it's on track to the plan? Yes, we believe so. And also for the global solutions, NTT Data had some unprofitable businesses, but overall, there is a strong digital demand. Therefore, the sales is strong. So we believe that the global solutions business is the growing driver, growth driver. So we're not that concerned for NTT Limited. As I have been explaining from before, the telecommunications equipment sales business is being impacted right now. However, At this timing, the margin is low, so having them improve the efficiency is something that we also can do. Therefore, it's not necessarily all bad. Well, of course, the more we sell, it's better. But if they can't sell, we can respond in a way that it doesn't sell with different measures and initiatives. So I believe that they're in the environment that they will be able to pursue such initiatives as well. And as for the other businesses, for NTT Anode, for now, they're managing the business at a satisfactory level. They're increasing their sales as well. From Tokyo... Yes, and other partners. Basically, NTT Node is selling on behalf of them, so they are able to secure the electricity side supply, so they are steadily increasing. For real estate... business urban solutions have declined in revenue and operating income so excluding the part that they have transferred over to a node and then they are increasing both in the revenue and profit thank you very much the second question is including the electricity power and infrastructure wise maybe not so much in Japan but globally there is some impact and So simply speaking, in terms of the price increase strategy, how much effort are you going to put into that? I'd like to know your way of thinking, not just electricity, but also in the United States. My impression is that the personnel expenses is in a situation that is easy to be increased. So how should we think about this price increase? Well, regarding the devices product, the ones that are increasing, it is already set at that increased level of price. For the telecommunications equipment, the network equipment or the servers equipment, we have quite a bit of volume that is imported. So the impact from that is something that is going to come out from now onwards, and we need to consider that as well. How much of a response can we make towards the inflation? Within the next year's plan, how much can we absorb? Is this something that we need to look into? And as for the personnel expenses, well, the issue that Japan has is that the personnel expenses is not increasing. However, suddenly, personnel expenses are going up. I don't think such a thing is going to happen again. There's domestic inflation that we're experiencing here. If it reaches the level of Europe or the United States, then we probably need to increase the wages and salary accordingly. But the CPI has increased that much, so CPI plus – an increase of personnel expenses that will maintain or increase the employees' motivation is something we have to think of, but it's not going to be a sudden increase. Well, in the United States, the personnel expenses or electricity, various expenses are increasing. Therefore, you will have to bear the decline in profit. But if you can increase the price, it will be okay. But you already have measures ready for that direction for the overseas businesses where we are experiencing increase in personal expenses. Basically, we are going to ask the customer to pay it. We can pass on to the service price. So we don't have the mindset that the company side, we are going to absorb it. Okay, thank you very much. Any other questions?

Are there any other questions? Thank you. If not, with this, we'd like to conclude the presentation of the second quarter financial results for NTT. Thank you very much.