Earnings Results for the First Quarter Ended June 30, 2007 (Q1/FY2008) Analyst Meeting
August 9, 2007 SOFTBANK CORP. 1 Content
Items Page
Consolidated P/L Analysis 4
Consolidated B/S Analysis 17 Accounting Consolidated CF Analysis 24
CAPEX Analysis 26
Financial Activities 31
Finance Interest-bearing Debt Status 34
Investment Results 55
Broadband Infrastructure Segment 60
Fixed-line Telecommunications Segment 70 Operations Mobile Communications Segment 81
Appendices 101
2 Accounting
Kazuko Kimiwada General Manager Accounting, Internal Control SOFTBANK CORP.
3 - Consolidated P/L Analysis
- Consolidated B/S Analysis
- Consolidated CF Analysis
- CAPEX Analysis
4 Consolidated P/L summary
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Net Sales 494,231 625,941 702,195 721,850 2,544,219 663,084 (58,765) 168,853 Operating income 54,357 58,194 84,733 73,780 271,065 78,746 4,966 24,389 (Operating margin) 11.0% 9.3% 12.1% 10.2% 10.7% 11.9% ―― EBITDA 104,309 124,090 154,000 143,026 525,428 149,778 6,752 45,469 (EBITDA margin) 21.1% 19.8% 21.9% 19.8% 20.7% 22.6% ―― Non-operating income 12,096 4,540 1,829 4,259 13,531 4,531 272 (7,565) Non-operating expenses (40,459) (26,039) (37,637) (36,231) (131,173) (32,123) 4,107 8,335 Ordinary income 25,994 36,696 48,924 41,808 153,423 51,154 9,346 25,159 Special income 4,672 66,795 15,788 9,024 96,282 9,940 915 5,267 Special loss (1,365) (13,895) (6,688) (19,182) (41,132) (2,692) 16,490 (1,326) Net income 1,418 13,021 7,494 6,881 28,815 25,130 18,249 23,711 (Net margin) 0.3% 2.1% 1.1% 1.0% 1.1% 3.8% ―― Quarterly- Key factors for P/L fluctuation
1 Net sales ¾ Mobile: JPY 159.2bn increase due to the fact that 3 months of SOFTBANK MOBILE’s results were included (same quarter of previous fiscal year 2 months of results were included), etc. ¾ Broadband Infrastructure: JPY 2.4bn increase due to firm trend in Yahoo! BB ADSL business ¾ Fixed-line: JPY 1.8bn increase in sales due to increase in number of corporate Otoku Line lines, and efforts in the Mobile business 2 Operating income /loss ¾ Mobile:JPY16.2bn increase due to reflection of 3 months of SOFTBANK MOBILE’s results (same quarter of previous fiscal year 2 months of results were included), etc. ¾ Broadband Infrastructure: JPY 3.1bn increase in income due to firm trend in Yahoo! BB ADSL business ¾Internet Culture: JPY 5.5bn increase in income due to firm trend in advertising business 3 Non-operating income/loss ¾ Non-operating income: decrease in equity in earnings of JPY 7.6bn following the sale of shares held in SBI Holdings, Inc. during FY 2007, etc. ¾ Non-operating expenses: although interest expenses increased by JPY 12.3bn, financing related expenses, recorded at JPY 19.9bn in Q1/FY07, did not occur during Q1/FY2008 4 Special income/loss ¾ Special income: recorded JPY 4.6bn gain on sale of investment securities, related to the listing of subsidiaries gain on sale of interests in a subsidiary amounted to JPY 0.9bn, and JPY 2.8bn was recorded as dilution gain from changes in equity interest ¾ Special loss: JPY 1.0bn loss on disposal of fixed assets recorded 5 Income taxes etc. Recorded current income taxes for Yahoo Japan Corporation etc. of JPY11.7bn, on the other hand JPY 8.8bn of income tax payable for SOFTBANK Holdings Inc. was reversed 5 Scope of consolidation/scope of equity method
FY08/Q1 Core Companies
SOFTBANK MOBILE, SOFTBANK BB, SOFTBANK TELECOM, Yahoo Japan, Consolidated subsidiaries 112 Club iT, SOFTBANK TECHNOLOGY, ITmedia, etc.
Newly consolidated companies ― Subsidiaries excluded from consolidation 6 Insignificant companies Non-consolidated subsidiaries 72 Insignificant companies Non-consolidated subsidiaries under the equity method ― Affiliated companies under equity method 70 GungHo Online Entertainment, MySpace Japan, Alibaba.com, etc. Entities newly accounted for under the equity method 5 Entities no longer accounted for under the equity method 1 Non-Consolidated subsidiaries not under the equity method 72 Insignificant companies Affiliated companies not under equity method 25 Insignificant companies
Companies Consolidated Under Equity Core Group Companies Main Business Activities Subsidiaries Method - provide mobile phone service Mobile Communications 5 1 SOFTBANK MOBILE (SBM) - sales of mobile phones etc. - ADSL, optic fiber and other high speed internet connection services Broadband Infrastructure 5 4 SOFTBANK BB (SBB) - IP phone service - provide content - voice transmission services SOFTBANK TELECOM - data transmission services Fixed-line Telecommunications 5 ― (SBTM) - leased circuit - data center business etc. - internet advertisements Internet Culture 14 17 Yahoo Japan - broadband portal business - auction business etc. SOFTBANK BB (SBB) - distribution of Software for PC's and peripheral equipment e-Commerce 7 4 Vector - e-commerce towards businesses and consumers Carview - broadcast media business Club iT - technology service business Others 76 44 SOFTBANK TECHNOLOGY - media marketing business ITmedia - overseas fund business - others Total 112 70 6 Consolidated net sales
663,084 Mobile Communications 700,000
BB Infrastructure 494,231
Fixed-line 500,000 Telecommunications
Internet Culture 300,000 e-Commerce
Others 100,000
Elimination
(100,000)
07/Q1 08/Q1 (m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Consolidated net sales 494,231 625,941 702,195 721,850 2,544,219 663,084 (58,765) 168,853 Mobile Communications 232,467 351,991 430,328 427,252 1,442,040 391,668 (35,583) 159,200 Broadband Infrastructure 63,322 65,728 67,266 67,910 264,227 65,747 (2,163) 2,424 Fixed-line Telecommunications 88,673 93,276 93,712 98,466 374,129 90,486 (7,980) 1,812 Internet Culture 44,642 46,676 50,049 52,842 194,212 52,796 (46) 8,153 e-Commerce 59,142 65,037 65,369 82,021 271,570 61,660 (20,360) 2,518 Others 20,289 23,785 21,628 25,082 90,785 24,871 (210) 4,582 Elimination (14,307) (20,554) (26,159) (31,725) (92,746) (24,145) 7,579 (9,838) 7 Consolidated operating income
70,000 Fixed-line Telecommunications 54,357 Internet Culture 50,000
e-Commerce 30,000
Others 10,000 Elimination or Corporate (10,000) Consolidated operating income 07/Q1 08/Q1 (m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Consolidated operating income 54,357 58,194 84,733 73,780 271,065 78,746 4,966 24,389 Operating margin 11.0% 9.3% 12.1% 10.2% 10.7% 11.9% ―― Mobile Communications 27,293 29,341 56,906 42,202 155,743 43,528 1,326 16,234 Broadband Infrastructure 5,479 6,189 7,747 7,393 26,809 8,665 1,272 3,186 Fixed-line Telecommunications 1,212 (916) (2,603) (656) (2,965) (111) 544 (1,323) Internet Culture 21,630 22,712 25,011 27,189 96,544 27,148 (41) 5,517 e-Commerce 1,461 1,399 2,010 1,809 6,680 1,167 (642) (294) Others (717) 547 (4,002) (557) (4,730) (689) (131) 28 Elimination or Corporate (2,002) (1,078) (335) (3,599) (7,017) (962) 2,637 1,040 8 Consolidated EBITDA
(m JPY)
Mobile 149,778 Communications 150,000
BB Infrastructure 130,000 104,309 Fixed-line 110,000 Telecommunications 90,000 Internet Culture 70,000 e-Commerce 50,000 Others 30,000
Elimination or 10,000 Corporate
Consolidated (10,000) EBITDA 07/Q1 08/Q1 (m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Consolidated EBITDA 104,309 124,090 154,000 143,026 525,428 149,778 6,752 45,469 EBITDA margin 21.1% 19.8% 21.9% 19.8% 20.7% 22.6% ―― Mobile Communications 55,802 73,615 104,082 87,985 321,484 92,429 4,445 36,627 Broadband Infrastructure 11,850 12,600 15,408 15,743 55,601 15,962 220 4,112 Fixed-line Telecommunications 12,643 10,248 8,939 10,758 42,588 11,104 346 (1,538) Internet Culture 23,929 25,243 27,607 29,427 106,206 29,605 178 5,676 e-Commerce 1,995 1,978 1,535 2,256 7,764 1,442 (813) (552) Others (5) 1,188 (3,052) 225 (1,646) 93 (131) 98 Elimination or Corporate (1,905) (781) (517) (3,367) (6,570) (860) 2,506 1,045 9 Non-operating income/loss
Other non-operating 0 income/expense (net) Foreign exchange gain/loss (10,000) Equity in earnings (loss) under equity method (20,000) Financing related expense Interest expense (30,000)
Non-operating income/expense (net) (40,000)
07/Q1 08/Q1 (m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Consolidated operating income 54,357 58,194 84,733 73,780 271,065 78,746 4,966 24,389 Non-operating income 12,096 4,540 1,829 4,259 13,531 4,531 272 (7,565) Interest income 1,088 1,045 941 318 3,394 608 289 (480) Foreign exchange gain ―――2,108 ― 543 (1,565) 543 Equity in earnings under the equity 9,051 ―――2,130 1,440 1,440 (7,610) method Others 1,956 3,495 887 1,831 8,006 1,939 107 (16) Non-operating expenses (40,459) (26,039) (37,637) (36,231) (131,173) (32,123) 4,107 8,335 Interest expense (14,601) (17,943) (20,994) (25,981) (79,521) (26,960) (979) (12,358) Foreign exchange loss (154) (1,686) (1,102) ― (834) ――154 Equity in loss under the equity method ― (1,005) (2,763) (3,151) ― ― 3,151 ― Financing related expenses (19,954) ― (8,441) (318) (28,715) ― 318 19,954 Others (5,747) (5,403) (4,336) (6,778) (22,101) (5,162) 1,616 584 Non-operating loss (NET) (28,362) (21,498) (35,808) (31,972) (117,642) (27,592) 4,379 770 Consolidated ordinary income 25,994 36,696 48,924 41,808 153,423 51,154 9,346 25,159 *Foreign exchange gain (loss), equity in earnings (loss) under the equity method, income and expenses from investments in partnerships, net are set off quarterly and shown on a net base 10 Consolidated ordinary income/loss
51,154
40,000
25,994
20,000
0 07/Q1 08/Q1
Quarterly - Fluctuation factors YoY +25,159
¾Increase of operating income +24,389 Increase relating to the reflection of 3 months of the Mobile Communications business results etc. +16,234 ¾Decrease in non-operating income (7,565) Decrease in equity in earnings following the sale of all shares held in SBI Holdings, Inc., etc. (7,610) ¾Decrease in non-operating expenses +8,335 YoY interest expense (12,358). Financing related expenses did not occur during Q1/FY2008 +19,954
11 Special income/loss
Special 5,000 income
Special 0 loss
Special income/ (5,000) loss
(10,000) 07/Q1 08/Q1 (m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Consolidated ordinary income 25,994 36,696 48,924 41,808 153,423 51,154 9,346 25,159 Special income 4,672 66,795 15,788 9,024 96,282 9,940 915 5,267 Gain on sale of investment securities 3,971 65,234 11,502 3,397 84,106 4,632 1,234 660 Dilution gain from changes in equity 300 694 1,102 501 2,598 2,866 2,364 2,565 interest Gain on sale of interests in a subsidiary ――――― 938 938 938 Other special income 400 866 3,184 5,125 9,576 1,503 (3,622) 1,103 Special loss (1,365) (13,895) (6,688) (19,182) (41,132) (2,692) 16,490 (1,326) Special income/loss (NET) 3,307 52,900 9,099 (10,157) 55,150 7,248 17,405 3,940 Income before income taxes and minority 29,302 89,596 58,024 31,650 208,573 58,403 26,752 29,100 interests *the items in special income/loss for FY2007 and FY2008 are shown according to the same standards 12 Consolidated net income/loss
(m JPY) 30,000
25,130
20,000
10,000
1,418 0 07/Q1 08/Q1
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Income before income taxes and minority 29,302 89,596 58,024 31,650 208,573 58,403 26,752 29,100 interests Current 10,146 70,826 12,552 (44,798) 48,726 2,826 47,625 (7,319) Deferred 9,224 (3,182) 27,211 60,423 93,676 20,065 (40,357) 10,841 Minority interests 8,514 8,930 10,765 9,145 37,355 10,380 1,235 1,866 Consolidated net income 1,418 13,021 7,494 6,881 28,815 25,130 18,249 23,711 Net margin 0.3% 2.1% 1.1% 1.0% 1.1% 3.8% ――
13 Tax and other adjustments
Yahoo Japan Corporation 10,959 (m JPY) SOFTBANK Holdings Inc. (8,893) 60,000
Income taxes; 50,000 current 2,826
40,000
Income before Income taxes; deferred 30,000 income taxes & minority interests 20,065 58,403 Minority interests 20,000 10,380
Net income 25,130 10,000
0
14 Effect of tax adjustments
¾ Breakdown of tax expenses for Q1 (FY08) (m JPY)
Item Amount % Outline
1 Income before income taxes and minority interests 58,403 100%
・Yahoo Japan Corporation 10,959 2 Income taxes; Current 2,826 ・SOFTBANK Holdings Inc. (8,893) ・SBM use of deferred tax assets (loss carry-forwards) 13,168 3 Income taxes; Deferred 20,065 ・SBM depreciation and amortization adjustments, etc. 6,284
4 Total tax expenses (=2+3) 22,892 39% (=4/1)
¾ Difference in interest ratio
Statutory income tax 40%
1 Amortization of goodwill (mainly SBM) 10%
2 Unrecognized tax assets relating to Q1 loss 13%
3 Reversal of income tax payable (SOFTBANK Holdings Inc.) (16%)
4 Others (8%)
NET (1%)
Effective income tax 39% 15 Status of loss carry-forwards
(m JPY) Balance Company Name Expiry Date (end of June 2007) SOFTBANK MOBILE 153,641 March 2011
SOFTBANK BB 94,968 March 2011- March 2013
SOFTBANK TELECOM 72,236 March 2013- March 2015
SOFTBANK IDC 67,130 March 2009- March 2013
Others 182,192 March 2009- March 2015
Total 570,167
*Amounts are based on taxable income *FY08/Q1 amounts are not tax declaration values
16 - Consolidated P/L Analysis
- Consolidated B/S Analysis
- Consolidated CF Analysis
- CAPEX Analysis
17 Current assets Current liabilities Summary consolidated B/S Long-term liabilities Fixed assets Equity Current assets Current liabilities
SBM (m JPY) (m JPY) 1,417,902 1,500,000 1,247,433 1,500,000 1,142,903 1,114,719 1,000,000 677,817 871,023 1,000,000 480,452 523,372
500,000 500,000 569,616 546,878 662,450 591,347 0 0 March 2007 June 2007 March 2007 June 2007 Fixed assets Long-term liabilities (m JPY) (m JPY)
4,000,000 3,000,000 2,582,059 2,451,712 3,059,240 3,034,438 3,000,000 2,000,000 1,562,942 1,707,343 2,000,000 2,000,516 1,998,495
1,000,000 1,000,000 1,058,724 1,035,942 888,770 874,716
0 0 March 2007 June 2007 March 2007 June 2007 18 Consolidated B/S analysis (1) Current assets Current assets Current liabilities Long-term liabilities Fixed assets
Equity
(m JPY) e/o March 2007 e/o June 2007 Variance Outline Current assets 1,247,433 1,417,902 170,468 SBM 677,817 871,023 193,206 Others 569,616 546,878 (22,737) Cash and deposits 377,666 478,733 101,067 SBM 107,928 212,978 105,049 Securitization of installment sales receivables +88,161 SB stand-alone: e/o March 07/3 85,180 >>e/o June 07 93,824 Breakdown:straight bonds issued +90,000, repayment of credit line borrowings etc. (53,112) Decrease in cash receipts as collateral (20,000), redemption of commercial Others 269,737 265,755 (3,981) papers (5,000) etc. Yahoo Japan: e/o March 07 67,486 >> e/o June 07 48,254 Breakdown: repayment of borrowings (10,000) etc.
Notes and accounts 583,972 626,186 42,214 receivable-trade Mobile handset installment sales receivables SBM 380,674 444,020 63,346 e/o March 07 177,276 >> e/o June 07 253,000
SBTM: e/o March 07 69,331 >> e/o June 07 64,697 Others 203,298 182,166 (21,132) SBB: e/o March 07 94,275 >> e/o June 07 78,163
Inventories 76,898 109,197 32,299 SBM 39,187 68,115 28,927 Mobile handsets etc. e/o March 07 38,589 >> e/o June 07 67,472 SBB: e/o March 07 13,113 >> e/o June 07 15,567 Others 37,710 41,081 3,371 SBTM: e/o March 07 18,743 >> e/o June 07 18,302 Deferred tax assets 108,994 113,559 4,564 SBM 95,260 101,932 6,671 Others 13,733 11,626 (2,106) Others 99,902 90,224 (9,677) Accrued revenue e/o March 07 61,578 >> e/o June 07 46,623 of cash inflow SBM 54,765 43,976 (10,788) due to leased assets sales Allowance for doubtful account e/o March 07 (19,279) >> e/o June 07 (25,320) Others 45,136 46,248 1,111 19 Consolidated B/S analysis (2) Tangible assets Current assets Current liabilities Long-term liabilities Fixed assets
Equity
(m JPY) e/o March 2007 e/o June 2007 Variance Outline Fixed assets 3,059,240 3,034,438 (24,802) SBM 2,000,516 1,998,495 (2,020) Others 1,058,724 1,035,942 (22,782) Property and equipment, net 1,029,852 1,045,227 15,374 SBM 641,662 669,381 27,719 Others 388,190 375,845 (12,344) Buildings and structures 89,444 88,301 (1,143) SBM 32,543 32,074 (469) Others 56,900 56,226 (674) SBTM: e/o March 07 40,762 >> e/o June 07 40,273 Telecommunications equipment 694,785 722,804 28,019 SBM 520,582 557,337 36,755 SBTM: e/o March 07 118,121 >> e/o June 07 111,983 Others 174,202 165,466 (8,735) SBB: e/o March 07 52,722 >> e/o June 07 50,177 Telecommunications service lines 92,235 90,341 (1,893) SBM 8,325 8,276 (48) Others 83,910 82,065 (1,845) SBTM: e/o March 07 83,198 >> e/o June 07 81,358 Land 27,747 27,747 (0) SBM 10,752 10,753 0 Land for base stations Others 16,995 16,994 (0) SBTM 11,498, SBIDC 5,001 Construction-in-progress 71,777 61,678 (10,099) SBM 42,456 32,620 (9,835) Others 29,321 29,057 (264) Others 53,861 54,354 492 SBM 27,002 28,319 1,316 Others 26,859 26,035 (824)
20 Consolidated B/S analysis (3) Intangible assets Current assets Current liabilities Long-term liabilities Fixed assets
Equity
(m JPY) e/o March 2007 e/o June 2007 Variance Outline Intangible assets, net 1,279,710 1,271,344 (8,366) SBM 1,155,239 1,147,957 (7,281) Others 124,471 123,387 (1,084) Goodwill 1,032,927 1,017,956 (14,970) SBM 981,410 968,553 (12,856) Decrease due to amortization Others 51,516 49,403 (2,113) SBTM: e/o March 07 29,134 >> e/o June 07 28,163 Software 200,615 210,133 9,518 SBM 160,981 169,349 8,367 Switch software, service platform etc. SBTM: e/o March 07 18,333 >> e/o June 07 17,885 Others 39,633 40,784 1,150 SBB(*) : e/o March 07 8,316 >> e/o June 07 8,613 Others 46,168 43,253 (2,914) SBM 12,846 10,054 (2,791) Software in progress Others 33,321 33,199 (122) Investments and other assets 749,677 717,866 (31,811) SBM 203,615 181,156 (22,458) Others 546,062 536,709 (9,352) Investment securities and 487,421 474,166 (13,254) investment in partnerships SBM 3,081 3,025 (56) Others 484,340 471,141 (13,198) Shares of Yahoo! Inc. etc. Deferred tax assets 157,783 133,546 (24,236) SBM 154,244 129,483 (24,761) Others 3,538 4,063 524 Others 104,472 110,152 5,680 Long-term prepaid expense e/o March 07 36,052 >> e/o June 07 36,163 SBM 46,289 48,647 2,358 Guarantee money paid e/o March 07 10,036 >> e/o June 07 10,128 Others 58,183 61,504 3,321 SBTM: Long-term prepaid expense e/o March 07 13,403 >> e/o June 07 14,449 Deferred charges 4,178 4,180 2 SBM ― ーー Others 4,178 4,180 2
21 Consolidated B/S analysis (4) Current liabilities Current assets Current liabilities Long-term liabilities Fixed assets
Equity (m JPY) e/o March 2007 e/o June 2007 Variance Outline Current liabilities 1,142,903 1,114,719 (28,183) SBM 480,452 523,372 42,919 Others 662,450 591,347 (71,102) Accounts payable - trade 195,167 182,280 (12,886) SBM 132,583 133,727 1,144 Mobile handsets costs payable etc. SBB: e/o March 07 47,504 >> e/o June 07 34,930 * e/o fiscal year stock costs Others 62,584 48,553 (14,031) payable etc. Short-term borrowings 193,656 221,361 27,704 Installment sales receivables securitization structure short-term borrowings SBM 147 36,883 36,735 +36,645 SB stand-alone: e/o March 07 138,112 >>e/o June 07 125,000 Others 193,508 184,477 (9,030) SBTM: e/o March 07 23,200 >>e/o June 07 23,200 Yahoo Japan: e/o March 07 20,000 >>e/o June 07 20,000 Commercial paper 5,000 ー (5,000) SBM ― ーー Others 5,000 ー (5,000) SB stand-alone: e/o March 07 5,000 >> e/o June 07 (-) Current portion of corporate bonds 43,964 56,464 12,500 SBM ― ーー Transfer to short-term according to the redemption schedule Others 43,964 56,464 12,500 SB stand-alone: e/o March 07 43,900 >> e/o June 07 56,400 Accounts payable - other 415,561 386,762 (28,798) SBM 293,287 280,245 (13,041) Mainly payable for capital equipment, agencies, operation expenses etc. SBTM: e/o March 07 54,895 >> e/o June 07 48,118 Others 122,274 106,517 (15,757) SBB: e/o March 07 34,082 >> e/o June 07 30,537 Current-portion of lease obligations 18,049 43,169 25,120 SBM 18,049 43,169 25,120 Lease obligations transferred to short-term Others ― ーー Cash receipts as collateral 150,000 130,000 (20,000) SBM ― ーー Others 150,000 130,000 (20,000) SB stand-alone: cash receipts as collateral under security deposit agreement Others 121,504 94,680 (26,823) Advanced payments and advanced income SBM 36,385 29,344 (7,040) e/o March 07 30,247 >> e/o June 07 26,037 Others 85,118 65,336 (19,782) 22 Consolidated B/S analysis (5) Long-term liabilities Current assets Current liabilities Long-term liabilities Fixed assets Equity
(m JPY) e/o March 2007 e/o June 2007 Variance Outline Long-term liabilities 2,451,712 2,582,059 130,347 SBM 1,562,942 1,707,343 144,401 Others 888,770 874,716 (14,054) Corporate bonds 422,599 500,955 78,355 SBM ― ーー SB stand-alone straight bonds: e/o March 07 180,059 >> e/o June 07 258,414 Breakdown: 24th, 25th, 26th series Unsecured Straight Bond + 90,000 transferred to short-term (12,500) Others 422,599 500,955 78,355 SB stand-alone convertible bonds: e/o March 07 150,000 >> e/o June 07 150,000 SBTM: e/o March 07 60,100 >> e/o June 07 60,100 Long-term debt 1,729,183 1,718,399 (10,784) WBS loan e/o March 07 1,355,091 >> e/o June 07 1,342,174, SBM 1,439,687 1,478,286 38,599 Vodafone subordinate loan e/o March 07 84,596 >> e/o June 07 84,596 Installment sales receivables structure borrowings e/o June 07 51,515 SB stand-alone: e/o March 07 68,000 >> e/o June 07 28,000 Others 289,495 240,112 (49,383) SBTM: e/o March 07 52,000 >>e/o June 07 46,200 Yahoo Japan: e/o March 07 50,000 >> e/o June 07 40,000 Deferred tax liabilities 50,136 52,943 2,806 SBM ― ーー Others 50,136 52,943 2,806 Allowance for point mileage 43,787 43,917 130 SBM 43,787 43,917 130 Allowance for customer point mileage Others ― ーー Lease obligations 74,964 176,888 101,924 SBM 74,964 176,888 101,924 Breakdown: newly procured + 134,086, transferred to short-term (25,121) Others ― ーー Others 131,041 88,955 (42,085) SBM 4,502 8,250 3,748 SBH: derivative liabilities e/o March 07 41,874 >> e/o June 07 (-) *Recorded as assets Others 126,539 80,705 (45,833) SBB: deferred revenue (mainly modem rental business securitization advanced royalty balance), etc e/o March 07 26,392 >>e/o June 07 22,695 23 - Consolidated P/L Analysis
- Consolidated B/S Analysis
- Consolidated CF Analysis
- CAPEX Analysis
24 Cash flow main breakdown
(m JPY) Operating CF Investing CF Financing CF (27,478) (111,519) 218,480
SBM 150,000 SB straight Procurement through bonds series securitization of installment 24,25,26 149,864 receivables
100,000 88,161
Change in inventories 58,403 Implementation 89,483 SBM 28,927 of SBM base 53,533 Other 3,371 50,000 stations etc. 31,708 26,960 Mainly Yahoo Japan 14,426 Corporation 14,311
0
(13,364) (14,997) (18,558) (26,326) (20,000) (31,916) (29,770) -50,000 (75,724) (46,077) (57,793) (92,916) Amortizationgoodwill of taxes and minority interests taxes and Income beforeincome Change inmobile handset Interest expense Interest Interest paid Decrease in cash receipts cash in Decrease Depreciation& amortization Income taxes paid taxes Income acquired newly equipment of back lease saleand from Proceeds Proceeds from saleof from Proceeds Other investment securities investment and marketable of Purchase Other trade (non-installment) & notes in Decrease bonds of issuance from Proceeds installment receivables installment Repayment oflong-term debt trade payables- in Decrease Proceeds oflong-termdebt Decrease inshort-term as collateral securities investment and marketable equipment &intangibles accounts receivable- borrowings -100,000 & property of Purchase
*Significant items from the CF statement are shown here 25 - Consolidated P/L Analysis
- Consolidated B/S Analysis
- Consolidated CF Analysis
- CAPEX Analysis
26 CAPEX (actual basis)
150,000 (m JPY) Mobile 124,934 Communications
BB Infrastructure 103,512 100,000 88,052 85,355 Fixed-line Telecommunications 73,301
Internet Culture
50,000 e-Commerce
Others
0
07/Q1Q2Q3Q408/Q1(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Consolidated 73,301 103,512 88,052 124,934 389,801 85,355 (39,578) 12,054 Mobile Communications 52,945 79,257 71,259 104,944 308,406 72,104 (32,839) 19,159 Broadband Infrastructure 5,335 6,397 4,699 5,674 22,106 5,084 (590) (251) Fixed-line Telecommunications 10,870 12,351 8,113 6,351 37,686 5,042 (1,308) (5,827) Internet Culture 2,635 3,562 2,870 5,949 15,017 1,928 (4,020) (707) e-Commerce 570 778 386 1,122 2,858 336 (785) (233) Others 944 1,166 724 892 3,728 858 (33) (85)
*Includes capital leases in which the ownership of leased assets is transferred to lessees, and those in which the ownership of leased assets is not transferred to lessees, at the end of each lease periods. 27 Depreciation and amortization (excl. amortization of goodwill)
60,000 (m JPY) 53,972 53,533 50,578 46,494 Mobile Communications
38,048 BB Infrastructure 40,000
Fixed-line Telecommunications
Internet Culture 20,000 e-Commerce
Others
0 07/Q1 Q2 Q3 Q4 08/Q1 (m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Consolidated 38,048 46,494 50,578 53,972 189,092 53,533 (438) 15,485 Mobile Communications 18,563 27,048 30,415 32,991 109,017 33,579 588 15,016 Broadband Infrastructure 6,051 6,143 7,445 7,582 27,222 6,909 (672) 858 Fixed-line Telecommunications 10,334 9,987 10,337 10,168 40,826 9,962 (205) (371) Internet Culture 1,821 2,042 2,223 1,921 8,007 2,084 163 263 e-Commerce 525 571 (492) 423 1,027 268 (154) (256) Others 753 703 647 887 2,990 728 (158) (24) 28 Amortization of goodwill
(m JPY) 20,000
15,930 15,693 14,426 SOFTBANK 15,000 MOBILE 10,940 11,029
SOFTBANK 10,000 TELECOM
Others 5,000
0
07/Q1 Q2 Q3 Q4 08/Q1 (m JPY) FY2007 FY2008 Balance Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY (e/o June-07) Consolidated 10,940 15,930 15,693 11,029 53,595 14,426 3,396 3,485 1,017,956 SOFTBANK MOBILE 9,365 14,157 14,113 9,505 47,141 12,856 3,351 3,491 968,553 SOFTBANK TELECOM 971 971 971 971 3,884 971 ――28,163 Others 604 802 608 552 2,568 598 45 (6) 21,239
29 Finance
Yoshimitsu Goto
General Manager Finance, Group Management SOFTBANK CORP.
30 - Financial activities
- Interest-bearing debt status
- Investment results
31 Financial activities for Q1
Month Content
Apr-07 Procure JPY 20.0bn by issuing 24th Unsecured Straight Bond (3rd Fukuoka SoftBank HAWKS Bond)
Listing of IT media Inc. on TSE Mothers （market capitilization JPY 6.3bn as of 6-Aug）
Jun-07 Procure JPY 88.1bn through the securitization of the mobile handsets installment sales receivables
Issue 25th, 26th series Unsecured Straight Bond and procure JPY 55.0bn, JPY 15.0bn respectively; total procurement of JPY 70.0bn
Listing of Carview Corporation on TSE Mothers （market capitilization JPY 15.7bn as of 6-Aug）
32 Financial activities for Q1
Domestic straight bonds Wholesale bonds: comeback to market after 2 year absence
Name of Bond Amount Term Maturity Date Coupon Rate 25th Unsecured bond JPY 55.0bn 4yrs 17/6/2011 3.39% 26th Unsecured bond JPY 15.0bn 7yrs 19/6/2014 4.36% Retail bonds: sustain high demand
Name of Bond Amount Term Maturity Date Coupon Rate 24th Unsecured bond JPY20.0bn 3yrs 26/4/2010 2.72% (3rd Fukuoka SoftBank HAWKS bonds)
Securitization of installment sales receivables
Name of Program Amount Program for individual investors JPY 23.0bn Program for institutional investors JPY 65.1bn
33 - Financial activities
- Interest-bearing debt status
- Investment results
34 Interest-bearing debt and net interest-bearing debt
(m JPY) Interest-bearing debt
3,000,000 Net interest-bearing debt Cash and cash equivalents
2,000,000
1,000,000
0
e/o March 07 e/o June 07 (m JPY) FY2007 FY2008 e/o June e/o Sept e/o Dec e/o March e/o June Compared to e/o prev. Q YoY Interest-bearing debt 2,529,595 2,390,057 2,470,803 2,394,403 2,497,179 102,776 (32,415) Net interest-bearing debt 2,237,071 2,109,098 2,069,008 2,008,148 2,011,270 3,121 (225,800) Cash and cash equivalents 292,524 280,958 401,795 386,254 485,909 99,654 193,385
*Lease obligations are not included in interest-bearing debt 35 Interest-bearing debt and net interest-bearing debt (excl. mobile*)
(m JPY) Interest-bearing debt (excl. mobile)
3,000,000 Net interest-bearing debt (excl. mobile) Cash & cash equivalents (excl. mobile)
2,000,000
1,000,000
0 e/o March 07 e/o June 07 (m JPY) FY2007 FY2008 e/o June e/o Sept e/o Dec e/o March e/o June Compared to e/o prev. Q YoY Interest-bearing debt (excl. mobile) 1,130,543 1,008,059 1,020,154 954,567 982,009 27,441 (148,533) Net interest-bearing debt (excl. mobile) 891,127 752,501 717,132 677,752 710,673 32,921 (180,453) Cash and cash equivalents (excl. mobile) 239,415 255,557 303,021 276,815 271,335 (5,479) 31,919
*The debt balance of SOFTBANK MOBILE and BB Mobile have been deducted from the interest-bearing debt and net interest-bearing debt balance respectively *Lease obligations are not included in interest-bearing debt 36 Interest-bearing debt status by item
(m JPY) 4,000,000 Corporate bonds Long-term borrowings (other than SBM loan) Long-term borrowings (SBM loan) Short-term borrowings CP 3,000,000 2,497,179 2,394,403
2,000,000
1,000,000
0
e/o March 07 e/o June 07 (m JPY) FY2007 FY2008 e/o June e/o Sept e/o Dec e/o March e/o June Compared to e/o prev. Q YoY Interest-bearing debt 2,529,595 2,390,057 2,470,803 2,394,403 2,497,179 102,776 (32,415) Corporate bonds 591,468 567,944 475,446 466,563 557,419 90,855 (34,048) (incl. bonds with maturity date within one year) SBM bonds 125,000 100,000 ―― ――(125,000) Long-term borrowings 388,997 389,918 1,720,950 1,729,183 1,718,399 (10,784) 1,329,401 SBM Loan (non-recouse) ――1,365,602 1,355,091 1,342,174 (12,916) ― Others 388,997 389,918 355,348 374,092 376,224 2,132 (12,772) Short-term borrowings (incl. long-term loans with 1,534,529 1,422,194 254,606 193,656 221,361 27,704 (1,313,168) maturity date within one year) Vodafone acquisition bridge loan 1,166,000 1,173,830 ―― ――(1,166,000) Others 368,529 248,364 254,606 193,656 221,361 27,704 (147,168) CP 14,600 10,000 19,800 5,000 ― (5,000) (14,600) *Trust debt assumptions executed on SBM corporate bonds on Nov 30,2006 *Lease obligations are not included in interest-bearing debt 37 Consolidated interest-bearing debt details
(m JPY) 2,497,179 2,500,000 Securitization of installment 2,394,403 88,161 sales receivables obligations (SBM)
2,000,000 SBM Loan (WBS) 1,355,091 1,342,174 Vodafone subordinated loan 1,500,000 Yahoo Japan Corporation borrowings Borrowings from other 1,000,000 84,596 84,596 70,000 60,000 financial institutions, etc. (m JPY) 364,828 SOFTBANK credit line 60,000 413,153 SOFTBANK other bank loans 93,000 SOFTBANK TELECOM syndicated loan 69,400 500,000 Major overseas subsidiaries financial institutions loans 130,423 Others 12,005 Total 364,828 557,419 471,563 Corporate bonds & CP
0 e/o March 07 e/o June 07
38 SBM loan repayment status
SBM loan repayment status
e/o Nov 2006 e/o July 2007 e/o June 2007 (time of borrowing) (reference) SBM loan balance JPY 1,366.0bn JPY 1,342.1bn JPY 1,311.4bn Amount repaid - JPY 23.8bn JPY 54.5bn
Mobile Communications business leverage ratio
FY2007 2008/Q1 Mobile business interest- (a) JPY 1,439.8bn JPY1,515.1bn bearing debt balance Mobile Communications (b) business JPY 384.1bn(*1) JPY 369.7bn(*2) (annualized) (a)/(b) Leverage ratio 3.7X 4.1X
*1 Annualized by multiplying the Mobile Communications segment’s FY07 2nd half 06 EBITDA by 2 *2 Annualized by multiplying the Mobile Communications segment’s FY08/Q1 EBITDA by 4 39 Consolidated interest-bearing debt Short/long ratio
100% 100% 90% 90% 80% 80% 70% 70% Short-term Short-term ratio 60% ratio 60% Long-term 50% Long-term 50% 74.6% 75.5% 89.9% 88.9% ratio 40% ratio 40% 30% 30% 20% 20% 10% 10% 0% 0% Mar-07 Jun-07 Mar-07 Jun-07
e/o March 2007 e/o June 2007 e/o March 2007 e/o June 2007 Short-term 242,620 277,825 Short-term: excl. mobile 242,472 240,941 Long-term 2,151,783 2,219,354 Long-term: excl.mobile 712,095 741,067 Total 2,394,403 2,497,179 Total: excl. mobile 954,567 982,009 Long-term ratio 89.9% 88.9% Long-term ratio 74.6% 75.5% Short-term ratio 10.1% 11.1% Short-term ratio 25.4% 24.5%
40 Cash position
(m JPY) Unused portion of credit line facility Cash&cash equivalents 604,909 600,000
455,254
400,000
200,000
0
e/o March 07 e/o June 07 (m JPY) FY2007 FY2008 e/o June e/o Sept e/o Dec e/o March e/o June Compared to e/o prev. Q YoY Cash and cash equivalents 292,524 280,958 401,795 386,254 485,909 99,654 193,385 Unused portion of credit line facility 30,000 30,000 39,000 69,000 119,000 50,000 89,000 Total 322,524 310,958 440,795 455,254 604,909 149,654 282,385
Credit line facility total 161,000 179,000 179,000 ― 18,000
41 Interest expense
(m JPY)
30,000 26,960
20,000
14,601
10,000
0 07/Q1 08/Q1
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Interest expense 14,601 17,943 20,994 25,981 79,521 26,960 979 12,358
42 Shareholders’ equity - equity ratio
(m JPY) 2,000,000 100%
Shareholders' equity 1,500,000 Equity ratio
1,000,000 50%
500,000 6.6% 7.1%
0 0% e/o March 07 e/o June 07
(m JPY) FY2007 FY2008 e/o June e/o Sept e/o Dec e/o March e/o June Compared to e/o prev. Q YoY T otal assets 4,031,003 3,986,991 4,191,853 4,310,852 4,456,521 145,668 425,517 Shareholders' equity 235,198 249,162 267,800 282,949 316,126 33,176 80,928 Equity ratio 5.8% 6.2% 6.4% 6.6% 7.1% 0.5% 1.3%
43 (Reference) pro-forma equity ratio including unrealized gain of SOFTBANK held listed shares
(m JPY) Assumption 2,000,000 100% Shareholders' equity (pro-forma) Equity ratio (pro-forma) 1,500,000
1,000,000 50%
23.5% 23.8% 500,000
0 0%
e/o March 07 e/o June 07 (m JPY) FY2007 FY2008 e/o June e/o Sept e/o Dec e/o March e/o June Compared to e/o prev. Q YoY T otal assets (A) 4,031,003 3,986,991 4,191,853 4,310,852 4,456,521 145,668 425,517 Shareholders' equity (B) 235,198 249,162 267,800 282,949 316,126 33,176 80,928 SB unrealized capital gain (C) 1,969,358 1,326,262 1,364,009 1,232,650 1,243,906 11,256 (725,452) Loss carry-forwards (D) 538,055 538,055 538,055 538,055 570,167 32,112 32,112 taxable unrealized capital gain (E=C-D) 1,431,303 788,207 825,954 694,595 673,739 (20,856) (757,564) tax (F=E×40%) 572,521 315,283 330,382 277,838 269,495 (8,343) (303,026) unrealized capital gain after tax(G=C-F) 1,396,837 1,010,979 1,033,627 954,812 974,411 19,599 (422,426) Shareholders' Equity 1,632,036 1,260,141 1,301,427 1,237,761 1,290,537 52,776 (341,498) (incl. unrealized gain of SB held listed shares) (H=B+G) T otal assets 5,427,840 4,997,970 5,225,480 5,265,664 5,430,932 165,267 3,091 (incl. unrealized gain of SB held listed shares) (I=A+G) Equity ratio J=H/I 30.1% 25.2% 24.9% 23.5% 23.8% 0.3% -6.3% (incl. amount of unrealized gain of SB held listed shares) *SB unrealized capital gain is based on the share price of investment in securities (listed & public companies only), at the end of each quarter, held by SOFTBANK Group’s holding companies domestic and overseas. *Loss carry-forwards of FY2007 was assumed to be equal to the balance at the end of March 2007 44 Debt/Equity ratio - Net Debt/Equity ratio
¾Steady improvement Debt/Equity ratio Net Debt/Equity ratio
(times) (times)
14.0 D/E ratio 14.0 Net D/E ratio D/E ratio (excl. mobile) 12.0 12.0 Net D/E ratio (excl. mobile) 10.8 9.6 10.0 9.2 10.0 8.5 9.5 8.5 7.9 7.7 8.0 8.0 7.1 6.4
6.0 4.8 6.0 4.0 3.8 3.8 4.0 3.4 3.1 4.0 3.0 2.7 2.4 2.2 2.0 2.0
0.0 0.0 07/Q1 Q2 Q3 Q4 08/Q1 07/Q1 Q2 Q3 Q4 08/Q1
45 Major margins
EBITDA margin Operating margin Ordinary margin
(bn JPY)
600 300 200 60% 30% 20% EBITDA Operating Ordinary (loss) (loss) income 150 EBITDA margin 25% income 50% 15% 400 200 Operating Ordinary 40% margin 20% 100 margin 7.7% 10% 22.6% 11.9% 6.0% 30% 15% 20.7% 10.7% 50 2.5% 5% 200 100 13.5% 10% 20% 5.6% 0 5.3% 0% 10% 5%
0 0 (50) -5% 0% 0% 3 months 3 months -10% 3 months -5% (100) -10%
(200) -20% (100) -10% (150) -15%
3 4 5 6 7 1 0 0 0 0 0 /Q 03 04 05 06 07 1 Y Y Y Y Y 8 Y Y Y Y Y /Q F F F F F 0 FY03 FY04 FY05 FY06 FY07 F F F F F 8 Y Y0 F FY08/Q1 F
46 SOFTBANK’s market capitalization and margins
SOFTBANK’s market capitalization and market Ordinary margin over equity ratio* capitalization of shares held in Yahoo Japan Corporation by the SOFTBANK Group (bn JPY)
(bn JPY) 200 Ordinary income 80% Ordinary margin/equity ratio 6,000 MKT Cap of SOFTBANK shares MKT Cap of SB held portion of Yahoo Japan Corporation 150 70% 54% 5,000 60%
100 50% 4,000 40%
50 3,000 30% 20% 2,000 11% 0 10%
0% 1,000 -50 -10%
0 -20% -25% /1 /1 /1 1 -100 /4/1 8/1 /4/1 -30% 5 5/ 12 6/4 7 5/ 0 00 00 00 2004/42004/8/1 2 2 00 20 2006/8/ 2 FY05 FY06 FY07 2004/12/1 2 2006/12/1 *Equity ratio over ordinary margin=ordinary margin/equity ratio 47 Status of lease financing
e/o March 2007 e/o June 2007 Change Due within one year 18,049 43,169 25,120 Due after one year 74,964 176,888 101,924 Total 93,013 220,058 127,044 Total e/o March 2007 e/o June 2007 Change Due within one year 51,138 76,120 24,982 Due after one year 240,931 339,401 98,470 Total 292,069 415,522 123,453 48 SBM on-balance lease balance
¾Capital investment related to expansion of SBM’s base stations and network enhancement
(m JPY)
250,000
200,000
150,000
100,000
50,000
0 e/o March 07 e/o June 07 (m JPY) FY2007 FY2008
e/o June e/o Sept e/o Dec e/o March e/o June Compared to e/o prev. Q YoY Finance leases in which the ownership of leased assets is transferred to the lessees at the end of the lease period ― 6,085 15,558 93,013 220,057 127,044 220,057 (on-balance)
*FY2007/Q2, Q3 recorded as other long-term liabilities 49 Corporate bond details (as of e/o June 2007)
(m JPY)
Interest rate March 07 June 07 Company Name Bond Issue date Maturity Date Collateral Change (%/year) balance balance
2nd series Unsecured Straight Bond 1995/9/27 2007/9/27 3.90 None 23,900 23,900 - 18th series Unsecured Straight Bond 2005/1/31 2008/1/29 1.23 None 20,000 20,000 - 19th series Unsecured Straight Bond 2005/1/31 2010/1/29 1.97 None 20,000 20,000 - 20th series Unsecured Straight Bond 2005/6/9 2008/6/9 1.41 None 12,500 12,500 - (1st Fukuoka SoftBank HAWKS bond) 21st series Unsecured Straight Bond 2005/9/14 2008/9/12 1.17 None 20,000 20,000 - 22nd series Unsecured Straight Bond 2005/9/14 2010/9/14 1.98 None 38,000 38,000 - 23rd series Unsecured Straight Bond 2005/11/29 2008/11/28 1.36 None 20,000 20,000 - (2nd Fukuoka SoftBank HAWKS bond) 24th series Unsecured Straight Bond SOFTBANK 2007/4/26 2010/4/26 2.72 None - 20,000 20,000 (3rd Fukuoka SoftBank HAWKS bond) 25th series Unsecured Straight Bond 2007/6/19 2011/6/17 3.39 None - 55,000 55,000 26th series Unsecured Straight Bond 2007/6/19 2014/6/19 4.36 None - 15,000 15,000 Convertible Bond due 2013 (*1) 2003/12/30 2013/3/31 1.50 None 50,000 50,000 - Convertible Bond due 2014 (*1) 2003/12/30 2014/3/31 1.75 None 50,000 50,000 - Convertible Bond due 2015 (*1) 2003/12/30 2015/3/31 2.00 None 50,000 50,000 - Euro-denominated Senior Notes due 2011 (*2) 2004/3/8 2011/3/15 9.375 None 672 707 35 68,887 69,707 Euro-denominated Senior Notes due 2013 2006/10/12 2013/10/15 7.75 None 820 (500m Euro) (500m Euro) 1st series Unsecured Straight Bond 2004/12/7 2009/12/7 2.00 None 45,000 45,000 - SOFTBANK TELECOM 2nd series Unsecured Straight Bond 2004/12/7 2011/12/7 2.88 None 15,000 15,000 - Phoenix JT Subordinated Notes Due 2016 2004/12/24 2016/12/15 5.95 None 32,400 32,400 - Other corporate bonds - - - -- 204 204 - Total - - 466,563 557,419
(*1) Concerning CB due 2013, 2014, 2015, under certain conditions early redemption of these bonds due to the holders' or companies’ request is possible respectively after 2007, 2008, and 2009. (*2) Concerning Euro-denominated Senior Notes Due 2011, 99% (396 m EUR) of the outstanding notes was redeemed in Oct 2006. (*3) The above table does not include straight bonds issued by SOFTBANK MOBILE, on which a debt assumption was executed. 50 Bond redemption schedule
(m JPY) FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Others SOFTBANK Straight Bond 43,900 52,500 20,000 58,707 55,000 69,707 15,000 SOFTBANK TELECOM Straight Bond 45,000 15,000 SOFTBANK CB *1 50,000 50,000 50,000 Phoenix JT 32,400 Subordinated Notes Other corporate bonds 204 Total 43,900 52,500 65,000 58,707 70,000 50,000 119,707 65,000 ― 32,400 204
(*1) Concerning CB due 2013, 2014, 2015, under certain conditions early redemption of these bonds due to the holders' or companies’ request is possible respectively after 2007, 2008, and 2009.
51 Procurement through securitization of installment sales receivables
Outline of procurement through securitization of installment sales receivables
Institutional program Individual program JPY 88.1bn Amount procured JPY 65.1bn JPY 23.0bn Rating Aaa (Moody's) A (R&I) Funding market Domestic ABL market, domestic ABS market Money trust for individual investors Issue date 29/6/2007 Applicable receivables Receivables of the installment sales of mobile handsets Use of funds Capital expenditure and repayment of existing debt etc. Accounting procedures The procured funds are recorded on the balance sheet as borrowings
¾ Improve working capital gap incurred by accumulation of installment sales receivables ¾ Reduce procurement cost as result of high credit rating
52 Diversification of procurement, main securitization/liquidation
Past securitization/liquidation
Term Segment Details Procured Amount
Ongoing e-Commerce Segment Liquidation of account receivables JPY 10.0-15.0bn
Jul-03 Broadband Segment Rental modem securitization JPY 19.1bn
Dec-05 Broadband Segment Sale of modem rental business JPY 85.0bn
Securitization of Mobile Nov-06 Mobile Communications Segment Communications Segment Approx. JPY 1.4tn Part of acquisition financing
Liquidation of network center Fixed-line Telecommunications Mar-07 Procurement of construction costs, etc. Approx. JPY 13.3bn Segment through liquidation of network center
Securitization of installment sales receivables Jun-07 Mobile Communications Segment Procurement through securitization of JPY 88.1bn mobile phone handset installment sales receivables
Mobile Communications Segment (On balance) Fixed-line Telecommunications Lease procurement JPY 220,0bn Ongoing Segment (Off balance/on balance) (Off balance) Broadband Infrastructure Segment JPY 195.9bn
53 Credit Rating
Mobile Communications credit rating JCR (AA-) AA－/AA3 (WBS structured rating (senior portion)) A+/A1 S&P (A) A/A2 Moody’s (A3) A－/A3 BBB+/Baa1 JCR (BBB) BBB/Baa2 June 2007 BBB /Baa3 － S&P upgraded BB+/Ba1 Moody’s (Ba2) BB/Ba2
BB－/Ba3 S&P (BB) B+/B1
2003 2004 2005 2006 2007 Acquisition of Acquisition of JAPAN TELECOM Vodafone K.K. 54 - Financial activities
- Interest-bearing debt status
- Investment results
55 Investment results ¾Accumulate recovery of investments steadily through IPOs of subsidiaries
(m JPY) ITmedia (m JPY) Carview
4,000 10,000 1,012
8,000 3,000
Proceeds from sale 6,000 at time of listing (12 June) 2,000 3,538 8,568 4,000
1,000 2,000 122
705 2,011
0 0 Initial investment Value of SB's portion Initial investm ent Value of SB's portion
Initial SB held Value of portion Share price Unrealized gain Market Listed investment shares held by SB (JPY) (m JPY) (m JPY) (shares) (m JPY)
ITmedia TSE mothers 19/4/2007 705 17,429 203,000 3,538 2,833
Carview TSE mothers 12/6/2007 2,011 16,477 520,000 8,568 6,557
* At the time of the Carview listing SOFTBANK CORP. sold its 1,000 shares for JPY 1,012m, and recorded JPY 890m gain on sale of interests in a subsidiary. * Share price as of 6 August 56 Future financial strategies
Completion of mobile business acquisition related financing Completion of equipment finance (lease finance) Start financing through securitization of mobile handset sales installment receivables Thorough acceleration of repayment of debt funding
Early improvement of financial stability - credit improvement Improve Equity ratio and Debt/Equity ratio Take sufficient measures towards interest rate rise risk Improve credit rating
FurtherFurther dedicationdedication toto IRIR activitiesactivities (Debt(Debt andand Equity)Equity) Regularize domestic and overseas quarterly meetings (in cooperation with IR) Number of debt investors have increased rapidly as a result of WBS financing: plan sufficient follow-up Emphasize communication with investors from each market (retail, corporate, domestic, overseas)
57 Operation
Kazuhiko Fujihara Senior Vice President, CFO, Director SOFTBANK MOBILE Corp. Senior Vice President & CFO, Director SOFTBANK BB Corp. Director SOFTBANK TELECOM Corp.
58 Actual overview of major 3 telecommunication businesses
FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 YoY Net Sales 63,322 65,728 67,266 67,910 264,227 65,747 2,424 Operating income 5,479 6,189 7,747 7,393 26,809 8,665 3,186 EBITDA 11,850 12,600 15,408 15,743 55,601 15,962 4,112
FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 YoY Net Sales 88,673 93,276 93,712 98,466 374,129 90,486 1,812 Operating (loss) income 1,212 -916 -2,603 -656 -2,965 -111 -1,323 EBITDA 12,643 10,248 8,939 10,758 42,588 11,104 -1,538
FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 YoY Net Sales 232,467 351,991 430,328 427,252 1,442,040 391,668 159,200 Operating income 27,293 29,341 56,906 42,202 155,743 43,528 16,234 EBITDA 55,802 73,615 104,082 87,985 321,484 92,429 36,627
*Net sales is the total sum of external sales and internal sales between segments.
59 - Broadband Infrastructure Business
- Fixed-line Telecommunications Business
- Mobile Communications Business
60 Summary - Broadband Infrastructure Business -
Yahoo! BB ADSL marginal change
¾ +45k lines year-on-year,-30k lines quarter-on-quarter
FY2007 FY2008 Q1 Q2 Q3 Q4 Total Q1 YoY Yahoo! BB ADSL cumulative 5,089 5,146 5,161 5,164 ― 5,134 45 lines installed (k lines)
Operating income increasing trend sustained
¾ Sustain increasing income trend
FY2007 FY2008 Q1 Q2 Q3 Q4 Total Q1 YoY
Broadband Infrastructure business 5,479 6,189 7,747 7,393 26,809 8,665 3,186 Operating income (m JPY)
61 Operating income/loss (BB Infrastructure Business)
¾ Sustain increasing income trend
( m JPY) YoY ＋JPY 3,186m 20,000 Impact of modem rental business sale 12,321 8,665 Operating income (loss) excl. impact of 9,361 modem rental business sale 5,479 7,747 7,393 10,000 Operating income (loss) (SB consolidated +7,014 6,189 308 Broadband Infrastructure segment) +7,649 9,817 8,171 6,3636,350 7,085 3,483 1,712 5,306 -424 0 (4,494) -884 -160 (6,594) -1,151 (12,474) (16,340) (17,981) (18,337) -10,000 (20,775) (19,950) (28,890)
-20,000
-30,000 04/Q1 Q2 Q3 Q4 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 62 EBITDA (BB Infrastructure Business)
¾ Sustain increase in EBITDA YoY ＋JPY 4,112m
(m JPY)
18,122 15,962 20,000 Impact of modem rental business 16,345 15,743 sale 12,60015,408 +4,856 11,850 +5,828 18,996 18,057 10,000 EBITDA excl. impact of modem 14,963 17,582 11,420 14,955 rental business sale 13,265 10,516 882 3,023 0 (5,851) -3,105-2,363-2,649-1,839-3,034 (10,540) (11,800) (11,451) (15,201) (14,002) -10,000 (23,676)
-20,000
-30,000
1 4 3 1 2 4 Q2 Q3 Q /Q1 Q2 Q Q4 Q Q3 Q4 Q2 Q3 Q /Q1 4/Q 5 6/Q 8 0 0 0 07/Q1 0 63 CAPEX on actual basis (BB Infrastructure Business)
(m JPY) (m JPY)
25,000 100,000
CAPEX 20,000 Depreciation & amortization 80,000
15,000 60,000
83,901
10,000 7,445 7,582 40,000 6,909 6,051 6,143 22,106 47,652 5,000 20,000 Q4/5,674 6,397 Q3/4,699 5,335 4,699 5,674 5,084 Q2/6,397 Q1/5,335 5,084 0 0 FY07/Q1 Q2 Q3 Q4 FY08/Q1 FY2005 FY2006 FY2007 FY08/Q1 64 Number of lines and full charged users - ADSL -
¾ +45k lines year-on-year,30k lines quarter-on-quarter
（k lines) 6,000
5,146 5,161 5,164 5,134 5,007 5,049 5,089 Cumulative lines 4,889 4,972 4,776 5,000 4,658 installed 4,490 4,282 Full charged users 4,534 4,575 4,436 4,462 4,474 4,524 4,450 4,000 4,381 4,130 4,206 3,938 3,784 3,571 3,000
2,000
1,000
0
/Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 /Q1 5 0 06/Q1 07/Q1 08 65 Product MIX - ADSL -
¾ Increase of high speed and wireless LAN ratio
YBB 50MR+WLAN 100% 100% 50M YBB 50MR 90% 90% ratio 28.2% YBB 50M+WLAN 80% 80%
YBB 50M 70% 70% YBB 26M+WLAN 60% 60% YBB 26M 50% 50% YBB 12M+WLAN Wireless 40% 40% LAN ratio YBB 12M 29.7% 30% 30% YBB 8M+WLAN
YBB 8M 20% 20%
YBB 8M (ADSL 10% 10% only) BB Phone only 0% 0%
3 4 1 2 Q Q Q1 Q2 Q3 Q4 /Q1 Q2 Q3 Q4 Q2 Q3 Q4 Q1 Q Q3 Q4 /Q1 5 8 04/ 0 06/Q 07/ 0 66 ARPU (User payment base*) - ADSL -
¾ Sustain ARPU trend in FY08/Q1
(JPY) 5,000 4,358 Yahoo! ISP 4,500 BB security
4,000 BB phone
3,500 Wireless LAN
3,000 Modem rental revenue
2,500
2,000
1,500 Basic charge 1,000
500
0
1 1 Q4 /Q Q2 Q3 Q4 /Q1 Q2 Q3 Q4 /Q1 Q2 Q3 Q4 Q2 Q3 Q4 /Q Q2 Q3 Q4 3 4 5 7 8/Q1 02/Q3 0 0 0 06/Q1 0 0 *The above graph is based on user’s payment. The impact of the modem rental business sale is not reflected. From FY08/Q1 part of Yahoo! ISP revenue recorded as basic charge (no impact on user’s charge). 67 ARPU (based on sales after modem rental business sell-off) - ADSL -
¾ Decrease in modem rental revenue, servicing fee received (JPY) ARPU trend on user 5,000 payment basis
Recognition of deferred 4,500 gain on sale
Servicing fee ,etc. 4,000 from modem operator
3,500 Yahoo! ISP
BB security 3,000 BB phone
2,500 Wireless LAN Modem rental 2,000 revenue
Basic charge 1,500
1,000
500
0
1 1 4 Q4 /Q Q2 Q3 Q4 Q2 Q3 Q4 /Q1 Q2 Q3 Q4 /Q1 Q2 Q3 Q4 /Q Q2 Q3 Q 3 4/Q1 5 6 7 8/Q1 02/Q3 0 0 0 0 0 0 *The above graph is based on user’s payment of fully charged users. The impact of the modem rental business sale is included. From FY08/Q1 part of Yahoo! ISP revenue recorded as basic charge (no impact on user’s charge). 68 Churn rate - ADSL -
¾ Sustaining low and stable trend in spite of seasonal factors
10.0%
8.0% Caused by one-off seasonal factors (moving, etc.)
6.0%
4.0%
2.0%
0.0% Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07
April May June July August September October November December January February March Average FY 2005 1.57% 1.19% 1.17% 1.34% 1.25% 1.13% 1.24% 1.11% 1.45% 1.29% 1.24% 1.78% 1.31% FY 2006 1.45% 1.27% 1.30% 1.34% 1.35% 1.38% 1.33% 1.47% 1.42% 1.50% 1.67% 2.31% 1.48% FY 2007 1.88% 1.73% 1.58% 1.55% 1.50% 1.57% 1.57% 1.48% 1.56% 1.67% 1.69% 2.52% 1.69% FY 2008 1.95% 1.76% 1.73% FY07 VS FY08 0.07% 0.03% 0.15%
69 - Broadband Infrastructure Business
- Fixed-line Telecommunications Business
- Mobile Communications Business
70 Summary - Fixed-line Telecommunications Business -
Expand corporate business base
¾ Increasing lines, mainly for Otoku Line
FY2007 FY2008 Q1 Q2 Q3 Q4 Total Q1 YoY Corporate voice lines (k lines) 1,345 1,561 1,672 1,736 ― 1,717 372 Otoku Line + MYLINE
Income (loss) trend improving
¾ Improving trend in profitability
FY2007 FY2008 Q1 Q2 Q3 Q4 Total Q1 YoY Fixed-line Telecommunications Business 1,212 -916 -2,603 -656 -2,965 -111 -1,323 Operating (loss) income (m JPY)
*Includes amortization of goodwill JPY 1,026m/quarterly *FY07/Q1: includes reversal of JPY 2,575m for retirement benefits
71 Operating income/loss (Fixed-line Telecommunications Business)
¾ Improving trend in profitability
(m JPY) Includes one-off factor 10,000 (reversal of retirement benefits) 2,928 JPY 2,575m 1,212 -111 0 -916 -656 -1,787 -2,603
-10,000
-12,209 -14,297 -14,089 -20,000 -21,767
-30,000
3 4 1 2 3 4 2 3 1 /Q Q /Q Q Q Q /Q1 Q Q Q4 05 06 07 08/Q 72 EBITDA (Fixed-line Telecommunications Business)
¾ Improving trend in profitability
(m JPY) Includes one-off factor 20,000 (reversal of retirement benefits) JPY 2,575m 14,201 12,643 11,104 10,248 10,758 9,177 10,000 8,939
16 0 -343 -1,898
-6,208 -10,000
3 4 1 2 3 4 2 3 1 /Q Q /Q Q Q Q /Q1 Q Q Q4 05 06 07 08/Q 73 CAPEX on actual basis (Fixed-line Telecommunications Business)
¾ Significant reduction
CAPEX and depreciation and amortization CAPEX (quarterly trend) (yearly trend)
(m JPY) (m JPY)
200,000 50,000
CAPEX 40,000 Depreciation & 150,000 amortization
30,000 100,000 186,873
20,000
9,987 10,334 10,337 10,168 9,962 50,000 37,686 10,000 82,652 Q4/6,351 Q3/8,113 10,870 12,351 8,113 Q2/12,351 6,351 5,042 5,042 Q1/10,870 0 0 FY07/Q1 Q2 Q3 Q4 FY08/Q1 FY2005 FY2006 FY2007 FY08/Q1 74 Strategy of SOFTBANK TELECOM
Enhance corporate business in 3 focused areas
OtokuOtoku LineLine
DataData communicationcommunication serviceservice MobileMobile
Enhancement of corporate business ＋ Lean management ＝ Turn to positive
75 Net sales & operating expenses (SBTM consolidated)
¾ Improve profitability by reducing operating expenses
(bn JPY) Corporate net sales Consumer net sales Corporate ratio 100 85% 84% 82% 83% 100% 90 78% 80% 77% 73% 75% 80 80% 70
60 60% 50
40 40% 30
20 20% 10
0 0% 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 * Mobile phone sales business of former Telecom Service Co., Ltd. in FY06 is deducted 76 Number of Otoku Line/MYLINE users
¾ Expanded corporate business base focusing on Otoku Line
(k lines) 2,000
1,500
1,000 Corporate MYLINE Corporate Otoku Line 500
0 Jul Sep Dec Mar Jul Sept Dec Mar Jul 2005 2006 2007 77 Number of lines - Otoku Line -
¾ Otoku Line steadily increasing (k lines) 1,400 Heisei Denden 1,257 1,200 Large corporation SME(excl.JTI) 1,020 Corporate lines 1,000 SME(JTI) 792k Consumer (Corporate ratio: 63%) 800
600 540
400
200
0 05/Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1
78 ARPU – Otoku Line -
(JPY) Large corporations Total 12,000
10,000
8,000
6,000
4,000
2,000
0 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1
79 Expansion of corporate mobile sales
EnrichmentEnrichment of of corporate corporate ExpansionExpansion of of network network handsetshandsets
X01HT X01NK/ Nokia E61 C01SI 813SH for Biz
EnhancementEnhancement of of corporate corporate EnhancementEnhancement of of c coontent/ntent/ salessales structure structure solutionssolutions 80 - Broadband Infrastructure Business
- Fixed-line Telecommunications Business
- Mobile Communications Business
81 Summary - Mobile Communications Business -
Steady increase in cumulative subscribers ¾ No. 1 in quarterly net additions ¾ No. 1 in net additions for 3 consecutive months (May, June, July 2007)
FY2007 FY2008 Q1 Q2 Q3 Q4 Total Q1 YoY Cumulative subscriber (k lines) 15,240 15,307 15,497 15,909 ― 16,441 1,200
Operating income sustains firm trend
¾ Sustain increasing income trend after acquisition
FY2007 FY2008 Q1 Q2 Q3 Q4 Total Q1 YoY Mobile Communications 27,293 29,341 56,906 42,202 155,743 43,528 16,234 Operating income (m JPY) SBM Consolidated 31,162 18,301 50,667 34,474 134,607 38,844 7,681 Operating income (m JPY)
82 Operating income (SB consolidated / Mobile Communications)
(m JPY) 50,000 43,528
40,000
30,000 27,293
20,000
10,000 2 months May-June
0 07/Q1 08/Q1 (m JPY) FY2007 FY2008
Q1 Q2 Q3 Q4 Total Q1 YoY
Operating income 27,293 29,341 56,906 42,202 155,743 43,528 16,234 83 EBITDA (SB consolidated / Mobile Communications)
¾ Achieve significant year-on-year growth
(m JPY)
100,000 92,429
80,000
55,802 60,000
40,000
20,000 2 months May-June
0
07/Q1 08/Q1 (m JPY) FY2007 FY2008
Q1 Q2 Q3 Q4 Total Q1 YoY
EBITDA 55,802 73,615 104,082 87,985 321,484 92,429 36,627
84 Operating income (SBM consolidated)
¾ Improving trend in profitability and growth
(m JPY) (k lines) Operating income Net additions
50,000 531 600
40,000 500
30,000 400
300 20,000 38,844 31,162 200 10,000
30 100
0 0 07/Q1 08/Q1 (m JPY) FY2007 FY2008
Q1 Q2 Q3 Q4 Total Q1 YoY
Operating income 31,162 18,301 50,667 34,474 134,607 38,844 7,681 85 EBITDA (SBM consolidated)
¾ Improving trend in profitability and growth
(m JPY) EBITDA Net additions (k lines)
100,000 531 600
80,000 500
60,000 400
90,313 83,866 300 40,000
200 20,000 30 100
0 0 07/Q1 08/Q1 (m JPY) FY2007 FY2008
Q1 Q2 Q3 Q4 Total Q1 YoY
EBITDA 83,866 74,338 103,187 88,673 350,064 90,313 6,447 86 ¾CAPEX on actual basis (Mobile Communications)
¾ Accelerate CAPEX after acquisition CAPEX CAPEX and depreciation and amortization (yearly trend) (quarterly trend)
(m JPY) (m JPY)
120,000 CAPEX 500,000 104,944 (Forecast) Depreciation & amortization Carried over 387,910 400,000 to next Q 90,000 79,257 Carried over from 72,104 71,259 Q4
300,000 1 month April FY07 60,000 52,945
200,000 32,991 33,579 30,415 308,406 27,048 30,000 18,563 100,000 11 months May FY07-March FY08
72,104
0 0
FY07/Q1Q2Q3Q4FY08/Q1 FY2007 FY2008 87 3G base stations
(BS) 46,000 August 2007: 46,00046,000 BSBS achieved
22,000 SignificantlySignificantly enhancedenhanced networknetwork inin littlelittle overover aa yearyear
Q1 Q2 Q3 Q4 Q1Aug FY07 FY08 88 Monthly net addition
¾ Over 200k net additions for 2 consecutive months
(K) 250 225 JulyJuly 20072007 205 200 netnet additionaddition
164 164 162 224,8224,80000 150 128 120 100 97 64 63 69 No.1 for 57 50 24 27 3 consecutive 18 18 13 17 23 5 4 5 12 16 3 1 months! 0 r ay n ug ov ec ay ug ct ov eb M Ju Jul A Sep Oct N D Jan Feb Mar Apr M Jun Jul A Sep O N Dec Jan F Ma Apr May Jun Jul 05-Apr 06- 07- -50 -40 -40 1-Oct Brand change 27-Apr Acquisition 24-Oct MNP Start -100 Vodafone 89 Monthly net addition (postpaid)
(K) 300 257 July,July, 20072007 240 250 204 netnet additionaddition 200 200 179 256,8256,80000
150 143 114 100 70 71 6356 36 45 50 27 32 35 17 25 10 21 20 10 9 7 (9)(6) 0
ct ar ct ec ar MayJun JulAug Sep O Nov Dec Feb M AprMayJun JulAug Sep O Nov D Feb M AprMayJun Jul 05-Apr 06-Jan 07-Jan -50 (35) (39) 1-Oct Brand change 27-Apr Acquisition -100 24-Oct MNP Start
Vodafone 90 Quarterly net addition
-100 -74 -119 -200 1 Q2 Q3 Q4 /Q1 Q2 Q3 Q4 /Q Q2 Q3 Q4 6 7 05/Q1 0 0 08/Q1 Vodafone 91 Monthly net addition
¾ No.1 in monthly net additions for 3 consecutive months July 2007 net addition share (K) 600 SoftBank 500 45%
400
300 225 SoftBank 200 191 KDDI
100 81 NTT DoCoMo
0
-100
y p c b y p c n n a Jul un Jul ug an -AprM Jun AugSe OctNovDe Fe MarAprMa J A Se OctNovDe J Ja FebMarAprMayJu July 7- 05 06-Jan 0 *Source: disclosed information from each company *EMOBILE is not included in this graph 92 Cumulative 3G Subscribers
18,000 16,441 15,109 14,967 15,240 16,000 e/o July 2007 Cumulative subscribers:16,665k 14,000 End June 07 3G subscribers: 9,853k 3G subscribers 9,218k 3G ratio: 59.1% 12,000 3G ratio：56.1%
10,000 End June 06 8,000 3G subscribers 3,715k 3G ratio： 24.4% 6,000 Ref. other operators’ 3G ratios: NTT DoCoMo:73.0% 4,000 au: 98.1% 2,000 (as of e/o July 2007)
0
FY05Mar Jun Sep DecFY06 Mar Jun Sep DecFY07 Mar Jun Sep DecFY08 Mar Jun
Vodafone 93 Installment sales receivables and Super Bonus ratio
¾ Super Bonus subscribers exceed 6m
(m JPY) 300,000 Installment sales receivables balance 100%
Super Bonus ratio 253,000 86% 77% 80% 71%
200,000 177,276 60%
40% 100,000 87,552
88.1bn 10% procured 20% through securitization
6,291 0 0% 07/Q1 Q2 Q3 Q4 08/Q1 *Ratio of installment sales subscribers to total postpaid subscribers (new/upgrade) 94 ARPU
¾ Expansion of data ARPU and of Double White is key for ARPU improvement
(JPY) 7,000 6,290 6,140 6,080 5,810 5,870 5,930 5,840 6,000 5,600 5,590 5,700 5,560 5,210 5,000 5,000
4,000 Voice 4,820 4,940 4,780 4,540 4,540 4,510 4,490 4,260 4,230 4,320 4,230 3,830 3,590 3,000 Data
2,000
1,000 1,320 1,350 1,300 1,320 1,330 1,390 1,330 1,340 1,350 1,380 1,330 1,380 1,410
0 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1
05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 ARPU Voice 4,820 4,940 4,780 4,490 4,540 4,540 4,510 4,260 4,230 4,320 4,230 3,830 3,590 Data 1,320 1,350 1,300 1,320 1,330 1,390 1,330 1,340 1,350 1,380 1,330 1,380 1,410 Total 6,140 6,290 6,080 5,810 5,870 5,930 5,840 5,600 5,590 5,700 5,560 5,210 5,000 95 (Reference) User monthly payments
(JPY) 7,000 6,290 6,140 6,080 5,810 5,870 5,930 5,840 6,000 5,600 5,480 5,590 5,700 5,580 5,430
5,000 Install ment charge 4,000 4,820 4,940 4,780 4,540 4,540 4,510 Voice 4,490 4,260 4,230 4,320 4,230 3,830 3,590 3,000
Data 2,000
1,000 1,320 1,350 1,300 1,320 1,330 1,390 1,330 1,340 1,350 1,380 1,330 1,380 1,410
0 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1
05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 ARPU Voice 4,820 4,940 4,780 4,490 4,540 4,540 4,510 4,260 4,230 4,320 4,230 3,830 3,590 Data 1,320 1,350 1,300 1,320 1,330 1,390 1,330 1,340 1,350 1,380 1,330 1,380 1,410 Total 6,140 6,290 6,080 5,810 5,870 5,930 5,840 5,600 5,590 5,700 5,560 5,210 5,000 96 Acquisition commission per gross addition
¾ Acquisition commission decreased due to introduction of installment sales
(JPY) 80,000
60,000
46,100 44,900 44,900 45,600 44,400 43,800
40,000 29,000 30,700 22,400 20,000
0 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1
97 Churn rate
¾ Decrease due to penetration of installment sales
4.0%
3.0% SBM NTT DoCoMo au
1.85% 1.69% 2.0% 1.50% 1.46%
1.0%
0.0%
05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 SBM 1.85% 2.00% 1.82% 1.90% 1.69% 1.59% 1.47% 1.61% 1.50% 1.27% 1.60% 1.63% 1.46% NTT docomo 1.06% 1.08% 0.95% 0.96% 0.80% 0.81% 0.72% 0.75% 0.64% 0.60% 0.93% 0.97% 0.85% au 1.40% 1.49% 1.37% 1.51% 1.26% 1.21% 1.11% 1.23% 1.04% 0.95% 1.00% 1.07% 0.97%
98 3G churn rate
¾ 3G churn rate improved significantly
4.0%
3.02%
3.0% 2.43%
1.73% 2.0%
1.0% 1.07%
0.0%
05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 Churn rate 1.85% 2.00% 1.82% 1.90% 1.69% 1.59% 1.47% 1.61% 1.50% 1.27% 1.60% 1.63% 1.46% 3G Churn rate 3.02% 3.04% 2.40% 2.39% 2.43% 2.52% 2.27% 3.28% 1.73% 1.50% 1.66% 1.37% 1.07%
99 Upgrade rate
¾ Stable trend in upgrade rate
5.0%
4.0%
3.0% 2.25% 2.05% 1.89% 1.99%
2.0%
1.0%
0.0%
05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 05/Q1 Q2 Q3 Q4 06/Q1 Q2 Q3 Q4 07/Q1 Q2 Q3 Q4 08/Q1 Upgrade rate 1.89% 2.46% 2.06% 2.55% 2.05% 2.81% 2.61% 2.34% 1.99% 2.53% 3.02% 2.89% 2.25%
100 APPENDICES
101 Mobile Communications Business
Financial Data
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Net sales 232,467 351,991 430,328 427,252 1,442,040 391,668 -35,583 159,200 Operating income 27,293 29,341 56,906 42,202 155,743 43,528 1,326 16,234 EBITDA 55,802 73,615 104,082 87,985 321,484 92,429 4,445 36,627 Operating margin 11.7% 8.3% 13.2% 9.9% 10.8% 11.1% ―― EBITDA margin 24.0% 20.9% 24.2% 20.6% 22.3% 23.6% ――
Reference: SOFTBANK MOBILE and consolidated subsidiaries (m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Net sales 352,321 352,481 430,742 426,437 1,561,982 391,741 -34,696 39,420 Telecommunication service revenue 268,777 275,159 272,784 261,570 1,078,292 258,023 -3,547 -10,754 Sales of mobile handsets and accessories 83,543 77,321 157,957 164,867 483,689 133,718 -31,149 50,174 Gross Profit 161,462 160,932 188,510 186,354 697,260 181,207 -5,146 19,744 Telecommunication service revenue 156,689 158,461 159,819 150,097 625,068 147,181 -2,915 -9,507 Sales of mobile handsets and accessories 4,773 2,471 28,691 36,256 72,192 34,025 -2,231 29,252 Selling, general and administrative expenses 130,299 142,631 137,843 151,879 562,653 142,363 -9,516 12,063 Operating income 31,162 18,301 50,667 34,474 134,607 38,844 4,369 7,681 Operating margin 8.8% 5.2% 11.8% 8.1% 8.6% 9.9% ―― Telecommunication service revenue 26,389 15,830 21,976 -1,781 62,414 4,818 6,600 -21,571 Sales of mobile handsets and accessories 4,773 2,471 28,691 36,256 72,192 34,025 -2,231 29,252 EBITDA 83,866 74,338 103,187 88,673 350,064 90,313 1,640 6,447 EBITDA margin 23.8% 21.1% 24.0% 20.8% 22.4% 23.1% ――
102 Broadband Infrastructure Business
Financial Data
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Net sales 63,322 65,728 67,266 67,910 264,227 65,747 -2,163 2,424 Operating income 5,479 6,189 7,747 7,393 26,809 8,665 1,272 3,186 EBITDA 11,850 12,600 15,408 15,743 55,601 15,962 220 4,112 Operating margin 8.7% 9.4% 11.5% 10.9% 10.1% 13.2% ―― EBITDA margin 18.7% 19.2% 22.9% 23.2% 21.0% 24.3% ――
Reference: Impact amount from sale of the modem rental business
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Impact on net sales from the sale of the modem rental business -4,378 -3,568 -3,793 -2,691 -14,432 -3,932 -1,241 446 Impact on net sales from the sale of the modem rental business -884 -160 -424 308 -1,161 -1,151 -1,459 -267 Net sales excluding the sale of the modem rental business 67,701 69,297 71,060 70,601 278,659 69,679 -922 1,978 Operating income excluding the sale of the modem rental business 6,363 6,350 8,171 7,085 27,970 9,817 2,732 3,453
103 Fixed-line Telecommunications Business
Financial Data
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Net sales 88,673 93,276 93,712 98,466 374,129 90,486 -7,980 1,812 Operating (loss) income 1,212 -916 -2,603 -656 -2,965 -111 544 -1,323 EBITDA 12,643 10,248 8,939 10,758 42,588 11,104 346 -1,538 Operating margin 1.4% ―――― ― ―― EBITDA margin 14.3% 11.0% 9.5% 10.9% 11.4% 12.3% ――
Internet Culture Business
Financial Data
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Net sales 44,642 46,676 50,049 52,842 194,212 52,796 -46 8,153 Operating income 21,630 22,712 25,011 27,189 96,544 27,148 -41 5,517 EBITDA 23,929 25,243 27,607 29,427 106,206 29,605 178 5,676 Operating margin 48.5% 48.7% 50.0% 51.5% 49.7% 51.4% ―― EBITDA margin 53.6% 54.1% 55.2% 55.7% 54.7% 56.1% ――
104 e-Commerce Business
Financial Data
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Net sales 59,142 65,037 65,369 82,021 271,570 61,660 -20,360 2,518 Operating income 1,461 1,399 2,010 1,809 6,680 1,167 -642 -294 EBITDA 1,995 1,978 1,535 2,256 7,764 1,442 -813 -552 Operating margin 2.5% 2.2% 3.1% 2.2% 2.5% 1.9% ―― EBITDA margin 3.4% 3.0% 2.3% 2.8% 2.9% 2.3% ――
Others
Financial Data
(m JPY) FY2007 FY2008 Q1 Q2 Q3 Q4 Ｔｏｔａｌ Q1 QoQ YoY Net sales 20,289 23,785 21,628 25,082 90,785 24,871 -210 4,582 Operating (loss) income -717 547 -4,002 -557 -4,730 -689 -131 28 EBITDA -5 1,188 -3,052 225 -1,646 93 -131 98 Operating margin ― 2.3% ――― ― ―― EBITDA margin ― 5.0% ― 0.9% ― 0.4% ――
105 http://www.softbank.co.jp
This presentation contains forward-looking statements including statements regarding future events, future strategies or future performance of SOFTBANK CORP. that involves risks or uncertainties. In evaluating these statements, a recipient thereof should specifically consider various factors that could cause actual events or results to differ materially from those indicated, including without limitation; continuing decline in the general economic conditions, general market conditions, customer demand for products and services, increased competition, inherent risk in the international operations and other important factors.
106