Earnings Results for the Interim Period Ended September 30, 2007
Analyst Meeting
November 8, 2007 SOFTBANK CORP. 1H/FY2007 Summary of Consolidated Earnings Results
1. Consolidated earnings results: 1H operating income increased by 49% (YoY) 1H net income: 3.2 times (YoY)
2. Success in mobile operations: 1.14 million of net subscriber additions in 1H
3. Towards No.1 Internet company in Asia: IPO of Alibaba + Yahoo! JAPAN
‘Fiscal 2007’ refers to the fiscal year ended March 31, 2008, and other fiscal years are referred to in a corresponding manner. 2 Content
Items Page
Consolidated P/L Analysis 5
Consolidated B/S Analysis 18 Accounting Consolidated CF Analysis 26
CAPEX Status 28
Financial Activities 33
Finance Interest-bearing Debt Status 36
Investment Results 53
Broadband Infrastructure Segment 60
Fixed-line Telecommunications Segment 70 Operations Mobile Communications Segment 79
Appendices 99
3 Accounting
Kazuko Kimiwada General Manager Accounting, Internal Control SOFTBANK CORP.
4 - Consolidated P/L Analysis
- Consolidated B/S Analysis
- Consolidated CF Analysis
- CAPEX Status
5 Consolidated P/L summary
(m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Net Sales 494,231 625,941 1,120,173 702,195 721,850 2,544,219 663,084 701,660 38,575 1,364,745 244,571 Operating income 54,357 58,194 112,552 84,733 73,780 271,065 78,746 89,000 10,253 167,746 55,194 (Operating margin) 11.0% 9.3% 10.1% 12.1% 10.2% 10.7% 11.9% 12.7% ― 12.3% ― EBITDA 104,309 124,090 228,400 154,000 143,026 525,428 149,778 164,493 14,715 314,272 85,871 (EBITDA margin) 21.1% 19.8% 20.4% 21.9% 19.8% 20.7% 22.6% 23.4% ― 23.0% ― Non-operating income 12,096 4,540 15,631 1,829 4,259 13,531 4,531 5,654 1,123 10,185 (5,445) Non-operating expenses (40,459) (26,039) (65,493) (37,637) (36,231) (131,173) (32,123) (34,643) (2,520) (66,767) (1,274) Ordinary income 25,994 36,696 62,690 48,924 41,808 153,423 51,154 60,010 8,856 111,165 48,474 Special income 4,672 66,795 71,468 15,788 9,024 96,282 9,940 19,922 9,982 29,863 (41,605) Special loss (1,365) (13,895) (15,260) (6,688) (19,182) (41,132) (2,692) (15,406) (12,714) (18,098) (2,837) Net income 1,418 13,021 14,439 7,494 6,881 28,815 25,130 21,331 (3,798) 46,462 32,022 (Net margin) 0.3% 2.1% 1.3% 1.1% 1.0% 1.1% 3.8% 3.0% ― 3.4% ―
YoY- Key factors for P/L fluctuation 1 Net sales ¾ Mobile: JPY 230bn increase due to the fact that 6 months of SOFTBANK MOBILE’s results were included from this interim period (5 months of results were included in the interim results of the previous fiscal year), and a steady increase of mobile handsets sold, etc. ¾Internet Culture: JPY 19.1bn increase in net sales due to firm trend in advertising business 2 Operating income ¾ Mobile: JPY 37.5bn increase in operating income due to growth of mobile handset sales and the fact that 6 months of SOFTBANK MOBILE’s results were included from this interim period (5 months of results were included in the interim results of the previous fiscal year) ¾Internet Culture: JPY 10.5bn increase in operating income due to firm trend in advertising business ¾Broadband Infrastructure: JPY 7.3bn increase in operating income due to firm trend in Yahoo! BB ADSL business 3 Non-operating income ¾ Decrease in equity in earnings of JPY 4.9bn following the sale of shares held in SBI Holdings, Inc. on Aug 2006, etc. (4 months of results were included in the interim results of the previous fiscal year) 4 Non-operating expenses ¾ Although interest expense increased by JPY 22.8bn, financing related expenses, recorded at JPY 19.9bn in the interim period of the previous fiscal year, did not occur during 1H/FY2007 5 Special income ¾Recorded JPY 10.4bn gain on sale of investment securities, gain related to unrealized appreciation on investments at subsidiaries in the U.S amounted to JPY 14.1bn, and JPY 3.0bn was recorded as dilution gain from changes in equity interest 6 Special loss ¾JPY 10.1bn valuation loss on investment securities and JPY 3.9bn loss on disposal of fixed assets recorded 7 Income taxes etc. ¾Recorded current income taxes for Yahoo Japan Corporation etc. of JPY25.2bn, on the other hand JPY 8.4bn of income tax payable for SOFTBANK Holdings Inc. was reversed 6 Scope of consolidation/scope of equity method
FY07/2Q Core Companies SOFTBANK MOBILE, SOFTBANK BB, SOFTBANK TELECOM, Consolidated subsidiaries 112 Yahoo Japan, Broadmedia(*1), SOFTBANK TECHNOLOGY, ITmedia, etc. Newly consolidated companies 2 Subsidiaries excluded from consolidation 8 Non-consolidated subsidiaries 80 Insignificant companies Non-consolidated subsidiaries under the equity method 3 GungHo Online Entertainment, MySpace Japan Affiliated companies under the equity method 71 Alibaba Group Holding Limited(*2), etc. Entities newly accounted for under the equity method 10 Entities no longer accounted for under the equity method 2 Non-consolidated subsidiaries not under the equity method 77 Insignificant companies Affiliated companies not under the equity method 24 Insignificant companies
Companies Consolidated Under Equity Core Group Companies Main Business Activities Subsidiaries Method SOFTBANK MOBILE - provide mobile phone service Mobile Communications 5 2 (SBM) - sales of mobile phones etc. - ADSL, optic fiber and other high speed internet connection services Broadband Infrastructure 5 3 SOFTBANK BB (SBB) - IP phone service - provide content - voice transmission services SOFTBANK TELECOM - data transmission services Fixed-line Telecommunications 5 0 (SBTM) - leased circuit - data center business etc. - internet advertisements Internet Culture 15 18 Yahoo Japan - broadband portal business - auction business etc. SOFTBANK BB (SBB) - distribution of Software for PC's and peripheral e-Commerce 7 4 Vector equipment Carview - e-commerce towards businesses and consumers - broadcast media business Broadmedia - technology service business SOFTBANK Others 75 47 - media marketing business TECHNOLOGY - overseas fund business ITmedia - others Total 112 74
*1 Changed its company name from Club iT Corporation on Oct 1, 2007. *2 Changed its company name from Alibaba.com Corporation on Nov 5, 2007. 7 Consolidated net sales
¾ YoY increase thanks to firm trend of Mobile Communications segment
(m JPY) 1,364,745 Mobile 1,500,000 Communications 1,300,000 1,120,173 BB Infrastructure 1,100,000 Fixed-line Telecommunications 900,000 +22%+22%
Internet Culture 700,000
e-Commerce 500,000
300,000 Others 100,000 Elimination (100,000) 06/1H 07/1H
(m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Consolidated net sales 494,231 625,941 1,120,173 702,195 721,850 2,544,219 663,084 701,660 38,575 1,364,745 244,571 Mobile Communications 232,467 351,991 584,459 430,328 427,252 1,442,040 391,668 422,841 31,172 814,509 230,050 Broadband Infrastructure 63,322 65,728 129,050 67,266 67,910 264,227 65,747 64,072 (1,674) 129,819 768 Fixed-line Telecommunications 88,673 93,276 181,950 93,712 98,466 374,129 90,486 90,986 500 181,473 (477) Internet Culture 44,642 46,676 91,319 50,049 52,842 194,212 52,796 57,623 4,827 110,419 19,100 e-Commerce 59,142 65,037 124,180 65,369 82,021 271,570 61,660 63,812 2,151 125,473 1,293 Others 20,289 23,785 44,075 21,628 25,082 90,785 24,871 26,907 2,035 51,779 7,704 Elimination (14,307) (20,554) (34,861) (26,159) (31,725) (92,746) (24,145) (24,583) (437) (48,729) (13,867)
8 Consolidated operating income
BB Infrastructure 150,000
Fixed-line 130,000 112,552 Telecommunications 110,000 Internet Culture 90,000 e-Commerce 70,000 +49%+49% Others 50,000
Elimination or Corporate 30,000
Consolidated operating 10,000 income (10,000) 06/1H 07/1H
(m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Consolidated operating income 54,357 58,194 112,552 84,733 73,780 271,065 78,746 89,000 10,253 167,746 55,194 Operating margin 11.0% 9.3% 10.1% 12.1% 10.2% 10.7% 11.9% 12.7% ー 12.3% ー Mobile Communications 27,293 29,341 56,635 56,906 42,202 155,743 43,528 50,691 7,163 94,219 37,584 Broadband Infrastructure 5,479 6,189 11,668 7,747 7,393 26,809 8,665 10,320 1,654 18,986 7,317 Fixed-line Telecommunications 1,212 (916) 295 (2,603) (656) (2,965) (111) 460 572 349 53 Internet Culture 21,630 22,712 44,343 25,011 27,189 96,544 27,148 27,766 618 54,915 10,571 e-Commerce 1,461 1,399 2,860 2,010 1,809 6,680 1,167 933 (233) 2,100 (759) Others (717) 547 (169) (4,002) (557) (4,730) (689) 38 727 (650) (480) Elimination or Corporate (2,002) (1,078) (3,081) (335) (3,599) (7,017) (962) (1,211) (248) (2,173) 907 9 Consolidated EBITDA
¾ 38% YoY increase thanks to firm trend of Mobile Communications segment, achieve record high since establishment on interim basis
(m JPY)
400,000 Mobile Communications 314,272
BB Infrastructure 300,000 228,400 Fixed-line Telecommunications 200,000 Internet Culture
e-Commerce 100,000 +38%+38%
Others
0 Elimination or Corporate
Consolidated EBITDA (100,000) 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Consolidated EBITDA 104,309 124,090 228,400 154,000 143,026 525,428 149,778 164,493 14,715 314,272 85,871 EBITDA margin 21.1% 19.8% 20.4% 21.9% 19.8% 20.7% 22.6% 23.4% ー 23.0% ー Mobile Communications 55,802 73,615 129,417 104,082 87,985 321,484 92,429 104,091 11,661 196,521 67,103 Broadband Infrastructure 11,850 12,600 24,450 15,408 15,743 55,601 15,962 17,513 1,550 33,475 9,025 Fixed-line Telecommunications 12,643 10,248 22,891 8,939 10,758 42,588 11,104 11,351 246 22,456 (434) Internet Culture 23,929 25,243 49,172 27,607 29,427 106,206 29,605 30,591 985 60,197 11,025 e-Commerce 1,995 1,978 3,973 1,535 2,256 7,764 1,442 1,207 (234) 2,650 (1,323) Others (5) 1,188 1,182 (3,052) 225 (1,646) 93 829 736 922 (259) Elimination or Corporate (1,905) (781) (2,686) (517) (3,367) (6,570) (860) (1,091) (231) (1,952) 733 10 Non-operating income/loss
¾ Increase in interest expense, however non-operating expenses level out
(m JPY)
Interest income 20,000
Other non-operating income/expense (net) 0 Foreign exchange gain/loss (20,000) Equity in earnings (loss) of affiliated companies
Financing related (40,000) expense
Interest expense (60,000)
Non-operating income/expense (net) (80,000) 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Consolidated operating income 54,357 58,194 112,552 84,733 73,780 271,065 78,746 89,000 10,253 167,746 55,194 Non-operating income 12,096 4,540 15,631 1,829 4,259 13,531 4,531 5,654 1,123 10,185 (5,445) Interest income 1,088 1,045 2,134 941 318 3,394 608 929 321 1,537 (596) Foreign exchange gain ― ―――2,108 ― 543 2,062 1,519 2,605 2,605 Equity in earnings of affiliated companies 9,051 ― 8,046 ――2,130 1,440 1,696 255 3,136 (4,909) Others 1,956 3,495 5,451 887 1,831 8,006 1,939 965 (973) 2,905 (2,546) Non-operating expenses (40,459) (26,039) (65,493) (37,637) (36,231) (131,173) (32,123) (34,643) (2,520) (66,767) (1,274) Interest expense (14,601) (17,943) (32,545) (20,994) (25,981) (79,521) (26,960) (28,413) (1,452) (55,374) (22,829) Foreign exchange loss (154) (1,686) (1,841) (1,102) ― (834) ―― ――1,841 Equity in loss of affiliated companies ― (1,005) ― (2,763) (3,151) ― ―― ―― ― Financing related expenses (19,954) ― (19,954) (8,441) (318) (28,715) ―― ――19,954 Others (5,747) (5,403) (11,151) (4,336) (6,778) (22,101) (5,162) (6,230) (1,067) (11,392) (241) Non-operating loss (NET) (28,362) (21,498) (49,861) (35,808) (31,972) (117,642) (27,592) (28,989) (1,397) (56,582) (6,719) Consolidated ordinary income 25,994 36,696 62,690 48,924 41,808 153,423 51,154 60,010 8,856 111,165 48,474 *Foreign exchange gain (loss), equity in earnings (loss) of affiliated companies, net are set off quarterly and shown on a net base. 11 Consolidated ordinary income/loss
¾ Substantial increase accompanying the growth in consolidated operating income and achieve record high since establishment on interim basis
(m JPY)
120,000 111,165
100,000
80,000 62,690 60,000 +77%+77% 40,000
20,000
0
06/1H 07/1H YoY - Fluctuation factors YoY +48,474 million ¾Increase of operating income JPY +55,194 million Increase thanks to the firm trend in SOFTBANK MOBILE’s subscriber increase and to the reflection of 6 months of the Mobile Communications business results (5 months of results were included in the interim results of the previous fiscal year) etc. JPY +37,584 million ¾Decrease in non-operating income JPY (5,445) million Decrease in equity in earnings following the sale of all shares held in SBI Holdings, Inc., etc. JPY (4,909) million (4 months of results were included in the interim results of the previous fiscal year) ¾Increase in non-operating expenses JPY (1,274) million Increase interest expense JPY (22,829) million Financing related expenses did not occur during 07/1H (06/1H JPY 19,954 million) 12 Special income/loss
¾ Special income: unrealized appreciation on investments at subsidies in the U.S totaled JPY 14.1bn ¾ Special loss: valuation loss on investment securities totaled JPY 10.1bn
(m JPY)
80,000 Special income 60,000
Special 40,000 loss 20,000
Special 0 income/ loss (20,000) 06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Consolidated ordinary income 25,994 36,696 62,690 48,924 41,808 153,423 51,154 60,010 8,856 111,165 48,474
Special income 4,672 66,795 71,468 15,788 9,024 96,282 9,940 19,922 9,982 29,863 (41,605)
Gain on sale of investment securities 3,971 65,234 69,206 11,502 3,397 84,106 4,632 5,808 1,175 10,440 (58,765)
Dilution gain from changes in equity 300 694 995 1,102 501 2,598 2,866 223 (2,642) 3,089 2,094 interest Unrealized appreciation on investments at subsidiaries in the ―――2,474 2,460 4,935 460 13,665 13,204 14,126 14,126 U.S.
Gain on sale of interests in a ――――――938 ― (938) ―― subsidiary
Other special income 400 866 1,266 709 2,664 4,641 1,042 225 (817) 2,206 940 Special loss (1,365) (13,895) (15,260) (6,688) (19,182) (41,132) (2,692) (15,406) (12,714) (18,098) (2,837) Valuation loss on investment (143) (1,948) (2,092) (1,356) (1,902) (5,351) (169) (9,995) (9,825) (10,165) 8,073 securities Loss on redemption of bonds ― (7,386) (7,386) (3,042) ― (10,429) ――――7,386 Loss on disposal of fixed assets 0 (453) (453) (1,355) (5,886) (7,695) (1,030) (2,963) (1,933) (3,993) (3,540) loss on office relocation ― (1,853) (1,853) ― (789) (2,642) ――――1,853 Other special loss (1,221) (2,253) (3,475) (934) (10,604) (15,013) (1,492) (2,447) (954) (3,939) (464) Special income/loss (NET) 3,307 52,900 56,207 9,099 (10,157) 55,150 7,248 4,516 (2,731) 11,765 (44,442)
Income before income taxes and 29,302 89,596 118,898 58,024 31,650 208,573 58,403 64,527 6,124 122,930 4,031 minority interests *The items in special income/loss for FY2006 are shown according to the disclosing manner of FY 2007. 13 Consolidated net income/loss
¾ Significant YoY increase in net income
(m JPY)
46,462 50,000
40,000
30,000
20,000 14,439 +222%+222%
10,000
0
06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Income before income taxes and 29,302 89,596 118,898 58,024 31,650 208,573 58,403 64,527 6,124 122,930 4,031 minority interests Current 10,146 70,826 80,972 12,552 (44,798) 48,726 2,826 13,982 11,155 16,808 (64,164) Deferred 9,224 (3,182) 6,041 27,211 60,423 93,676 20,065 19,009 (1,055) 39,075 33,033 Minority interests in net income 8,514 8,930 17,444 10,765 9,145 37,355 10,380 10,203 (177) 20,583 3,139 Consolidated net income 1,418 13,021 14,439 7,494 6,881 28,815 25,130 21,331 (3,798) 46,462 32,022 Net margin 0.3% 2.1% 1.3% 1.1% 1.0% 1.1% 3.8% 3.0% ― 3.4% ―
14 Tax and other adjustments
(m JPY) 150,000 Yahoo Japan Corporation 23,531 SOFTBANK Holdings Inc. (8,457) (reversal of income tax payable)
120,000 SBM use of deferred tax assets (loss carry-forwards) 27,609 SBM depreciation and amortization adjustments, etc 12,415
Income taxes; current 90,000 16,808
Mainly Yahoo Japan Corporation Income before income taxes & 60,000 minority interests Income taxes; deferred 122,930 39,075 Minority interests in net income 30,000 20,583 Net income 46,462
0
SBM: SOFTBANK MOBILE Corp. 15 Effect of tax adjustments
¾ Breakdown of tax expenses (1H/FY07)
(m JPY)
Item Amount % Outline
1 Income before income taxes and minority interests 122,930 100%
・Yahoo Japan Corporation 23,531 2 Income taxes; Current 16,808 ・SOFTBANK Holdings Inc. (8,457) ・SBM use of deferred tax assets (loss carry-forwards) 27,609 3 Income taxes; Deferred 39,075 ・SBM depreciation and amortization adjustments 12,415
4 Total tax expenses (=2+3) 55,884 45% (=4/1)
¾ Difference in tax ratio
Statutory income tax 40%
1 Amortization of goodwill (mainly SBM) 9%
2 Unrecognized tax assets relating to 1H loss (BBM, SBTM) 4%
3 Reversal of income tax payable (SOFTBANK Holdings Inc.) (7%)
4 Others (1%)
NET 5%
Effective income tax 45%
16 Status of loss carry-forwards
(m JPY) Balance Company Name Expiry Date (end of Sep 2007) SOFTBANK MOBILE 131,394 Mar 2011
SOFTBANK BB 87,228 Mar 2011-Mar 2013
SOFTBANK TELECOM 80,724 Mar 2013-Mar 2015
SOFTBANK IDC 66,536 Mar 2009-Mar 2013
Others 218,199 Mar 2009-Mar 2015
Total 584,081
*Amounts are based on taxable income *FY07/1H amounts are not tax declaration values
17 - Consolidated P/L Analysis
- Consolidated B/S Analysis
- Consolidated CF Analysis
- CAPEX Status
18 Summary consolidated B/S Current assets Current liabilities Long-term liabilities Fixed assets Equity Current assets Current liabilities
(m JPY) SBM (m JPY) 1,445,045 1,500,000 1,247,433 1,500,000 1,142,903 1,110,276 1,000,000 870,905 1,000,000 677,817 480,452 500,755
500,000 500,000 569,616 574,140 662,450 609,520 0 0 Mar 2007 Sep 2007 Mar 2007 Sep 2007 Fixed assets Long-term liabilities
(m JPY) (m JPY) 4,000,000 3,000,000
2,451,712 2,550,550 3,059,240 3,009,613 3,000,000 2,000,000 1,562,942 1,712,678 2,000,000 2,000,516 1,987,553
1,000,000 1,000,000
1,058,724 1,022,060 888,770 837,872
0 0 Mar 2007 Sep 2007 Mar 2007 Sep 2007 19 Current assets Current liabilities
Consolidated B/S analysis (1) Current assets Long-term liabilities Fixed assets Equity
(m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Current assets 1,247,433 1,445,045 197,611 SBM 677,817 870,905 19,087 Others 569,616 574,140 4,523 Cash and deposits 377,666 472,738 95,072 Securitization of installment sales receivables +153,024, repayment of SBM loan (43,676) SBM 107,928 184,326 76,397 Repayment of finance leases (18,663), repayment of securitization of installment sales receivables (10,894) SB stand-alone: e/o Mar 07 85,180 >> e/o Sep 07 101,078 Breakdown:straight bonds issued +90,000, exercise of warrants +44,819, redemption of bonds (23,900), repayment of borrowings (56,912) Others 269,737 288,412 18,675 Decrease in cash receipts as collateral (20,000) etc. Yahoo Japan Corporation: e/o Mar 07 67,486 >> e/o Sep 07 73,945 Breakdown: provided by operating activities +61,810, payment of taxes (27,184), repayment of borrowings (10,000) etc. Notes and accounts 583,972 726,625 142,652 receivable-trade Mobile handset installment sales receivables SBM 380,674 535,612 154,938 e/o Mar 07 177,276 >> e/o Sep 07 351,579 SBTM: e/o Mar 07 69,331 >> e/o Sep 07 64,286 Others 203,298 191,012 (12,285) SBB: e/o Mar 07 94,275 >> e/o Sep 07 84,730 Inventories 76,898 85,325 8,427 SBM 39,187 45,863 6,676 Mobile handsets etc. SBB: e/o Mar 07 13,113 >> e/o Sep 07 13,125 Others 37,710 39,461 1,751 SBTM: e/o Mar 07 18,743 >> e/o Sep 07 19,325 Deferred tax assets 108,994 97,451 (11,542) SBM 95,260 85,222 (10,038) Others 13,733 12,229 (1,503) Others 99,902 62,903 (36,998) Accrued revenue e/o Mar 07 61,578 >> e/o Sep 07 32,874 cash inflow due to sales of SBM 54,765 19,880 (34,885) leased assets Allowance for doubtful accounts e/o Mar 07 (19,279) >> e/o Sep 07 (31,777)
Others 45,136 43,023 (2,113) 20 Current assets Current liabilities
Consolidated B/S analysis (2) Tangible assets Long-term liabilities Fixed assets Equity
(m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Fixed assets 3,059,240 3,009,613 (49,627) SBM 2,000,516 1,987,553 (12,963) Others 1,058,724 1,022,060 (36,664) Property and equipment, net 1,029,852 1,047,287 17,434 SBM 641,662 678,925 37,263 Others 388,190 368,361 (19,829) Buildings and structures 89,444 87,986 (1,457) SBM 32,543 32,390 (153) Network center etc. e/o Mar 07 32,279 >> e/o Sep 07 32,200 Others 56,900 55,596 (1,304) SBTM: e/o Mar 07 40,762 >> e/o Sep 07 39,814 Telecommunications equipment 694,785 734,253 39,468 SBM 520,582 572,999 52,417 SBTM: e/o Mar 07 118,121 >> e/o Sep 07 110,482 Others 174,202 161,253 (12,948) SBB: e/o Mar 07 52,722 >> e/o Sep 07 47,483 Telecommunications service lines 92,235 89,623 (2,611) SBM 8,325 9,125 800 Others 83,910 80,497 (3,412) SBTM: e/o Mar 07 83,198 >> e/o Sep 07 79,890 Land 27,747 27,770 22 SBM 10,752 10,776 23 Land for base stations Others 16,995 16,994 (0) SBTM 11,498, SOFTBANK IDC 5,001 Construction-in-progress 71,777 53,479 (18,298) SBM 42,456 25,211 (17,244) Others 29,321 28,268 (1,053) Others 53,861 54,172 310 SBM 27,002 28,422 1,419 Others 26,859 25,750 (1,109)
21 Consolidated B/S analysis (3) Intangible assets Current assets Current liabilities Long-term liabilities Fixed assets Equity
(m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Intangible assets, net 1,279,710 1,257,136 (22,574) SBM 1,155,239 1,132,415 (22,823) Others 124,471 124,720 248 Goodwill 1,032,927 1,005,172 (27,755) SBM 981,410 955,696 (25,713) Decrease due to amortization Others 51,516 49,475 (2,041) SBTM: e/o Mar 07 29,134 >> e/o Sep 07 27,192 Software 200,615 211,418 10,803 SBM 160,981 171,036 10,054 Switch software, service platform etc. SBTM: e/o Mar 07 18,333 >> e/o Sep 07 16,985 Others 39,633 40,382 748 SBB : e/o Mar 07 8,316 >> e/o Sep 07 8,959 Others 46,168 40,545 (5,622) SBM 12,846 5,682 (7,163) Software in progress Others 33,321 34,863 1,541 Investments and other assets 749,677 705,189 (44,487) SBM 203,615 176,211 (27,404) Others 546,062 528,978 (17,083) Investment securities and 487,421 465,879 (21,541) investment in partnerships SBM 3,081 2,782 (298) Others 484,340 463,096 (21,243) Shares of Yahoo! Inc.,etc Deferred tax assets 157,783 129,426 (28,357) SBM 154,244 124,477 (29,766) Others 3,538 4,948 1,409 Others 104,472 109,883 5,411 Long-term prepaid expense e/o Mar 07 36,052 >> e/o Sep 07 39,355 SBM 46,289 48,950 2,661 Guarantee money paid e/o Mar 07 10,036 >> e/o Sep 07 9,332
Others 58,183 60,932 2,749 SBTM: long-term prepaid expense e/o Mar 07 13,403 >> e/o Sep 07 15,588 Deferred charges 4,178 3,920 (257) SBM ーーー Others 4,178 3,920 (257)
22 Current assets Current liabilities
Consolidated B/S analysis (4) Current liabilities Long-term liabilities Fixed assets Equity
(m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Current liabilities 1,142,903 1,110,276 (32,626) SBM 480,452 500,755 20,302 Others 662,450 609,520 (52,929) Accounts payable - trade 195,167 131,093 (64,073) SBM 132,583 85,685 (46,897) Mobile handsets costs payable etc. Others 62,584 45,408 (17,176) SBB: e/o Mar 07 47,504 >> e/o Sep 07 31,585 * e/o fiscal year stock costs payable Short-term borrowings 193,656 276,154 82,497 SBM 147 89,521 89,373 Short-term borrowings from Installment sales receivables securitization structure +89,233 SB stand-alone: e/o Mar 07 138,112 >>e/o Sep 07 128,000 Others 193,508 186,632 (6,876) SBTM: e/o Mar 07 23,200 >>e/o Sep 07 23,600 Yahoo Japan: e/o Mar 07 20,000 >>e/o Sep 07 20,000 Commercial paper 5,000 ー (5,000) SBM ーーー Others 5,000 ー (5,000) SB stand-alone: e/o Mar 07 5,000 >> e/o Sep 07 (-) Current portion of corporate bonds 43,964 52,572 8,608 SBM ーーー Transfer to short-term according to the redemption schedule Others 43,964 52,572 8,608 SB stand-alone: e/o Mar 07 43,900 >> e/o Sep 52,500 Accounts payable - other 415,561 360,861 (54,700) SBM 293,287 244,948 (48,338) Mainly payable for capital equipment, agencies, operation expenses etc. SBTM: e/o Mar 07 54,895 >> e/o Sep 07 48,841 Others 122,274 115,912 (6,361) SBB: e/o Mar 07 34,082 >> e/o Sep 07 29,553 Current-portion of lease obligations 18,049 54,262 36,213 SBM 18,049 54,256 36,207 Investment in leased capital equipment transferred to short-term Others ー 55 Cash receipts as collateral 150,000 130,000 (20,000) SBM ーーー Others 150,000 130,000 (20,000) SB stand-alone: cash receipts as collateral under security deposit agreement Others 121,504 105,332 (16,172) Advanced receipts and deferred revenue SBM 36,385 26,342 (10,042) e/o Mar 07 30,247 >> e/o Sep 07 21,467 Others 85,118 78,989 (6,129)
23 Current assets Current liabilities
Consolidated B/S analysis (5) Long-term liabilities Long-term liabilities Fixed assets Equity
(m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Long-term liabilities 2,451,712 2,550,550 98,838 SBM 1,562,942 1,712,678 149,736 Others 888,770 837,872 (50,898) Corporate bonds 422,599 480,702 58,102 SBM ーーー SB stand-alone straight bonds: e/o Mar 07 180,059 >> e/o Sep 07 238,201 Breakdown: 24th, 25th, 26th series Unsecured Straight Bond 90,000 Others 422,599 480,702 58,102 transferred to short-term (32,500) SB stand-alone convertible bonds: e/o Mar 07 150,000 >> e/o Sep 07 150,000 SBTM: e/o Mar 07 60,100 >> e/o Sep 07 60,100 Long-term debt 1,729,183 1,666,923 (62,260) SBM loan e/o Mar 07 1,355,091 >> e/o Sep 07 1,311,414 SBM 1,439,687 1,448,907 9,219 Vodafone subordinate loan e/o Mar 07 84,596 >> e/o Sep 07 84,596 Installment sales receivables structure borrowings e/o Sep 07 52,895 SB stand-alone: e/o Mar 07 68,000 >> e/o Sep 07 21,000 Others 289,495 218,016 (71,479) SBTM: e/o Mar 07 52,000 >>e/o Sep 07 40,000 Yahoo Japan: e/o Mar 07 50,000 >> e/o Sep 07 40,000 Deferred tax liabilities 50,136 49,860 (276) SBM ーーー Others 50,136 49,860 (276) Allowance for point mileage 43,787 43,796 8 SBM 43,787 43,796 8 Allowance for point mileage Others ーーー Lease obligations 74,964 211,126 136,161 Breakdown: newly procured + 191,026, transferred to short-term (36,208), SBM 74,964 211,119 136,154 payment of leases (18,644) Others ー 77 Others 131,041 98,142 (32,898) SBM 4,502 8,856 4,354 SBH: derivative liabilities e/o Mar 07 41,874 >> e/o Sep 07 15,589 Others 126,539 89,286 (37,252) SBB: deferred revenue (mainly modem rental business securitization advanced royalty balance), etc e/o Mar 07 26,392 >>e/o Sep 07 18,991
24 Current assets Current liabilities
Consolidated B/S analysis (6) Equity Long-term liabilities Fixed assets Equity
(m JPY) e/o Mar 2007 e/o Sep 2007 Variance Outline Equity 716,237 797,752 81,514 Shareholders' equity 158,515 244,822 86,306 Common stock 163,309 187,315 24,005 Execution of stock subscription rights and stock acquisition rights Cash receipts for new stock 1 ― (1) subscriptions Additional paid-in capital 187,669 211,632 23,963 Execution of stock subscription rights and stock acquisition rights Accumulated deficit (192,271) (153,924) 38,347 Current period net income 46,462 Treasury stock (193) (201) (7) Valuation and translation adjustments 124,434 108,613 (15,820) Stock acquisition rights 3,180 66 (3,114) Decrease due to execution e/o Sep breakdown: BBM (300,000) * Issue preferred stock to Vodafone International Minority interests 430,106 444,250 14,143 Holdings BV, other mainly Yahoo Japan Corporation
[Consolidated Statements of Changes in Equity] Interim period from April 1, 2007 to September 30, 2007 (m JPY) Shareholders' equity Valuation and Stock acquisition Additional paid- Accumulated translation Minority interests Total equity Common stock Treasury stock rights in capital deficit adjustments Balance at Apr 1, 2007 163,309 187,669 (192,271) (191) 124,434 3,180 430,106 716,237 Increase in accumulated deficit due to adoption of new ――(5,150) ― (5,150) accounting standards at a subsidiary in the U.S. Changes of Exercise of warrants 24,005 23,963 ― (1) 47,967 Cash dividends ――(2,639) ― (2,639) items during the period Adjustments of accumulated deficit due to change in ――(325) ― (325) scope of the consolidation Net income ――46,462 ― 46,462 Items other than changes in ―――(7) (15,820) (3,114) 14,143 (4,798) shareholders' equity Balance at Sep 30, 2007 187,315 211,632 (153,924) (201) 108,613 66 444,250 797,752
25 - Consolidated P/L Analysis
- Consolidated B/S Analysis
- Consolidated CF Analysis
- CAPEX Status
26 Consolidated Cash flow main breakdown
(m JPY) Operating CF Investing CF Financing CF +443 (227,285) +303,526 SBM Funding by installment sales 220,816 receivables securitization
153,024 24th, 25th, 26th series Unsecured 122,930 Straight Bond 107,762 Mainly Yahoo Japan Acquisitions of SBM 89,471 Corporation base stations etc. 44,819 29,456 30,068 21,787
(20,000) (28,692) (29,777) (23,932) (46,160) (64,734) (86,438)
(174,303)
(204,405) warrants of exercise from Proceeds Amortizationgoodwill of Redemption of bonds Change inmobile handset Proceeds from saleof from Proceeds Decrease in cash receipts cash in Decrease Depreciation &amortization taxes and minority interests taxes and Income beforeincome paid taxes Income acquired newly equipment of back lease saleand from Proceeds equipment &intangibles & property of Purchase securities investment and marketable of Purchase trade (non-installment) & notes in Decrease bonds of issuance from Proceeds installment receivables installment debt Repayment oflong-term trade payables- in Decrease Proceeds from long-termdebt Proceeds from Decrease inshort-term securities investment and marketable as collateral accounts receivable- borrowings
*Significant items from the consolidated CF statement are shown here. 27 - Consolidated P/L Analysis
- Consolidated B/S Analysis
- Consolidated CF Analysis
- CAPEX Status
28 CAPEX (actual basis)
¾ Mainly due to expansion of 3G base stations in mobile communications business
(m JPY) 150,000 Mobile 124,934 Communications
BB Infrastructure 103,512 100,000 88,052 85,355 Fixed-line Telecommunications 73,301 64,509 Internet Culture
50,000 e-Commerce
Others
0
06/1Q 2Q 3Q 4Q 07/1Q 2Q
(m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Consolidated 73,301 103,512 176,814 88,052 124,934 389,801 85,355 64,509 (20,846) 149,864 (26,949) Mobile Communications 52,945 79,257 132,202 71,259 104,944 308,406 72,104 50,949 (21,155) 123,054 (9,148) BB Infrastructure 5,335 6,397 11,732 4,699 5,674 22,106 5,084 4,869 (214) 9,953 (1,778) Fixed-line Telecommunications 10,870 12,351 23,221 8,113 6,351 37,686 5,042 5,428 385 10,471 (12,750) Internet Culture 2,635 3,562 6,197 2,870 5,949 15,017 1,928 2,379 451 4,308 (1,889) e-Commerce 570 778 1,348 386 1,122 2,858 336 265 (70) 602 (746) Others 944 1,166 2,111 724 892 3,728 858 616 (242) 1,475 (635)
*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. 29 Depreciation and amortization (excl. amortization of goodwill)
¾ Consolidated basis depreciation and amortization in the range of JPY 50bn/Q
(m JPY) 60,000 53,972 53,258 54,503 50,578 46,494 Mobile Communications
38,048 BB Infrastructure 40,000
Fixed-line Telecommunications
Internet Culture 20,000 e-Commerce
Others
0 06/1Q 2Q 3Q 4Q 07/1Q 2Q
(m JPY) FY2006 FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Consolidated 38,048 46,494 84,542 50,578 53,972 189,092 53,258 54,503 1,244 107,762 23,220 Mobile Communications 18,563 27,048 45,611 30,415 32,991 109,017 33,579 34,867 1,287 68,446 22,835 BB Infrastructure 6,051 6,143 12,194 7,445 7,582 27,222 6,909 6,707 (202) 13,616 1,422 Fixed-line Telecommunications 10,334 9,987 20,321 10,337 10,168 40,826 9,687 9,482 (205) 19,170 (1,150) Internet Culture 1,821 2,042 3,863 2,223 1,921 8,007 2,084 2,413 329 4,497 634 e-Commerce 525 571 1,096 (492) 423 1,027 268 267 (1) 535 (560) Others 753 703 1,455 647 887 2,990 728 765 36 1,494 40 30 Amortization of goodwill
¾ Consolidated basis amortization of goodwill approx. JPY 14bn/Q
(m JPY)
20,000
15,930 15,693 14,701 14,755 SOFTBANK 15,000 MOBILE 10,940 11,029
SOFTBANK 10,000 TELECOM
Others 5,000
0
06/1Q 2Q 3Q 4Q 07/1Q 2Q
(m JPY) FY2006 FY2007 Balance 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY (e/o Sept.-07) Consolidated 10,940 15,930 26,871 15,693 11,029 53,595 14,701 14,755 54 29,456 2,584 1,005,172 SOFTBANK MOBILE 9,365 14,157 23,522 14,113 9,505 47,141 12,856 12,856 0 25,713 2,191 955,696 SOFTBANK TELECOM 971 971 1,942 971 971 3,884 971 971 0 1,942 0 27,192 Others 604 802 1,406 608 552 2,568 873 927 54 1,800 393 22,284
31 Finance
Yoshimitsu Goto
General Manager Finance, Group Management SOFTBANK CORP.
32 - Financial activities
- Interest-bearing debt status
- Investment results
33 Financial activities for 1H - 1
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 capitalization JPY 18.8bn as of the day of listing Apr 17）
Jun-07 Procure JPY 88.1bn through the 1st 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 capitalization JPY 28.7bn as of the day of listing Jun 12）
Sep-07 Procure JPY 64.8bn through the 2nd securitization of the mobile handsets installment sales receivables
Exercise of stock acquisition rights (24 million shares x JPY1,837 = JPY 44.0bn)
Oct-07 Renewal of credit line facility: size increased from JPY179.0bn to JPY200.0bn
Nov-07 Listing of Alibaba .com Limited on HONG KONG Stock Exchanges （market capitalization JPY 2.9tn as of the day of listing Nov 6）
34 Financial activities for 1H - 2
Number of exercised stock acquisition rights 80,000 Number of shares to be issued 24 million Cash proceeds JPY 44.0bn Exercise price per share JPY 1,837
Securitization of installment sales receivables Amount(2Q) Amount(1Q) Program for individual investors JPY 20.8bn JPY 23.0bn Program for institutional investors JPY 44.0bn JPY 65.1bn Total JPY 64.8bn JPY 88.1bn (Oct 2007) Renewal of credit line facility
After renewal Before renewal Credit line facility size JPY 200.0bn JPY 179.0bn Term 07/10/01-08/09/26 - Participating financial 47 financial institutions 37 financial institutions institutions 35 - Financial activities
- Interest-bearing debt status
- Investment results
36 Interest-bearing debt and net interest-bearing debt
¾Net interest-bearing debt decreased to less than JPY 2,000bn
(m JPY) Interest-bearing debt Securitization of installment receivables 3,000,000 Net interest-bearing debt Cash and cash equivalents
2,000,000
1,000,000
0 e/o Mar 07 e/o Jun 07 e/o Sep 07 (m JPY) FY2006 FY2007 e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep QoQ YoY Interest-bearing debt 2,529,595 2,390,057 2,470,803 2,394,403 2,497,179 2,476,351 (20,828) 81,948 Net interest-bearing debt 2,237,071 2,109,098 2,069,008 2,007,148 2,011,270 1,994,352 (16,918) (13,796) Cash and cash equivalents 292,524 280,958 401,795 386,254 485,909 481,999 (3,909) 95,744
Interest-bearing debt (excl. the securitization of 2,409,018 2,334,222 (74,796) (60,180) installment sales receivables) Net interest-bearing debt (excl. the securitization of 1,923,109 1,852,223 (70,886) (155,925) installment sales receivables)
*Lease obligations are not included in interest-bearing debt. 37 Interest-bearing debt and net interest-bearing debt (excl. mobile*)
¾Interest-bearing debt (excl. mobile) repaid steadily
(m JPY) 3,000,000 Interest-bearing debt (excl. mobile) Net interest-bearing debt (excl. mobile) Cash & cash equivalents (excl. mobile)
2,000,000
1,000,000
0 e/o Mar 07 e/o Jun 07 e/o Sep 07
(m JPY) FY2006 FY2007 e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep QoQ YoY Interest-bearing debt (excl. mobile) 1,130,543 1,008,059 1,020,154 954,567 982,009 937,922 (44,086) (16,645) Net interest-bearing debt (excl. mobile) 891,127 752,501 717,132 677,752 710,673 641,779 (68,894) (35,973) Cash and cash equivalents (excl. mobile) 239,415 255,557 303,021 276,815 271,335 296,143 24,808 19,328
*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. 38 Interest-bearing debt status by item
2,000,000
1,000,000
0
e/o Mar 07 e/o Jun 07 e/o Sep 07 (m JPY) FY2006 FY2007 e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep QoQ YoY Interest-bearing debt 2,529,595 2,390,057 2,470,803 2,394,403 2,497,179 2,476,351 (20,828) 81,948 Corporate bonds 591,468 567,944 475,446 466,563 557,419 533,274 (24,145) 66,710 SBM bonds 125,000 100,000 ―――――― Long-term borrowings 388,997 389,918 1,720,950 1,729,183 1,718,399 1,666,923 (51,475) (62,260) SBM Loan (non-recouse) ――1,365,602 1,355,091 1,342,174 1,311,414 (30,760) (43,676) Financing from the securitization of ――――51,515 52,895 1,380 52,895 installment sales receivables(long term) Others 388,997 389,918 355,348 374,092 324,709 302,613 (22,095) (71,479) Short-term borrowings (incl. long-term loans 1,534,529 1,422,194 254,606 193,656 221,361 276,154 54,792 82,497 with maturity date within one year) Vodafone acquisition bridge loan 1,166,000 1,173,830 ―――――― Financing from the securitization of ――――36,645 89,233 52,587 89,233 installment sales receivables(short term) Others 368,529 248,364 254,606 193,656 184,715 186,921 2,205 (6,735) CP 14,600 10,000 19,800 5,000 ―――(5,000) *Trust debt assumptions executed on SBM corporate bonds on Nov 30,2006. *Lease obligations are not included in interest-bearing debt. 39 Interest-bearing debt status details
¾Existing debt repaid, while securitization of installment sales receivables continued
(m JPY) Securitization of installment 2,497,179 2,476,351 2,500,000 sales receivables obligations 2,394,403 88,161 142,129 (SBM)
2,000,000 SBM Loan (WBS)
1,342,174 1,355,091 1,311,414 Vodafone subordinated loan
1,500,000 Yahoo Japan Corporation borrowings Borrowings from other financial institutions, etc. 1,000,000 84,596 84,596 60,000 84,596 70,000 60,000 (m JPY) SOFTBANK credit line 60,000 364,828 SOFTBANK other bank loans 89,000 413,153 344,937 SOFTBANK TELECOM syndicated loan 63,600 Major overseas subsidiaries financial institutions loans 120,470 500,000 Others 11,867 Total 344,937 557,419 471,563 533,274 Corporate bonds & CP 0 e/o Mar 07 e/o Jun 07 e/o Sep 07
40 SBM loan repayment status
e/o Nov 2006 e/o Sep 2007 e/o Oct 2007 (time of borrowing) SBM loan balance JPY 1,366.0bn JPY 1,311.4bn JPY 1,295.0bn
Amount repaid - JPY 54.5bn JPY 70.9bn
Mobile communications business leverage ratio
FY2007 2007/1H Mobile business interest-bearing debt (a) JPY 1,439.8bn JPY1,538.4bn balance Mobile communications business (b) JPY 384.1bn(*1) JPY 393.0bn(*2) (annualized) (a)/(b) Leverage ratio 3.7X 3.9X
*1 Annualized by multiplying the Mobile Communications segment’s FY06 2H EBITDA by 2 *2 Annualized by multiplying the Mobile Communications segment’s FY07 1H EBITDA by 2
41 Consolidated interest-bearing debt Short/long ratio
¾Maintain high long-term debt ratio
Consolidated interest-bearing debt Consolidated interest-bearing debt (excl. mobile )
100% 100% 90% 90% 80% 80% Short-term 70% ratio 70% Short-term ratio 60% 89.9% 88.9% 86.7% 60% Long-term Long-term 50% ratio 50% 74.6% 75.5% 74.5% ratio 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% e/o Mar 07 e/o Jun 07 e/o Sep 07 e/o Mar 07 e/o Jun 07 e/o Sep 07
e/o Mar 2007 e/o Jun 2007 e/o Sep 2007 e/o Mar 2007 e/o Jun 2007 e/o Sep 2007 Short-term 242,620 277,825 328,726 Short-term: excl. mobile 242,472 240,941 239,204 Long-term 2,151,783 2,219,354 2,147,625 Long-term: excl.mobile 712,095 741,067 698,718 Total 2,394,403 2,497,179 2,476,351 Total: excl. mobile 954,567 982,009 937,922 Long-term ratio 89.9% 88.9% 86.7% Long-term ratio 74.6% 75.5% 74.5% Short-term ratio 10.1% 11.1% 13.3% Short-term ratio 25.4% 24.5% 25.5%
Long-term ratio(excl. the securitization of installment 89.9% 90.0% 89.7% sales receivables)
42 Cash position
¾Maintained sufficient cash position Unused portion of credit line facility (m JPY) Cash&cash equivalents 604,909 600,999 600,000
455,254
400,000
200,000
0 e/o Mar 07 e/o Jun 07 e/o Sep 07
(m JPY) FY2006 FY2007 e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep QoQ YoY Cash and cash equivalents 292,524 280,958 401,795 386,254 485,909 481,999 (3,909) 95,744 Unused portion of credit line facility 30,000 30,000 39,000 69,000 119,000 119,000 ― 50,000 Total 322,524 310,958 440,795 455,254 604,909 600,999 (3,909) 145,744
Credit line facility total 161,000 179,000 ――
*Credit line facility amount was increased to JPY 200bn on Oct. 1, 2007 43 Interest expense
(m JPY)
55,374 60,000
50,000
40,000 32,545
30,000
20,000
10,000
0
(m JPY) 06/1HFY2006 07/1H FY2007 1Q 2Q 1H 3Q 4Q Total 1Q 2Q QoQ 1H YoY Interest expense 14,601 17,943 32,545 20,994 25,981 79,521 26,960 28,413 1,452 55,374 22,829
44 Shareholders’ equity - equity ratio
(m JPY) 2,000,000 30%
Shareholders' equity 1,500,000 Equity ratio 20%
1,000,000 7.9% 6.6% 7.1% 10% 500,000
0 0% e/o Mar 07 e/o Jun 07 e/o Sep 07
(m JPY) FY2006 FY2007 e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep QoQ YoY Total assets 4,031,003 3,986,991 4,191,853 4,310,852 4,456,521 4,458,579 2,058 147,726 Shareholders' equity 235,198 249,162 267,800 282,949 316,126 353,435 37,309 70,485 Equity ratio 5.8% 6.2% 6.4% 6.6% 7.1% 7.9% ――
45 (Reference) pro-forma equity ratio including unrealized gain of
0 0% e/o Mar 07 e/o Jun 07 e/o Sep 07 (m JPY) FY2006 FY2007 Based on Nov 5 e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep QoQ YoY share price Total assets (A) 4,031,003 3,986,991 4,191,853 4,310,852 4,456,521 4,458,579 2,058 149,293 4,458,579 Shareholders' equity (B) 235,198 249,162 267,800 282,949 316,126 353,435 37,309 70,485 353,435 SB unrealized capital gain (C) 1,969,358 1,326,262 1,364,009 1,232,650 1,243,906 1,243,982 76 11,332 1,446,186 Loss carry-forwards (D) 538,005 538,055 538,055 538,055 570,167 584,081 13,914 46,026 584,081 taxable unrealized capital gain (E=C-D) 1,431,303 788,207 825,954 694,595 673,739 659,901 (13,838) (34,694) 862,105 tax (F=E×40%) 572,521 315,283 330,382 277,838 269,495 263,960 (5,535) (13,878) 344,842 unrealized capital gain after tax(G=C-F) 1,396,837 1,010,979 1,033,627 954,812 974,411 980,022 5,611 25,210 1,101,344 Shareholders' Equity 1,632,036 1,260,141 1,301,427 1,237,761 1,290,537 1,333,457 42,920 95,696 1,454,779 (incl. unrealized gain of SB held listed shares) (H=B+G) Total assets 5,427,840 4,997,970 5,225,480 5,265,664 5,430,932 5,438,601 7,669 172,937 5,559,923 (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% 24.5% ――26.2% (incl. amount of unrealized gain of SB held listed shares)
*Unrealized gain of SOFTBANK held listed shares is calculated based on the share price of investment securities (listed & public companies only), held by fully owned domestic and overseas subsidiaries of SOFTBANK CORP., at the end of each quarter. *Loss carry-forwards of FY2007 was assumed to be equal to the balance at the end of Mar 2007. 46 Debt/Equity ratio - Net Debt/Equity ratio
¾Steady improvement Debt/Equity ratio Net Debt/Equity ratio
(times) (times)
D/E ratio Net D/E ratio 14.0 D/E ratio (excl. mobile) 14.0 10.8 Net D/E ratio (excl. mobile) 12.0 12.0 9.6 9.5 9.2 10.0 8.5 10.0 8.5 7.9 7.7 7.0 7.1 8.0 8.0 6.4 5.6 6.0 4.8 6.0 4.0 3.8 3.8 3.4 3.1 4.0 2.7 4.0 3.0 2.7 2.4 2.2 1.8 2.0 2.0
0.0 0.0
06/1Q 2Q 3Q 4Q 07/1Q 2Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q 47 Major margins
¾Major margins improved dramatically
EBITDA margin Operating margin Ordinary margin
(bn JPY) 600 60% 300 30% 200 20%
Ordinary EBITDA Operating 50% 25% (loss) (loss) income 150 15% EBITDA margin income 400 40% 200 Operating 20% Ordinary margin 100 margin 8.1% 10%
23.0% 30% 12.3% 15% 6.0% 20.7% 10.7% 50 2.5% 5% 200 13.5% 20% 100 10% 5.6% 0 0% 5.3% 10% 5% 6months (50) -5% 0 0% 0 0%
6months 6months -10% -5% (100) -10%
(200) -20% (100) -10% (150) -15% 2 3 4 5 6 H 0 0 0 0 0 /1 2 3 4 5 6 H Y Y Y Y 7 Y03 0 0 0 0 0 1 F F F F 0 FY02 F FY04 FY05 FY06 Y Y Y Y Y 7/ Y F F F F F 0 F FY07/1H FY
48 Status of lease financing
Finance leases without ownership transfer of leased assets to the
e/o Mar 2007 e/o Jun 2007 e/o Sep 2007 QoQ Due within one year 33,088 32,950 32,621 (328) Due after one year 165,966 162,513 154,660 (7,852) Total 199,055 195,463 187,282 (8,181)
Finance leases with ownership transfer of leased assets to the lessees at the end of the lease period (on-balance)
e/o Mar 2007 e/o Jun 2007 e/o Sep 2007 QoQ Due within one year 18,049 43,169 54,262 11,092 Due after one year 74,964 176,888 211,126 34,237 Total 93,013 220,058 265,389 45,330
Total
e/o Mar 2007 e/o Jun 2007 e/o Sep 2007 QoQ Due within one year 51,138 76,120 86,884 10,764 Due after one year 240,931 339,401 365,786 26,384 Total 292,069 415,522 452,671 37,148
49 SBM on-balance lease balance
¾Execute lease related to 3G base stations
(m JPY) 300,000 265,389
250,000 220,058
200,000
150,000
100,000 93,013
50,000
0 e/o Mar 07 e/o Jun 07 e/o Sep 07 (m JPY) FY2006 FY2007
e/o Jun e/o Sep e/o Dec e/o Mar e/o Jun e/o Sep QoQ 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 22,058 265,389 45,330 172,375 (on-balance)
*FY2006/2Q, 3Q recorded as other long-term liabilities 50 Corporate bond details (as of e/o Sep 2007)
Interest Mar 07 Jun 07 Sep 07 Company Name Bond Issue date Maturity Date rate Collateral Change balance balance balance (%/year) 2nd series Unsecured Straight Bond (paid off) 1995/9/27 2007/9/27 3.90 None 23,900 23,900 0 (23,900) 18th series Unsecured Straight Bond 2005/1/31 2008/1/29 1.23 None 20,000 20,000 20,000 - 19th series Unsecured Straight Bond 2005/1/31 2010/1/29 1.97 None 20,000 20,000 20,000 - 20th series Unsecured Straight Bond 2005/6/9 2008/6/9 1.41 None 12,500 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 20,000 - 22nd series Unsecured Straight Bond 2005/9/14 2010/9/14 1.98 None 38,000 38,000 38,000 - 23rd series Unsecured Straight Bond 2005/11/29 2008/11/28 1.36 None 20,000 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 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 55,000 26th series Unsecured Straight Bond 2007/6/19 2014/6/19 4.36 None - 15,000 15,000 15,000 Convertible Bond due 2013 (*1) 2003/12/30 2013/3/31 1.50 None 50,000 50,000 50,000 - Convertible Bond due 2014 (*1) 2003/12/30 2014/3/31 1.75 None 50,000 50,000 50,000 - Convertible Bond due 2015 (*1) 2003/12/30 2015/3/31 2.00 None 50,000 50,000 50,000 - Euro-denominated Senior Notes due 2011 (*2) 2004/3/8 2011/3/15 9.375 None 672 707 698 26 68,887 69,707 69,503 Euro-denominated Senior Notes due 2013 2006/10/12 2013/10/15 7.75 None 616 (500m Euro) (500m Euro) （500m Euro） 1st series Unsecured Straight Bond 2004/12/7 2009/12/7 2.00 None 45,000 45,000 45,000 - SOFTBANK TELECOM 2nd series Unsecured Straight Bond 2004/12/7 2011/12/7 2.88 None 15,000 15,000 15,000 - Phoenix JT Subordinated Notes Due 2016 2004/12/24 2016/12/15 5.95 None 32,400 32,400 32,400 - Other corporate bonds - - --- 204 204 172 (32) Total - - 466,563 557,419 533,273 66,710
(*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. 51 Bond redemption schedule
JPY 23,900 million redeemed *2
(m JPY) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Others SOFTBANK Straight Bond 43,900 52,500 20,000 58,698 55,000 69,503 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 58,698 70,000 50,000 119,503 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 (*2) Concerning SOFTBANK 2nd series Unsecured Straight Bond scheduled for redemption in FY2007, JPY 23.9 bn has been redeemed on Sep 27, 2007.
52 - Financial activities
- Interest-bearing debt status
- Investment results
53 IPO of Alibaba.com Limited
Alibaba.com Limited (listed company) ¾Market capitalization at time of IPO: approx. 1 trillion JPY (based on initial offering price*) ¾P/L impact due to this IPO: Record equity in earnings of affiliated companies (planned for 3Q) ¾Discuss business cooperation in Japan
*Initial offering price:13.5HK$/share 54 IPO of Alibaba.com Limited
Management/employees of Alibaba Group and other minority shareholders Yahoo! Inc. 33%*1
Alibaba Group Holding Limited*2
Nov 6, 2007 *1 100% listed on Hong Kong stock exchange
(Yahoo China) (Alisoft) (Alipay) (Taobao) Alibaba.com Limited Search/ portal Online software Payment service C2C auction (public company) B2B service
*1 The ownership percentage as recognized in SOFTBANK CORP’s interim closing (ratio is calculated as of at the end of Jun 30, 2007). *2 Company name was changed from Alibaba.com Corporation. Affiliated company accounted for under the equity method. 55 Pro-forma Equity Ratio (after impact of unrealized capital gain)
Alibaba.com Limited unrealized gain Pro-forma adjusted equity ratio 26.2% (after consideration of unrealized 23.5% capital gain*) 20%
Equity ratio 7.9% 6.6%
0% End Mar 07 End Sep 07 * Calculated by offsetting the tax liability to the unrealized capital gain on investments in listed securities held by SOFTBANK CORP. domestic and overseas fully owned subsidiaries. Closing stock price of Nov 5 is used. The unrealized gain of Alibaba.com Limited is estimated based on the value of indirect economic ownership ratio.
56 FY2007 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
FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Net Sales 63,322 65,728 67,266 67,910 264,227 65,747 64,072 129,819 768 Operating income 5,479 6,189 7,747 7,393 26,809 8,665 10,320 18,986 7,317 EBITDA 11,850 12,600 15,408 15,743 55,601 15,962 17,513 33,475 9,025
FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Net Sales 88,673 93,276 93,712 98,466 374,129 90,486 90,986 181,473 (477) Operating income 1,212 (916) (2,603) (656) (2,965) (111) 460 349 53 EBITDA 12,643 10,248 8,939 10,758 42,588 11,104 11,351 22,456 (434)
FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Net Sales 232,467 351,991 430,328 427,252 1,442,040 391,668 422,841 814,509 230,050 Operating income 27,293 29,341 56,906 42,202 155,743 43,528 50,691 94,219 37,584 EBITDA 55,802 73,615 104,082 87,985 321,484 92,429 104,091 196,521 67,103
*Net sales is the total sum of external sales and internal sales between segments. *Operating results of SOFTBANK MOBILE Corp. from May to Feb are reflected in the FY2006/1Q results. 59 - Broadband Infrastructure Business
- Fixed-line Telecommunications Business
- Mobile Communications Business
60 Summary - Broadband Infrastructure Business -
Yahoo! BB ADSL decrease in number of lines
¾ -104k lines YoY,-92k lines QoQ
FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q QoQ YoY Yahoo! BB ADSL cumulative 5,089 5,146 5,161 5,164 ― 5,134 5,042 (92) (104) lines installed (k lines)
Operating income significant increase
¾ Operating income exceeds JPY 10bn on quarterly basis for the first time (significant YoY increase)
FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Broadband Infrastructure business 5,479 6,189 7,747 7,393 26,809 8,665 10,320 18,986 7,317 Operating income (m JPY)
61 Operating income/loss (Broadband Infrastructure Business)
¾ Sustain increasing income trend
( m JPY)
20,000 Impact of modem rental business sale 12,321 10,320 8,665 Operating income (loss) excl. impact of 9,361 10,000 modem rental business sale 5,479 7,747 7,393 Operating income (loss) (SB consolidated +7,014 6,189 +308 10,657 Broadband Infrastructure segment) +7,649 9,575 8,171 6,3636,350 7,085 (4,494) 5,306 0 1,712 -424 3,483 -884 -160 -337 (6,594) -909 (12,474) (16,340) -10,000 (17,981) (18,337) (20,775) (19,950) (28,890)
-20,000 FY06 1H FY07 1H 11,668(m JPY) → 18,986(m JPY)
-30,000 03/1Q 2Q 3Q 4Q 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q
62 EBITDA (Broadband Infrastructure Business)
(m JPY) 17,513 18,122 15,962 20,000 16,345 15,743 Impact of modem rental business 12,600 sale 15,408 +4,856 11,850 +5,828 18,805 EBITDA excl. impact of modem 18,057 19,915 10,000 17,582 rental business sale 14,963 11,420 14,955 13,265 10,516 882 3,023 0 (5,851) -3,105-2,363-2,649-1,839-2,843 (10,540) -2,402 (11,800) (11,451) (15,201) (14,002)
-10,000 (23,676)
FY06 1H FY07 1H -20,000 24,450(m JPY) → 33,475(m JPY)
-30,000 03/1Q 2Q 3Q 4Q 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q
63 CAPEX on actual basis (Broadband Infrastructure Business)
(m JPY) (m JPY) 25,000 100,000
20,000 CAPEX 80,000 Depreciation & amortization
15,000 60,000
83,901
10,000 40,000 7,445 7,582 6,909 6,707 6,051 6,143 47,652 22,106 5,000 20,000 4Q/5,674 3Q/4,699 9,953 5,335 6,397 5,674 4,699 5,084 4,869 2Q/6,397 2Q/4,869 1Q/5,335 1Q/5,084 0 0 06/1Q 2Q 3Q 4Q 07/1Q 2Q FY04 FY05 FY06 FY07/1H 64 Number of lines and full charged users - ADSL -
¾ -104k lines YoY, -92k lines QoQ
（k lines)
6,000 5,089 5,146 5,161 5,164 5,134 4,972 5,007 5,049 5,042 Cumulative lines 4,889 4,776 installed 4,658 5,000 4,490 4,282 Full charged users 4,575 4,474 4,534 4,524 4,381 4,436 4,462 4,450 4,423 4,206 4,000 4,130 3,938 3,784 3,571
3,000
2,000
1,000
0
Q Q Q Q Q Q Q Q Q /1Q 2Q 3 4 /1Q 2 3Q 4 1 2 3 4 /1 2Q 4 5 0 0 06/ 07 65 Product MIX - ADSL -
¾ Increase of high speed and WLAN ratio
YBB 50MR+WLAN 100% 100% 50M YBB 50MR 90% 90% ratio 29% YBB 50M+WLAN 80% 80%
YBB 50M 70% 70% YBB 26M+WLAN 60% 60% YBB 26M 50% 50% YBB 12M+WLAN WLAN 40% 40% ratio YBB 12M 30% 30% 30% YBB 8M+WLAN
YBB 8M 20% 20%
YBB 8M (ADSL 10% 10% only) BB Phone only 0% 0%
Q Q Q Q Q Q Q Q Q Q Q 3 4 1 2Q 3Q 4Q /1 2 3Q 4Q /1 2 3Q 4Q /1Q 2 3 4 /1 2Q 4 5 6 7 03/ 0 0 0 0 66 ARPU (User payment base*) - ADSL -
¾ Slight decrease in ARPU (sustains JPY 4,300 level for 2 years) (JPY) 5,000
4,500 JPY 4,341
4,000
3,500 Yahoo ISP
3,000 BB security BB phone 2,500 WLAN
Modem rental 2,000 revenue
1,500 Basic charge
1,000
500
0
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q /3Q 4 /1Q 2 3 4 /1Q 2 3 4 /1Q 2 3 4 /1Q 2 3 4 /1Q 2 3 4 /1Q 2 1 2 3 4 5 6 7 0 0 0 0 0 0 0 *The above graph is based on user’s payment. The impact of the modem rental business sale is not reflected. From FY07/1Q 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) 5,000 ARPU trend on user payment basis 4,500 Recognition of deferred gain on sale 4,000 Servicing fee ,etc. from modem 3,500 operator Yahoo ISP
3,000 BB security BB phone 2,500 WLAN
Modem rental 2,000 revenue
1,500 Basic charge
1,000
500
0
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q /3Q 4 /1Q 2 3 4 /1Q 2 3 4 /1Q 2 3 4 /1Q 2 3 4 /1Q 2 3 4 /1Q 2 1 2 3 4 5 6 7 0 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 FY07/1Q 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 Sep-07
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Average FY 2004 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 2005 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 2006 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 2007 1.95% 1.76% 1.73% 1.75% 1.68% 1.67% FY06 VS FY 07 0.07% 0.03% 0.15% 0.20% 0.18% 0.10% 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
FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q QoQ YoY Corporate voice lines (k lines) 1,345 1,561 1,672 1,736 ― 1,717 1,736 19 175 Otoku Line + MYLINE
Income (loss) trend improving ¾ Achieved operating profitability on interim basis due to the enhancement of corporate line and efficient management (after amortization of goodwill)
FY2006 FY2007 1Q(*)2Q3Q4QTotal 1Q 2Q 1H YoY Fixed-line Telecommunications Business 1,212 (916) (2,603) (656) (2,965) (111) 460 349 53 Operating income (loss) (m JPY)
*FY06/1Q: includes reversal of JPY 2,575 million for retirement benefits
71 Operating income/loss (Fixed-line Telecommunications Business)
2,928 1,212 -111 460 0 -916 -656 -1,787 -2,603
-10,000 -12,209 -14,297 -14,089
-20,000 -21,767
-30,000 04/3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q 72 EBITDA (Fixed-line Telecommunications Business)
14,201 12,643 11,104 11,351 10,248 10,758 9,177 10,000 8,939
16 0 -343 -1,898
-6,208 -10,000 04/3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q 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) 50,000 200,000
CAPEX 40,000
Depreciation & 150,000 6 month amortization Oct-Mar
30,000
100,000 186,873 20,000
9,987 10,334 10,337 10,168 9,687 9,482 50,000 10,000 82,652 37,686 4Q/6,351 10,870 12,351 3Q/8,113 8,113 2Q/12,351 10,471 6,351 5,042 5,428 1Q/10,870 2Q/5,428 0 0 1Q/5,042 06/1Q 2Q 3Q 4Q 07/1Q 2Q FY04 FY05 FY06 FY07/1H 74 Net sales & operating expenses (SBTM consolidated)
¾ Improve corporate business base steadily
(bn JPY) Corporate net sales Consumer net sales 110 Corporate ratio 100% 100 86% 82% 83% 84% 85% 78% 80% 90 77% 75% 80% 73% 80
70 60% 60
50 40% 40
30
20 20%
10
0 0% 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q •Mobile phone sales business of former Telecom Service Co., Ltd. in FY05 is deducted •SBTM: SOFTBANK TELECOM Corp. 75 Number of Otoku Line/MYLINE users
¾ Expanded corporate business base focusing on Otoku Line
(k lines) 2,000
1,736
1,500
869
1,000 Corporate MYLINE Corporate Otoku Line 500 867
0 Jul Sep Dec Mar Jul Sep Dec Mar Jul Sep 2005 2006 2007 76 Number of lines - Otoku Line -
¾ Number of Otoku Line lines steadily increasing (k lines) 1,400 1,315 Heisei Denden
Large corporation 1,200 1,077 SME(excl.JTI) Corporate lines 1,000 SME(JTI) 867k Consumer (Corporate ratio: 66%) 800 683
600
400
200
0 JanFebMarAprMayJun JulAugSepOct NovDecJanFebMarAprMayJun Jul AugSepOctNovDecJanFebMarAprMayJun JulAugSep 2005 2006 2007 77 ARPU - Otoku Line -
¾ Sustain firm trend in large corporations ARPU
(JPY)
Large corporations Total 12,000
10,000
8,000
6,000
4,000
2,000
0 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q
78 - Broadband Infrastructure Business
- Fixed-line Telecommunications Business
- Mobile Communications Business
79 Summary - Mobile Communications Business -
Ref : Oct, 2007 Steady increase in cumulative subscribers No.1 in monthly net additions for 6 consecutive months ¾ No. 1 in net additions for 5 consecutive Net additions :158,600 months (May-Sep) Net addition share : 47.8% Cumulative sub: 17,211,100 ¾ Achieved 17 million cumulative subscribers MNP Net: port-in +15,700
FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q QoQ YoY Cumulative subscriber (k lines) 15,240 15,307 15,497 15,909 ― 16,441 17,053 612 1,745
Operating income sustains firm trend
¾ Sustain increasing income trend
FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Mobile Communications 27,293 29,341 56,906 42,202 155,743 43,528 50,691 94,219 37,584 Operating income (m JPY) SBM Consolidated 31,162 18,301 50,667 34,474 134,607 38,844 46,602 85,446 35,981 Operating income (m JPY)
80 Operating income (SB consolidated / Mobile Communications)
(m JPY)
120,000
94,219 100,000 5 months May-Sep 80,000 2Q 56,635 60,000
40,000 2Q
1Q 20,000 1Q
0
06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Operating income 27,293 29,341 56,906 42,202 155,743 43,528 50,691 94,219 37,584
81 EBITDA (SB consolidated / Mobile Communications)
(m JPY)
240,000 196,521 200,000 5 months May-Sep 160,000 129,417 2Q 120,000
2Q 80,000
40,000 1Q 1Q
0
06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY EBITDA 55,802 73,615 104,082 87,985 321,484 92,429 104,091 196,521 67,103
82 Operating income (SBM consolidated)
¾ Combination of improving profitability and growth
Net 97k 1,142k (m JPY) additions
100,000 85,446
80,000
49,464 2Q 60,000
40,000 2Q
20,000 1Q 1Q
0
06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY Operating income 31,162 18,301 50,667 34,474 134,607 38,844 46,602 85,446 35,981
83 EBITDA (SBM consolidated)
¾ Combination of improving profitability and growth
Net additions 97k 1,142k
(m JPY) 192,474 200,000 158,204 160,000 2Q
120,000 2Q
80,000
40,000 1Q 1Q
0
06/1H 07/1H (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Total 1Q 2Q 1H YoY EBITDA 83,866 74,338 103,187 88,673 350,064 90,313 102,160 192,474 34,269
84 ¾CAPEX on actual basis (Mobile Communications)
¾ Accelerate CAPEX after acquisition CAPEX and depreciation and amortization CAPEX (quarterly trend) (yearly trend)
(m JPY) (m JPY) 500,000 120,000 CAPEX (Forecast) 104,944 387,910 Depreciation & amortization 400,000 Carried over to FY07 90,000 79,257 Carried over from 72,104 71,259 FY06 300,000 1 month April 06 60,000 52,945 50,949 200,000 32,991 33,579 34,867 30,415 308,406 27,048 30,000 123,054 18,563 100,000 11 months May 06-Mar 07 2Q/50,949
1Q/72,104
0 0 FY06 FY07 06/1Q 2Q 3Q 4Q 07/1Q 2Q 85 3G base stations
(BS)
46,000 e/o Sep 2007: 47,43947,439 BSBS achieved
22,000 Improved the network significantly in slightly more than one year
1Q 2Q 3Q 4Q 1Q 2Q FY06 FY07 86 Quarterly net additions
-100 -74 -119 -200 Q Q Q Q Q Q Q 2Q 3Q 4 /1 2 3Q 4 /1 2 3Q 4Q /1 2Q 6 7 04/1Q 05 0 0 Vodafone 87 Monthly net additions
¾ Over 100k net additions for 10 consecutive months
(K) 250 225 No.1 for 205 198 200 189 6 consecutive 164 164 159 162 months! 150 128 120 Oct 2007 97 100 Net additions: 158,600 64 63 69 57 50 24 27 18 18 13 17 23 5 4 5 12 16 3 1 0 c pr n ep ct e pr ug ov eb ar ct A MayJu JulAug S O NovD Jan FebMarA MayJun JulA Sep OctN Dec F M AprMay Jun JulAug Sep O 05- 06- 07-Jan -50 -40 -40 1-Oct Brand change 27-Apr Acquisition 24-Oct MNP Start -100 Vodafone 88 Monthly net additions (postpaid)
¾ Net additions approx. 200k (K) 300 257 250 240 235 224 204 200 195 200 179
150 143 Oct 2007 114 100 Net additions: 194,900 70 71 6356 36 45 50 27 32 35 17 25 10 21 20 10 9 7 (9)(6) 0 n ec an pr ep ec pr ay ep ct MayJun JulAug Sep OctNov D J FebMarA MayJun JulAug S OctNov D JanFebMarA M Ju JulAug S O 05-Apr 06- 07- -50 (35) (39) 1-Oct Brand change 27-Apr Acquisition -100 24-Oct MNP Start
Vodafone 89 Monthly net addition
400
300
200 159SoftBank
100 133 KDDI 39 NTT DoCoMo 0
-100
r y l g p t v c n b r r y l g p t v c n n b r r y ly g p t unJu a unJu o a un -ApMa J Au Se OcNo De -Ja Fe Ma ApM J Au Se OcN De -J Ja Fe Ma ApMa J Ju Au Se Oc 7 05 06 0 *Source: disclosed information from each company *EMOBILE is not included in this graph 90 Cumulative 3G subscribers
¾ Increased 1.75 million YoY, and achieved 17 million cumulative subscribers (e/o Sep 07)
(K) 17,211 18,000 15,331 16,000 15,200 14,996
14,000 End Oct 07 3G subscribers 11,355k 12,000 3G ratio：66.0%
10,000 Ref. other operators End Oct 06 3G ratios: 8,000 3G subscribers 4,841k NTT DoCoMo: 77.0% 6,000 3G ratio： 31.6% au : 98.3% 4,000 (as of e/o Oct 2007) 2,000
0 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep FY04 FY05 FY06 FY07
Vodafone 91 Installment sales receivables and Super Bonus ratio
¾ Super Bonus subscribers exceed 8million (m JPY) Installment sales receivables balance 400,000 351,578 Super Bonus ratio 100% 86% 77% 87% 71% 300,000 80% 253,000
60% 200,000 177,276
64.8bn 40% procured through 100,000 87,552 2nd securitization 10% 88.1bn 77.2bn procured procured 20% through through securitization 1st 6,291 securitization 0 0% 06/1Q 2Q 3Q 4Q 07/1Q 2Q *Ratio of installment sales subscribers to total postpaid subscribers (new/upgrade) 92 ARPU
7,000 6,290 6,140 6,080 5,930 5,810 5,870 5,840 5,600 5,700 6,000 5,590 5,560 5,210 5,000 4,800 5,000
4,940 Voice 4,000 4,820 4,780 4,490 4,540 4,540 4,510 4,260 4,230 4,320 4,230 3,830 3,590 3,340 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 1,470
0
04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q 93 (Reference) ARPU + installment payments
¾ ARPU on the previous page & installment payment trend levels out
(JPY) 7,000 6,290 6,140 6,080 5,930 5,810 5,870 5,840 6,000 5,600 5,480 5,590 5,700 5,580 5,430 5,530
5,000 Install ment 4,000 4,940 4,820 4,780 4,490 4,540 4,540 4,510 4,260 4,230 4,320 4,230 Voice 3,830 3,590 3,340 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 1,470
0 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q
94 Acquisition commission per gross addition
¾ Acquisition commission decreased due to introduction of installment sales
(JPY)
80,000
60,000 Introduced full-fledged New Super Bonus installment 46,100 44,900 44,900 45,600 44,400 43,800 sales in Oct 2006
40,000 31,400 29,000 30,700
20,000 22,400
0 06/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q
95 Churn rate
¾ Decrease due to penetration of installment sales
4.0%
3.0% SBM NTT DoCoMo au
2.00% 2.0% 1.59% 1.49% 1.27% 1.42% 1.21% 1.03% 0.95% 1.0% 1.08% 0.94% 0.81% 0.60%
0.0% 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q
04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 07/2Q 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% 1.42% 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% 0.94% 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% 1.03%
96 3G churn rate
4.0%
Introduced full-fledged 3.0% New Super Bonus installment sales in Oct 2006
2.0%
1.0% 1.05%
0.0% 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q
04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 07/2Q 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% 1.42% 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% 1.05%
97 Upgrade rate
¾ Stable trend in upgrade rate after introduction of installment sales
5.0% Introduced full-fledged New Super Bonus installment sales in Oct 2006
4.0%
2.81% 2.67% 2.53% 3.0% 2.46%
2.0%
1.0%
0.0% 04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 2Q
04/1Q 2Q 3Q 4Q 05/1Q 2Q 3Q 4Q 06/1Q 2Q 3Q 4Q 07/1Q 07/2Q 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% 2.67%
98 APPENDICES
99 Mobile Communications Business
Financial Data
(m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 232,467 351,991 430,328 427,252 1,442,040 391,668 422,841 814,509 230,050 Operating income 27,293 29,341 56,906 42,202 155,743 43,528 50,691 94,219 37,584 EBITDA 55,802 73,615 104,082 87,985 321,484 92,429 104,091 196,521 67,103 Operating margin 11.7% 8.3% 13.2% 9.9% 10.8% 11.1% 12.0% 11.6% ― EBITDA margin 24.0% 20.9% 24.2% 20.6% 22.3% 23.6% 24.6% 24.1% ―
Reference: SOFTBANK MOBILE and consolidated subsidiaries (m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Operating Revenue 352,321 352,481 430,742 426,437 1,561,982 391,741 422,809 814,550 109,748 Telecommunication service revenue 268,777 275,159 272,784 261,570 1,078,292 258,023 257,872 515,895 (28,041) Sales of mobile handsets and accessories 83,543 77,321 157,957 164,867 483,689 133,718 164,936 298,655 137,790 Gross Profit 161,462 160,932 188,510 186,354 697,260 181,207 200,519 381,726 59,331 Telecommunication service revenue 156,689 158,461 159,819 150,097 625,068 147,181 140,673 287,855 (27,295) Sales of mobile handsets and accessories 4,773 2,471 28,691 36,256 72,192 34,025 59,845 93,871 86,627 Selling, general and administrative expenses 130,299 142,631 137,843 151,879 562,653 142,363 153,917 296,280 23,349 Operating income 31,162 18,301 50,667 34,474 134,607 38,844 46,602 85,446 35,981 Operating margin 8.8% 5.2% 11.8% 8.1% 8.6% 9.9% 11.0% 10.5% ― Telecommunication service revenue 26,389 15,830 21,976 (1,781) 62,414 4,818 (13,243) (8,425) (50,645) Sales of mobile handsets and accessories 4,773 2,471 28,691 36,256 72,192 34,025 59,845 93,871 86,627 EBITDA 83,866 74,338 103,187 88,673 350,064 90,313 102,160 192,474 34,269 EBITDA margin 23.8% 21.1% 24.0% 20.8% 22.4% 23.1% 24.2% 23.6% ―
100 Broadband Infrastructure Business
Financial Data
(m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 63,322 65,728 67,266 67,910 264,227 65,747 64,072 129,819 768 Operating income 5,479 6,189 7,747 7,393 26,809 8,665 10,320 18,986 7,317 EBITDA 11,850 12,600 15,408 15,743 55,601 15,962 17,513 33,475 9,025 Operating margin 8.7% 9.4% 11.5% 10.9% 10.1% 13.2% 16.1% 14.6% ― EBITDA margin 18.7% 19.2% 22.9% 23.2% 21.0% 24.3% 27.3% 25.8% ―
Reference: Impact amount from sale of the modem rental business
(m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Impact on net sales from the sale of the modem rental business (4,378) (3,568) (3,793) (2,691) (14,432) (3,756) (3,069) (6,826) 1,121 Impact on net sales from the sale of the modem rental business (884) (160) (424) 308 (1,161) (909) (337) (1,246) (201) Net sales excluding the sale of the modem rental business 67,701 69,297 71,060 70,601 278,659 69,503 67,141 136,645 (353) Operating income excluding the sale of the modem rental business 6,363 6,350 8,171 7,085 27,970 9,575 10,657 20,233 7,519
101 Fixed-line Telecommunications Business
Financial Data
(m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 88,673 93,276 93,712 98,466 374,129 90,486 90,986 181,473 (477) Operating (loss) income 1,212 (916) (2,603) (656) (2,965) (111) 460 349 53 EBITDA 12,643 10,248 8,939 10,758 42,588 11,104 11,351 22,456 (434) Operating margin 1.4% ―――― ― 0.5% 0.2% ― EBITDA margin 14.3% 11.0% 9.5% 10.9% 11.4% 12.3% 12.5% 12.4% ―
Internet Culture Business
Financial Data
(m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 44,642 46,676 50,049 52,842 194,212 52,796 57,623 110,419 19,100 Operating income 21,630 22,712 25,011 27,189 96,544 27,148 27,766 54,915 10,571 EBITDA 23,929 25,243 27,607 29,427 106,206 29,605 30,591 60,197 11,025 Operating margin 48.5% 48.7% 50.0% 51.5% 49.7% 51.4% 48.2% 49.7% ― EBITDA margin 53.6% 54.1% 55.2% 55.7% 54.7% 56.1% 53.1% 54.5% ―
102 e-Commerce Business
Financial Data
(m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 59,142 65,037 65,369 82,021 271,570 61,660 63,812 125,473 1,293 Operating income 1,461 1,399 2,010 1,809 6,680 1,167 933 2,100 (759) EBITDA 1,995 1,978 1,535 2,256 7,764 1,442 1,207 2,650 (1,323) Operating margin 2.5% 2.2% 3.1% 2.2% 2.5% 1.9% 1.5% 1.7% ― EBITDA margin 3.4% 3.0% 2.3% 2.8% 2.9% 2.3% 1.9% 2.1% ―
Others
Financial Data
(m JPY) FY2006 FY2007 1Q 2Q 3Q 4Q Ｔｏｔａｌ 1Q 2Q 1H YoY Net sales 20,289 23,785 21,628 25,082 90,785 24,871 26,907 51,779 7,704 Operating (loss) income (717) 547 (4,002) (557) (4,730) (689) 38 (650) (480) EBITDA (5) 1,188 (3,052) 225 (1,646) 93 829 922 (259) Operating margin ― 2.3% ――― ― 0.1% ―― EBITDA margin ― 5.0% ― 0.9% ― 0.4% 3.1% 1.8% ―
103 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 international operations and other important factors.
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