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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you very much for waiting. We will now begin the financial results briefing of KDDI Corporation for the third quarter of the fiscal year ending March 31, 2022. Thank you very much for taking time out of your busy schedule to join us today via the Internet. I am Hongou of Investor Relations department and will serve as the moderator today.
In order to prevent the spread of COVID-19, this briefing will be broadcast live on the Internet with simultaneous interpretation in Japanese and English. The presentation will be available on-demand on our IR website at a later date. Thank you for your understanding in advance.
Let me introduce the participants today. Shinichi Muramoto, Executive Vice President and Executive Director of Corporate Sector; Takashi Shoji, Executive Vice President and Executive Director of Personal Business Sector; Keiichi Mori, Senior Managing Executive Officer and Executive Director of Solutions Business Sector; Kazuyuki Yoshimura, Managing Executive Officer and Executive Director of Technology Sector; Nanae Saishoji, Executive Officer and General Manager of Corporate Management Division.
Three financial results-related materials, the presentation, Tanshin, quarterly report and detailed material and 2 TSE disclosure materials, a total of 5 documents are posted on our IR website. Please refer to the disclaimer in the material regarding statements made in these documents, performance targets and projected subscriber numbers explained in the Q&A session today.
Mr. Muramoto will first explain the financial results followed by Q&A. Mr. Muramoto, please.
Thank you so much for joining us in KDDI's Financial Results Meeting out of your busy schedule. Let me share with you the financial results for the third quarter of the fiscal year ending in March 2022. First, the consolidated financial results for the first through the third quarter for the term ending in March 2022 and various KPIs. The operating income was JPY 874.6 billion. Progress ratio versus full year forecast was 83.3%. Brisk progress against the full year forecast.
Next, let me explain factors for change from the first through the third quarter regarding consolidated operating income. From the left, Multi-brand communications ARPU revenues declined by JPY 56.4 billion, while group MVNO and roaming revenues contributed to a JPY 7 billion increase of mobile communications revenues. In addition, Life Design Domain and Business Services segment, that are growth fields, enjoyed an income growth of JPY 16.8 billion. Mobile communications revenues and growth fields contributed to an increase of JPY 3.5 billion in total. The third quarter had a transient income increase with a decrease of reserve, among others. From the beginning, we're forecasting a significant growth in the fourth quarter in growth fields with a robust progress versus full year forecast.
Next, on group IDs. The left, the group IDs turned to a net increase in the third quarter, reaching 31.56 million IDs. Even in the full year basis, cumulatively through the third quarter, it's a net addition of 48,000 units. Going to the right, momentum was recovered because the multi-brand strategy moved forward steadily. As for au, with the expansion of 5G areas, 5G unit sales is steadily increasing.
Regarding UQ mobile, discount with Denki, electricity, and the Internet that started in the first half and handling at all au stores are showing an effect. Regarding povo, from 0 in your own way, povo 2.0 was launched at the end of September, which is diffusing among highly active digital natives with a new usage.
Next on 5G units. The left shows cumulative 5G unit sales, which is enjoying a steady growth with 6.2 million units at the end of December as 5G area expansion and the new iPhone sales timing worked out well. By the end of March 2022, we aim for 8 million units. The right shows mobile data traffic per person for 5G, which is more than 2.5x that of 4G showing an expansion of data demand.
Next, on multi-brand communications ARPU. The left shows the third quarter communications ARPU, which was down JPY 240 year-on-year at JPY 4,200. Moving to the right regarding ARPU factors for change. The number of subscribers who remain with au is more than expected together with a contribution by 5G effect. And on the other hand, a subscriber increase in UQ Mobile and povo has been anticipated from the beginning and is within the expected range. As for the full year, we would like to reach the target JPY 4,200 and continue to operate our operations to land there.
This shows the performance of the growth fields from the first through the third quarter. The left, the operating income of Life Design Domain is -- were JPY 181 billion with a 72.4% progress ratio. Right shows Business Services segment's operating income, that is JPY 141.7 billion. The progress ratio versus full year forecasted 77.0%, both are expected of a significant increase in income making a good progress towards the full year forecast.
Next, on Life Design Domain KPIs. Customer base, of core services are steadily expanding. Of Life Design Domain performance, let me touch upon the impact by the Energy business. In the last half, the owning to -- in the last term, owning to price fluctuations in the wholesale electricity market from the first through the third quarter, we enjoyed higher profits. During the fourth quarter, profitability suffered due to sorrowing cost performance had ups and downs.
In this term, in order to control cost, we raised the ratio of private and stable procurement from local energy companies versus procurement from the wholesale electricity market. Against the backdrop, while income dropped year-on-year from the first through the third quarter, we anticipate a big increase in profit in the fourth quarter. We will continue to monitor the environment of the wholesale electricity market.
Next, I will talk about the sales in the Business Services segment. The NEXT core business, which is driving growth, achieved double-digit growth of 17% year-on-year.
Next is topics. This is au 5G network. Under the slogan, connecting more and always with au, we aim to create a secure and reliable network, focusing on areas of high customer concentration. On the left, to introduce 5G in rail world lines, we aim to expand our coverage to 26 routes, including JR and private railway lines by the end of this fiscal year. On the right side, we strengthened the DX of our operations center to ensure stable operation of the network. We will offer automated monitoring at 2 locations, east and west, for peace of mind that we are connected even in times of disaster.
Next is our collaboration with OTT Partners. On the left you can see that the intention to use video content in 5G is steadily increasing. In response to such customer needs, we have further expanded the OTT partner services leading in entertainment as shown on the right. We will continue to leverage our partnering strength to meet customer expectations.
Next is Metaverse, an experience unique 5G. On the left, we have been building up use cases ahead of other companies for about 2 years through collaboration with local governments and tourism associations rooted in the community. In October 2021, the HalloweenFes held in Virtual Shibuya attracted over 500,000 visitors in total. Most recently, Virtual Osaka was launched and collaboration with real cities is expanding. As shown on the right side, we launched Virtual City Consortium with the aim of developing guidelines for secure use of metaverse. Based on our extensive track record, we will continue to lead the standardization in the industry.
Next is the new mobility business. With the concept of transforming mobility into exciting experiences, we will work with our partners and connect people, products and things in cities and rural areas to solve social issues.
Lower left. Mobi, a short ride service within 2-kilometer radius, will be provided jointly with WILLER. With more flexible mobility, we will work to solve issues such as regional mobility and contribute to regional revitalization by supporting increased opportunities for going out and community interaction. Lower right, we established a new company, KDDI SmartDrone as a spin-off venture from KDDI Corporation. Details of the business will be announced in February.
Next is the extension of Connected Services. The strength of KDDI's global communication platform is its integrated management of different communication lines in each country to provide high-quality and stable communications. Upper half shows that KDDI is expanding the supply to major Japanese automobile manufacturers, including Toyota, Subaru and Suzuki. In addition to Japan, the deployment area has expanded to 5 regions around the world, including Europe, China, Australia and North America, as shown at the bottom of the slide.
Next is the global data center. On the left, TELEHOUSE strength is its high connectivity where telecom carriers and mega cloud operators are integrated in the resilient and high-quality data centers to form a robust ecosystem.
In London, TELEHOUSE is #1 in the world in terms of connectivity. And in Paris, it is #1 in France. As shown on the right, we will expand our success cases in Europe into Southeast Asia, we plan to build TELEHOUSE Bangkok in the spring of 2023.
Lastly, today's summary. Regarding financial results and KPIs, first to third quarter results show steady progress. Promotion of 5G and multi-brand strategy resulted in net increase of group ID. Growth fields is progressing steadily, and profit is expected to increase significantly in the fourth quarter.
Regarding topics, we are driving forward entertainment in the 5G era with video content and metaverse. Contributing to the resolution of social issues through new initiatives in the mobility field. Promoting NEXT Core Business, DX, by leveraging the strength of global businesses, including connected cars and data centers. And expanding our share buyback facility by JPY 50 billion. We promoted new initiatives in addition to multi-brand strategy. Thank you very much for your kind attention.
[Operator Instructions] The first question, SMBC Nikko, Kikuchi-san.
Kikuchi speaking. Can you hear me?
Yes, you are on. Thank you.
Regarding my questions. First, my first question. About migration situation, I'd like you to inform us about the migration. Currently, what's the progress? And in the fourth quarter, with some -- if there's concentration of migration in the fourth quarter, that might incur some costs. What's your outlook? And also, regarding this migration, customers might actually -- there might be customer churn. So what about the situation? So that's my question number 1 on migration.
May I? Kikuchi-san, thank you for your question. 3G migration, I think you would like to know the progress and also towards the fourth quarter, what about the cost, what about the churn, what our outlook. Those are the questions. Personal business, Shoji will answer your questions.
Allow me to address your question. About migration, for the past few years, we've been working on this. To give you a conclusion first. Just according to the enhanced plan, it's right on track. That's the conclusion.
If you calculate, you can see 1.1 million units are still remaining approximately. It was almost as expected, as planned. And in the fourth quarter to 4G and to 5G, how best we can migrate those customers? We are working very hard on this.
Now making it to 0 would be impossible. So what would be the final figures?
Excuse me, we are not really disclosing the numbers. I hope you'll understand. But we would like customers to migrate to 4G and 5G as much as possible. As for the migration cost, as we already informed you on several occasions in these meetings, accelerated depreciation, facilities-related costs and also sales-related costs. Facilities-related costs, it's been flat for each quarter, it's been expensed. As for sales and operation expenses, I think that will come in the fourth quarter. On a full year basis, it's about JPY 30 billion, but we anticipated that much cost. I hope I answered your question.
It's not going to be 0. Regarding such users, those remaining 3G users automatically -- will that be counted as churn, right?
That is correct. I mean, all sorts of ways are used in newspaper. And also individually, we approach the customers and news releases, using newspapers, we have been doing many things, making direct calls to customers and sending letter and various other methodologies have been utilized. And still, there are still some numbers and some people who will be left.
Understood. My second question. Regarding the depreciation cost, year-on-year in first quarter -- compared with first quarter and second quarter, it lowered. And in the third quarter, it's a factor for the increased income. Now 3G -- together with the 3G termination regarding the depreciation cost compared with the first half, has it declined? Is that the factor? Or are there any other factors behind this?
Also, CapEx facilities investment. In the first half, there was preparation going on. And on the full year forecast, it seems that it's actually higher. But in the fourth quarter, next term and onwards, how are you going to control facilities investment? And what was the depreciation cost? Depreciation, 3G termination together with that accelerated depreciation impact included, could you give me some more information?
First about depreciation. Saishoji will address your question.
Thank you for your question. Regarding the depreciation cost as for the decrease on the depreciation cost, allow me to address that part. On the fixed assets, for every fiscal year, the actual situation is looked at whether we need to change the number of years for depreciation. That's been scrutinized. Regarding this fiscal year currently compared to the service yes, beyond the certain years, it's already been utilized for such assets compared with other years, we did scrutinize them even more. And as a result, for those facilities that have exceeded those particular lines, particularly on the towers or the line facilities or power line facilities for some of them, we are reviewing the service line years -- service life years.
Originally from the first quarter, beginning of the term, the service years was to be changed. But because we spent more time for investigation in the third quarter, for the first quarter to the third quarter, depreciation cost was dropped.
If that's the case, on the third quarter, the first quarter, second quarter decrease is included, which means fourth quarter and onwards compared with the third quarter, that will be higher. Am I correct in assuming that?
That's right. In the third quarter, for 3 quarters, depreciation decline was listed for the 4 -- 2 quarters, there was more decrease. But in the fourth quarter, that would be just for the single quarter, compared with the third quarter it's likely to be increased.
About the facilities investment or CapEx. As was pointed out, compared with the plan, it's a little higher in terms of the progress ratio, if you look at the actual payment. On a full year basis, we would like to control it as much as possible. But in the final analysis, there might be a possibility that it might be higher. Next term and onwards depreciation will really have an effective. CapEx to sales is something we would like to monitor carefully, and we would like to control it. I hope you will feel rest assured.
Regarding factors compared with other companies, I think -- I know it's a meaningless exercise DOCOMO and SoftBank, we don't know how they will end up with. But starting from this term, their plan is to lower the CapEx not much change. That's what according to what they said. Now in your case, what are you doing that result in higher CapEx higher than the plan? What are the factors? And in the next term and onwards, what's going to happen? This is an additional question.
Yes. Yoshimura-san?
Yoshimura speaking. Regarding the total investment amount, it has gone up. 4G investment that declined 5G basis -- [ state ] basis investment increased. Regarding this next term and onwards, obviously, 5G investment will continue.
Regarding the investment sharing and 4G facilities assets could be utilized. We would like to lower the overall cost and keep making efforts. As for the major factor for the increase, the 5G facilities investment, that's significant.
Moving on to the next question. Next is Nomura Securities, Masuno-san.
Can you hear me?
Yes.
I have 2 questions. First is a bit long story, but mobile communication, service revenue, the future trend of this revenue. So one point is ID number is trending very strongly. So the sustainability, this is a structural factor. So I think it will continue, so your sustainability. And ARPU, UQ Mobile is growing with the discount with electricity and Internet. So that is 1 factor.
And au, so the data unlimited Plan MAX, that is -- proportion is 60% or 70%. I think that is very high level. But the au support discount is also supporting that. And maybe the 6-month discount will be gone in April next. So will they stay in the unlimited use plan and continue using that plan? Are you anticipating that to happen? Because I think that could happen. So that is my first question.
Thank you very much, Mr. Masuno. So ID and ARPU relationship is the question. So Shoji-san will explain.
Thank you for the question. Let me explain. So ID, as Mr. Muramoto said, we grew strongly in the third quarter. On the other hand, ARPU is in line with our internal plan. So our target this year is JPY 4,200. And towards this target, we are hoping that we can end at this level. So Mr. Masuno, your question was on ARPU will decline because UQ is growing. First of all, the answer is yes.
In our internal plan, more people are staying in au than we thought, more than we anticipated. But on the other hand, for UQ and povo, the momentum, there's a big momentum. And the number there grew as well. So this is impacting ARPU. And therefore, how this will be going forward? Needless to say, we will maintain this momentum and increase the number of IDs and for ARPU, this au, unlimited use max, these upper plan, we will try to attract the users to these upper plans so that M and L, these upper plans will be selected by users as much as possible.
However, as mentioned in the presentation, the traffic growth and 5G device performance and contents -- given these factors, traffic will grow significantly. So we will inform this to our customers and make -- do our best efforts so that they will select the upper plan.
Now in terms of sustainability, I think you mean what the ARPU revenue will look like in the future. It's hard to say at this moment, but we will grow the number of ID and also work on ARPU. We will work on increasing ARPU so that ARPU will increase, ARPU revenue will trend upwards again. So we will focus on that.
And one more point, as Mr. Masuno said, the au support discount is also very popular.
So you support discount. So 50% to 70% will continue and the au support discount will be gone in 6 months. So ARPU will -- at one point, will stop declining? What do you think ?
Yes, au support discount. So if customers try the unlimited MAX and see how easy to use it is. And that is why we are lowering as a discount. So I want the users to first experience. And looking at our experience and our data, quite a few users stay once they experience. That is our experience. So I think this will show a certain level of impact.
My next question is about return -- shareholder return. This time, JPY 50 billion buyback is resolved. What was the background? And what was your line of thinking to decide this amount? And what is the continuity, the sustainability of this policy?
Thank you. Let me answer that question. So this time, the message and our thinking behind this is twofold. First, as you know, the first point is before we start the new medium-term management plan, EPS growth was announced. So in 6 years' time, in -- we want to increase by 50% by the year ending March 2025. But the environment changed more than we anticipated, and we receive questions on what we will do with this target. But we will still aim to achieve this target. We have the determination to achieve this target. And with that in mind, we announced this buyback plan and the shareholder return plan.
Now EPS growth, compared to the initial plan is slower. So towards the next medium-term management plan, we will make a recovery. So that is our strong commitment and determination. Second point. As management, we are not content with the current share price. So that is the message. I hope you could take it as our message. I hope this answer your question. Thank you.
We would like to entertain the next question. Next, Daiwa Securities, Mr. Ando.
Can you hear me?
Yes, we can hear you, sir.
I have 2 questions. First mobile KPIs, more detailed information. Regarding the churn rate, it's a little higher -- high as I will look at the movement in the past, more sales and UQ has been very, very good. That's how I see those figures. But regarding UQ, what kind of things are selling? You already introduced to us cheaper plans. Those are the mainstream. Am I correct in assuming that? As for the au, in terms of revenues, are they increasing? Is that the direction, so detailed information and also higher churn rate outlook. Would you like to elaborate on those, please?
Thank you. Shoji will answer your question.
First of all, as you pointed out, regarding the churn rate, on year-on-year or on quarterly basis, yes, it was high. Having said that, on the other hand, if you look at the market, it's becoming rather mobile. I mean, it's invigorated. New sales, MNP both have had strong momentum. I hope you will understand it in that way. The momentum was strong.
The fourth quarter, I mean, it's a sales -- active sales period, churn rate tends to be high. Is it going to be the current level or it might actually turn out to be higher, but by maintaining this momentum, we would like to just keep making efforts.
Regarding UQ, probably, regarding Ando's question, I think you are referring to plan or plans. I mean it varies. Price-sensitive people, they go for the plan S, the least expensive one, but Plan M, Plan L, our price offering is pretty strategic. So people would -- there are more customers who choose M and L and also on UQ, under 18, that support discount with strategic pricing offered to customers.
Now UQ support discount, they are actually going -- most of them go for the high-end plans. And one thing about au, you raised question -- I'm sorry, I couldn't hear you. What was your question again about au?
Again, on au, increased revenues. Do you see the direction that is contributing to the increased revenues?
As we already explained to you, compared with our internal estimates, more customers remained with the au. Having said that, if you look at au, UQ or povo, there are still many people who move to those brands from au. On the other hand, with the iPhone, the sales launch, the 5G [ hard ] sales, the sales was pretty brisk. And most of them actually chose the 5G plan. And more than 60% of those people who have chose 5G, they use unlimited MAX. And OTT service bundle plan, as we are offering, they are on the significant increase. So I think it's going to turn out to be better in the future.
My second question. Page 3, if I look at this step-by-step chart, would you like to actually elaborate on this? Depreciation was actually mentioned. The group MVNO plus roaming revenues that part. Perhaps in the third quarter, is it -- it's on the increase. Am I correct? And about others?
I think there are major changes there. So those 2 parts. Group MVNO plus roaming revenues, probably Rakuten roaming is included here.
So this roaming they ask you to offer the service. But I think this -- the situation is changing. What's the direction and also the revenue trend in the third quarter? There is a kind of a deviation or disconnect and also the outlook and also the others, some more detailed information about others part, please?
First about the Rakuten -- revenues from Rakuten second quarter and the third quarter. Compared with the second quarter, there is a significant increase, I think, -- but it's not that the substance has changed significantly. Did I answer your question?
So Rakuten, regarding the scope of the roaming, it's been reduced -- is that -- I think that's what you're driving at? But on KDDI in this quarter, at least there was not much impact?
That's right. Not a significant change, slight change, I would say.
So going forward, anything you would like to share with us at this juncture about this roaming?
Regarding this term, at least, as I have been saying, would be our expectation. I think it will move within the expected range. As for the others...
Yes, please give us more information about others?
I would like to ask Saishoji.
Saishoji speaking. About others, many things. There are some ups and downs, but regarding the significant one, handset purchase support program loss reserve, this reserve has decreased. That's the major factor. Regarding the support program, handset purchase support program, we included in the past ones, there are various ones. But for each program, the loss reserve on every quarter, it's mark-to-market. -- and that's listed regarding this term, together with the expiry programs, the number of expected people who might exercise the right, that decreased also, the receivable also decreased.
And also on the [ 3G ] handsets for the resale, the since -- the unit price increased -- so that is why the reserve declined. The third quarter in the previous term, the reserve actually peaked as a difference. There was a huge negative figure for the reserve.
So this is a transient change? Or is it going to continue?
As I said before, regarding those parameters, there are some increases and the decreases. It's difficult for me to say at this moment. But at the moment, the program for the one that has expired, the trend is decreasing. On the other hand, we have a [indiscernible] trading program. And for this program, it's likely to increase. For this program so versus previous year -- versus previous year, how is going to move on the P&L, there might be some effect.
Mitsubishi UFJ Morgan Stanley Securities, Mr. Tanaka.
Mitsubishi UFJ Morgan Stanley. Tanaka is my name. Can you hear me?
Yes.
So I have 2 questions. First, Life Design Domain. So in the detailed material, Page 5, this is the page I'm looking at. Life Design, 3 months operating income is same as last year. So the profit is not growing. But the multi-brand, the added value ARPU is growing steadily. So in that sense, maybe the factor is the cost side. But the reason profit is growing. So maybe the subsidiaries -- some subsidiaries, financial result is not good. So could you explain that and the future forecast, please?
So this question will be answered by Mr. Shoji.
Yes, let me explain. First, as you rightly mentioned, the compensation service and the financial service credit card and Denki electricity, they are all trending strongly. And therefore, top line is moving steadily. So you may think the factors on the cost side. And you're right. So cost side, the biggest factor as Mr. Muramoto mentioned in his presentation, it is energy. So this is Page 9 of the presentation. If you see in this graph, this light blue is last year JEPX price, unit price. And it surged in the fourth quarter last year. And our profit and loss in the fourth quarter was very difficult last year.
So in order to avoid the volatility, we increased the private power source -- power purchase this year to control our costs. Until last third quarter, JEPX price was low, and therefore, we were able to procure at a low price. The cost was low. But this time, it is private power source procurement and to avoid the volatility, so the cost relatively increased. And so up to the third quarter, energy cost showed -- is shown like this. But in the fourth quarter on a year-on-year basis, this fourth quarter profit will increase significantly year-on-year. So we'll see recovery in profit.
And one more point. In terms of yen value, it is less than JPY 1 billion, so it's not large, but a one-off factor pushed up the profit. So on a year-on-year basis, that also led to the difference.
So looking into the future, this energy, profit and loss, excluding energy profit and loss, what will be the increase in profit?
We do not disclose the details, but energy, I'm sorry, I do not want to be misleading, but energy is also generating profit. It is, but it's the degree of profit, the amount of profit. Energy, as you see, 3.24 million, and we are trending towards our goal of 3.4 million. And with that, our revenue will go up and other mobile -- this will reduce the churn of the mobile and other businesses. So it's very effective. So the key is cost control.
The absolute amount is one factor we have to keep in mind. But if we can avoid volatility effectively and reduce costs and generate profit, increase our profit, it will -- that's our goal. That's what we're trying to do.
So you're generating profit, but the profit is lower than last year?
Yes, at least until third quarter.
I understood. Second question. So in the presentation material, Page 16, please. So this is connected services. So IoT line, connected cars are expanding, I think. But based on my estimate, revenue -- given your big P&L, maybe this revenue coming from this may be small, relatively speaking. So what do you think of the profit revenue contribution from this area? Could you elaborate?
Thank you very much. So Mr. Mori in charge will explain.
So from -- we started this from fiscal year 2019. So this was an upfront investment, but now we are starting to generate profit. And this profit -- it's not just the Japan of the headquarter side, but also in our overseas subsidiaries, we're seeing contribution in the overseas entity side, too, and the number is growing. And now we are in a good position to start generating profit.
Your GCP, global communication platform, you have industry opportunities, you have much potential to expand this. But in this area, connected car area and other areas -- connected area -- connected car area will be sizable in terms of revenue?
Yes, number of lines for connected car is large, number of communications for connected car is large. So this is a big contribution. For industries, comparatively speaking, is fewer. But that said, gas meters is growing significantly rapidly. So we think eventually it will grow. But now the connected car is first -- I mean, first.
Next question SBI Securities, Moriyuki-san.
SBI, Moriyuki speaking. Check -- I would like to check numbers, migration. This year, operating expense of JPY 30 billion is prepared. I think you said that. To the third quarter, how much has been used already? Just rough numbers would be appreciated. And about the facilities-related expenses in the planned manner that's been available for third quarter and the fourth quarter. Concerning 3G determination, there is no increase. Am I correct in assuming that? That's my first question.
Well, regarding those numbers, I don't have those numbers with me at the moment. So I probably have to repeat what I said before, operating expense, JPY 30 billion. Relatively speaking, it's on the second half and particularly more on the fourth quarter. I hope you will understand. And 3G-related expenses, in principle, it's actually flat. I couldn't really understand your intent in -- now in the fourth quarter, finally, it's going to be terminated. So compared with the third quarter, the facilities related any retirement expense, in a top-up any factor for increase? I don't really think so, it will be about the same amount, more or less right?
Also, the second question, I understand it would be difficult for you to address this. Until last year, about the power electricity, you shared with us some factors. In the fourth quarter, this is a factor for the decrease of JPY 30 billion, so I understand that. But third quarter -- until the third quarter, this was a factor for the decrease. But in the next first quarter and because of the new construct, you are going to keep enjoying the increased income? Am I correct?
Shoji-san?
To give you a total picture, yes. Total picture, yes. To avoiding volatility is so important. To that end, various things. We have been exploring many things this year. And towards next year, we are exploring -- we will be exploring even better ways if there are any.
Regarding the next year, let me say at least as good as this year. But revenues will increase. So total income should increase. Such is the operation that we would like to explore with full commitment because electricity procurement is so difficult. We would like to explore many things. And we just would like to really try to bend backwards doing this.
Until the third quarter, what was the actual level of its contribution to the negative profit? It's difficult for you to disclose that.
I hope you will forgive me, I can't. Several billions of yen.
Cumulatively, billion of yen?
That's correct.
[Operator Instructions] Citigroup Securities, Mr. Tsuruo.
So the way of thinking of ARPU -- so JPY 4,200 this year. So the fourth quarter, you anticipate a significant drop. So is that the correct line of thinking? And based on that, next year's ARPU, your estimate? So when do you think this ARPU decline will bottom out? I asked this question last year, but same question again.
Thank you for the question. So Shoji-san?
First question. fourth quarter. This year, we will end at JPY 4,200, which means we will see a further drop in the fourth quarter. Yes. The answer is yes.
So market ID is trending strongly, but the market trend is still the mid-volume service?
Of course, au unlimited use Max is strong, and we will grow these areas. But in total, we will anticipate a slight decline. And in the end, we want JPY 4,200 at the end of the year.
And second question it is difficult to say at this point because we are trying to plan to see what it will look like along with ID momentum, as I mentioned a few times today, au, UQ, povo with the 3 brand mix, we think the usage will increase. So with this, we hope we can make a rebound, a turnaround as soon as possible. But we are still in the midst of the planning.
If possible, I have one more question, a very short question. So the net addition, December addition was strong. And so with that trend, I think you're planning for January to March. So January, what is the situation in January? Is the momentum for strong December continuing in January?
May I ? So December or third quarter -- the entire third quarter was strong. Second quarter -- in the second quarter financial results briefing, I said we will see a slight improvement. And in August, September, we saw improvement and a full scale improvement from October. In January, this trend has not changed much. And as I said earlier, it is the new sales season, launch season. So we will step up the effort to achieve the target by all means.
[Operator Instructions] There seems to be no one who would like to raise questions at this juncture. So with this, we would like to conclude the meeting on the KDDI business results for the third quarter ending in March 2022. Thank you so much for your participation.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]