KDDI Corp
TSE:9433
KDDI Corp
TSE:9433
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Earnings Call Transcript
Earnings Call Recording
Other Earnings Calls
We will now begin the financial results briefing of KDDI Corporation for the third quarter of fiscal year ending March 2025. I am Nakoji of Public Relations department and will serve as the moderator today.
This briefing will be held in two parts. In part 1, we will give you the financial results. And from 4:45, we will start part 2 on HR matters. Today's briefing is held in this venue and also broadcast live on YouTube and other media. So we will start the Part 1 financial results. Three financial results related materials are posted on our IR website. For the attendees in the venue, please check your handout.
Let me introduce the 4 participants for Part 1 today. Makoto Takahashi, President, Representative Director and CEO; Nanae Saishoji, Managing Executive Officer, Director, CFO and Executive Director of Corporate Sector; Kenji Aketa, Executive Officer and Executive Director of Corporate Management Division; Shigeru Ezoe, General Manager of Accounting Department.
President Takahashi, please.
Thank you. Let me share with you the financial results for the third quarter of the fiscal year ending March 2025. I will explain these 4 items today, as you can see.
First, let me focus on the consolidated results. The third quarter cumulative consolidated results for the FY ending in March 2025 enjoyed a good progress in line with the full year forecast. The left shows the operating revenue, which was JPY 4,364.2 billion, up 2.3% year-on-year. The progress ratio was 75.6% versus the full year forecast. The center shares the operating income, which was JPY 864.6 billion, up 2.0% year-on-year. The progress ratio was 77.9%. The right shows the net income with a progress ratio of 77.8%. Excluding a temporary impact due to reorganization of subsidiaries and affiliates, it was plus 0.6% year-on-year.
Next, let me explain factors for change in the consolidated operating income. The consolidated operating income grew with a steady increases of communications ARPU revenues and main businesses, such as finance, energy and DX as well as brisk performance of Lawson. From the left group MVNO and Rakuten roaming revenues were minus JPY 12.2 billion year-on-year. Multi-brand communications ARPU revenues were up JPY 3.5 billion. Financial business and energy business combined were plus JPY 12.6 billion. Lawson's equity method accounted income was up JPY 18.2 billion DX and Business Services segment were plus JPY 12.3 billion. The income increased JPY 16.9 billion by absorbing technology costs and an increase in sales promotion and advertising costs.
Next on Personal Services segment. First, on total ARPU revenues, both communications and value-added ARPU revenues increased. Communications ARPU revenues up to the third quarter were plus JPY 3.5 billion year-on-year. Value-added ARPU revenues was plus JPY 27.9 billion year-on-year. As for the outlook for the fourth quarter communications ARPU revenue, we are forecasting an increase in revenue with new plants in UQ Mobile and au.
Next, on smartphone subscriptions and churn rates. Please look at the left, the number of smartphone subscriptions, which is a growth foundation for ARPU revenues, has been steadily increasing. The right shows an increased mobility due to intensifying competition. While the multi-brand churn rate has increased, au churn rate has been maintained low.
Next is about momentum. Please look at the left, last November and December, we introduced a competitive Komi-Komi Plan plus in UQ mobile and Money Activity Plan plus in au and the new topping in povo where virtually 30 gigabytes can be used per month at the least expensive price in the industry. Moving to the right with new plans, monthly net addition of the multi-brand ID has recovered the momentum since November.
Concerning the total ARPU, we are maintaining an increasing trend for both communications and value-added ARPU. Please look at the right, value added ARPU increased mainly in finance and settlements helped also by Money Activity Plan. As for communications, ARPU by brand, it was plus 2.1% year-on-year in au, plus 3.3% in UQ mobile, both are growing. The migration from UQ mobile to au was a steady increase of 1.5x year-on-year.
To expand total ARPU, we will be exercising synergy of communications times finance. Please look at the left. We have updated well-accepted Money Activity Plan to be more attractive, making it easier to accumulate Ponta points. We aim to increase the ratio of unlimited plan and fast utilization of value-added services, while increasing the number of subscriptions. Please look at the right. We know from the track record that compared with other unlimited plans, au Money Activity Plan is effective in increasing the frequency of each financial service usage. With more attractive au Many Activity Plan plus, we intend to further expand our customer base, accelerating the growth of au Financial Group.
Our collaborative initiatives with Lawson are also progressing. The lab chose Ponta pass, which has been well received. Since the launch in October, new acquisitions increased about 20% quarter-on-quarter. Customers using other carriers increasingly rolled as Ponta pass members. Povo Data Oasis has also been well received, total 100,000 people using it at more than 90% of Lawson stores. We are planning to start eSIM sales at all Lawson stores soon.
Please look at the right. These initiatives are working, and the number of visitors to Lawson has been rising, contributing to the expansion of Lawson daily sales, which is plus 3.4% year-on-year. Lawson has a target of 30% reduction of store operations by 2030. It has started thinking about a target for daily sales increase as well. We continue to strengthen collaborative initiatives for communications times convenience stores, realizing the growth of the 2 companies.
We'll continue to strengthen the networks. Last year, we achieved #1 in experiential quality in user experience evaluation by Opensignal. Please look at the left to further increase the communication quality, we started offering 5G SAs service in all the Sub6 base stations areas, utilizing the highest number of Sub6 base stations in Japan. In addition, as you can see on the right, we obtained a commercial license approval for direct to cell service, D2C, with the satellite, completing preparation for service launch. From this spring, there will be more compatible devices. We aim to offer the service to about 2 million customers.
Next is on financial business. Left side, the customer base for our financial business is withstanding steadily. AU PAY Card exceeded 10 million members and au Jibun Bank's mortgage loan is also doing well, with cumulative loan amount exceeding JPY 5 trillion, the fastest of any online bank. We are also working with Mitsubishi UFJ Financial Group to promote initiatives to utilize AI, as you see on the right side. In addition to developing finance-specialized LLM using it to propose financial services to customers, we will build a next-generation remote customer service platform that utilizes convenience stores and other facilities to expand customer touch points for financial services and promote service reform.
Next is on Business Services segment. Business Services segment is expanding steadily, driven by growth area. Left side, year-to-date consolidated operating revenue for FY March '25, reached JPY 1,012 billion, driven by 19.9% year-on-year growth in the growth area. IoT-related services are showing particularly strong growth in the growth area. Right side, operating revenue was JPY 122 billion, up 20.8% year-on-year, and the cumulative IoT connections were up 22.2% year-on-year, showing steady growth.
Next, let me explain WAKONX, a business platform for the AI era. At WAKONX, we are refining our strength by adding operational and security values on our communication and AI infrastructure. We will leverage these strengths to promote scaling of industrial DX solutions and AI utilization.
Next is enhancing strength of WAKONX. As shown on the left, we deployed ConnectIN on a full scale in January 2025. By integrating communications into all products and services with our partners, we will expand WAKONX communications infrastructure and contribute to creating added value for our customers with our operational strength. Right side, security becomes even more important in the era where communication and AI are integrated into all products and services. In order to strengthen our security business, we may lack a wholly-owned subsidiary to integrate communication and security.
We will support our customers' digitalization through these initiatives. Industry solution use cases are also increasing. Left side, in facility solutions aimed at digitalizing offices, we provide comprehensive services from interior to ICT infrastructure with group cooperation and partnering. There is a strong demand for integrated solutions with communications and with inquiries from major e-commerce companies, our operating revenue for FY March '25 is growing steadily, up over 50% year-on-year. In order to achieve further growth, we will use the opening of TAKANAWA GATEWAY CITY, where our new headquarters will be relocated as an opportunity to expand digitalization beyond our office to include buildings and entire towns using our own initiatives as a model case.
Next is on AI utilization. Tama Data Center, on the left, begun operating GPUs and preparations to provide AI services are progressing steadily. In addition, to meet the growing demand for GPUs, we decided to introduce NVIDIA's latest GPU, which offers significantly higher performance than conventional GPUs at former Sakai plant site, which is scheduled to begin full-scale operation next fiscal year. We will make full use of this AI platform to accelerate our customers' digitalization through WAKONX.
Next is on enhancing the power to connect. We are committed to developing future talent towards a society in which anyone can make their dreams of reality, which is our goal in KDDI Vision 2030. Specifically, we have held online instructions by professional soccer players face-to-face interactions and cashless school festivals at 100 schools to provide financial education to students.
Furthermore, at the Osaka, Kansai Expo, we will -- which will be held from April this year, Future City pavilion will provide visitors with experience of creating the future. Next is on MWC Barcelona 2025. Following on from last year, KDDI will exhibit from March 3 to 6. In addition to introducing our initiatives in communications and AI, retail-tech and mobility, we will also give a keynote speech on the first day of MWC. So please look forward to it.
Toward KDDI Vision 2030, we have many initiatives coming up this year, including our new HQ relocation, next-generation convenience stores and direct-to-sell service. We will further enhance the power to connect with AI to deliver exciting future vision.
To realize the future society I have described so far, we need a high value-added economic circulation. As you know, thanks to various policies, pricing in Japan is considered to be among the lowest -- among the developed countries globally. In addition, telecom carrier are striving to create an environment with high connectivity quality through friendly competition. As the use of AI becomes commonplace in the future, the ICT industry will support it by responding to further traffic increases, disasters and security measures.
On the other hand, outsourcing costs to partners who build facilities and operation-related costs are rising, and we are being asked to negotiate fair transaction prices and pricing pass-through. We believe it is necessary to promote a virtuous economic cycle, where we provide valuable services, including value-added services to customers, receive payment in accordance with that value and use it to further invest. We want to contribute to a virtuous cycle of economy supported by co-creation with such partners and the realization of sustainable future society.
Lastly, today's summary. Consolidated results for the 3 quarters of FY March '25 are progressing in line with the full year forecast. In addition to steady growth in major businesses, Lawson performs strongly. In Personal Services segment, total ARPU revenues increased steadily. New pricing plans are introduced for multi-brand and both communications and value-added ARPU revenues are expected to grow. We will promote initiatives of communications and value-added services, such as Financial Services and Lawson, to generate synergy. In Businesses Services segment, growth area is expanding steadily, driving growth. In addition, we will strengthen communications, AI infrastructure, operations and security, which support WAKONX. We will strengthen our initiatives for the future to achieve sustainable growth and enhance the power to connect with our partners in order to realize a sustainable society.
Thank you very much for your attention.
We now would like to entertain your questions. [Operator Instructions] At the venue B, fourth from the stage, please.
Nikkei [indiscernible], Nomura. Regarding the first question, Starlink launch. When are you going to launch this? Last year, 2024, from the beginning of December, you would like to launch it that was mentioned. But now the timing has been changed from this spring. What are the reasons behind that?
Thank you for your question. About the Starlink D2C, direct to cell by the end of the year, getting the approval and now, we are prepared to launch the service. Regarding this approval for licensing, this is about using the wave from the satellite and also doing so from the devices, we were able to get the approval. So we are prepared to launch the service. Having said that, we are still doing a test. At the time of the launch, we would like to create an environment to serve a certain number of customers, about 2 million devices. We are confident that we could expand the script to 2 million. In addition to Android, iPhones, obviously, we are studying the iPhones as well and would like to have a thorough preparation. And then with a certain level of volume, in the spring, we would like to start with 2 million devices.
Regarding the service content, B2C on messages, as we studied, Gemini can be used. We have already learned that. So AI service collaboration is also being studied because Gemini can be used. So in the areas where the wave is not available on the extension of messaging service, people will be able to use Gemini. That's the kind of service we have and image. But as details become clearer, we would like to get back to you and make an announcement.
Second question, please. It's about other company. SoftBank and OpenAI, there was an announcement. WAKONX is promoted by KDDI. So how do you look at what they are doing? What is your take?
There was a certain news. And with [ Mr. Sam ] -- about Mr. Sam's press conference, I watched it. But it was still difficult for me to really get a specific image, difficult for me to make a comment that Crystal, they are developing that. And from LLM, the AI has become from LM to agent, that shift is clear. So selling that agent to corporations, I think people are saying that's the main aim. So I thought that was moving to that direction.
So from corporate, there will be data and by linking the data, trying to make a contribution to the future industries. I thought that was the idea. And I could fully understand where they are coming from. Our subsidy FLYWHEEL as we receive data from corporations using LLM and connecting that further to the industry that's already being done. So in terms of the direction, I could see where they are coming from. But to be honest with you, the world of LLM is moving so quickly.
Can we just stick to the open AI? That was the question. So just a personal opinion, but I had a question. With the Open AI, open AI is great, obviously, but then Google's Gemini, AWS.
Rapidly, the LLM has been prepared. If you look at the DeepSeek of China, there are both pros and cons. But the world is changing so rapidly. You are adhering to the JPY 450 billion and 1,000 people, would it be all right to adhere to that, that much? Having said that, this is what Mr. Sam is doing. So I'm pretty sure he had certain concept ideas. So we would just like to monitor this carefully. That's all from me.
[Operator Instructions] Line C, second from the front, please, closer to the door.
Asahi Newspaper. Kuroda is my name. I have one question. Fuji TV had some issues. So I have a question on that. You stopped your TV commercial. So if you have a take on this incident, could you share with us. Now what are the conditions to resume the TV commercial, depends on the third-party committee and the governance improvement to be announced by Fuji TV side. So what are the conditions for you to resume TV commercials?
We have the same stance as other companies. So we will take a comprehensive view and decided to suspend the TV commercial. Until end of March, we have suspended our TV commercial on Fuji TV. And I think different decisions will be made by each company. We will look at the progress of the third-party committee, which other companies are also doing. So we will look at that and make the right decision.
Please raise your hand, if you have a question. B, front line, in the center, please.
Freelance. Shikawa is my name. December end, the guideline was changed. Any impact about the change of the guideline?
About the guideline impact, December 26, I think it was revised. And this program has been strengthened. It was at the last minute. So identifying the last-minute demand, it's difficult. To be honest with you, I don't really think the impact was that significant. About the trial discount issue, there were some issues. But regarding each carrier, not much was done. So we will continue to monitor what peers are doing and would like to be careful. But roughly speaking, no significant impact has been felt.
About Starlink, you can do messaging and the Gemini can be also used, you mentioned that. So you are planning to roll out those services. Is that right?
About messaging, we have RCS, we are preparing concerning RCS. Now Starlink, D2C messaging will be main ones. So we'll be responding to that. With RCS, when you do the exchanges on the extension, since there's a Gemini, so in the exchanges using Gemini, doing those exchanges, that would also be possible by this spring, we would like to complete the preparation so that we can roll out the service to users. RC alone is not really the interesting, so we would like to have something fun. So we believe that the preparation is ongoing by the spring.
Next questioner, please. So in the room, center, line C, first person, closer to me.
[indiscernible] Sekiguchi is my name. So in your presentation, you touched on povo, Lawson. So povo eSIM will be deployed soon, you said at the launch timing, you mentioned early part of 2025. But as you said, it will be within -- by the end of FY '24. Is this a delay? Is there a delay povo eSIM deploying to all stores, right?
Yes. So earlier I said -- which year did I say? FY '24. So it is in line with the plan. You mentioned early parts, so I thought maybe around January. Maybe there's a 1-month difference, but not a big difference. So nothing has happened, no.
So povo Data Oasis usage status, how is it going?
So about 100,000 are using. So I think we are off to a good start. So already 90% of the stores can be -- is available. So with that GPS, you can get 100 mega. And so I think that is attracting the users. So once eSIM can be sold in all stores, it will activate and gain momentum. So I am having high expectations.
Well, due to the time constraint, next will be the final question. One question, please. C, second row from the top, please.
Freelance. Ishino is my name. Communication finance, the synergy between the 2 au Money Activity Plan, track record, positive effects on finance, the gold card position rate and also the settlement unit price that was mentioned. But I think you are referring to the Money Activity Plan. But now with Money Activity Plan, plus how the return method has been changed, do you think the trend will be changing? If it's the same, that's fine. But what acceleration, if there is any accelerating trend, please let me know. From Money Activity Plan to Money Activity Plan Plus for customers, the frequency has been -- has increased 80% at the time of upgrade.
So Money Activity Plan to Money Activity Plan Plus, yes, there is some acceleration. If you could understand it that way, that's fine.
Second question, povo Data Oasis, total 100,000 people. How -- what's your take?
I think there will be more users. It's free of charge. So it could have been the 1 million total number, in my opinion.
To stimulate the use, is there other any measures?
Let's see. Already 100,000 are using, it's pretty brisk that how the frontline people understand this. But as I said, at all the stores, the povo Oasis rollout regarding that -- regarding the biggest effect, I think the promotion effect is the biggest at all the stores, Povo illustration will be shown and everybody. People will be exposed to Povo. With that, I can expect some acceleration. I have high expectations in that regard.
Thank you very much. I'm so sorry for those who are raising your hand now, if you could come to our Public Communications -- Public Relations later. We will now bring this Part 1 to a close. So that is all for the financial results briefing, Part 1. Thank you very much.
The executives on the stage will exit for a moment. After this, we will start Part 2. We will change the layout. So please bear with us. If you could wait for a moment, we would appreciate it.
[Break]
Ladies and gentlemen, thank you so much for waiting. We would like to start the second part, KDDI's change in President and Representative Director, CEO and Executive Officer. On this issue, TSE timely disclosure, press release has just been made, is also posted on the KDDI's website. Those of you who are at the venue, please refer to the handout.
Let me introduce today's attendees: President, Representative Director and CEO, Takahashi Makoto; Director, Senior Managing Executive Officer, Matsuda Hiromichi. The 2 attendees, CEO, Mr. Takahashi and Matsuda will also express comments, then Q&A and photo session will take place. Regarding online distribution, it will cover up to Q&A session. Mr. Takahashi, the floor is yours.
As you can see in the handout today, the Board meeting was held -- KDDI's Board meeting was held. And as of April 1, the current Managing Executive Officer, Matsuda Hiromichi, will become the CEO and Representative Director as of April 1st. Regarding Matsuda, who will be the new President, as you can see, currently, he is Director and Managing Executive Officer. He's also General Manager of Advancing Business Technology Strategy Division and overseeing Business Exploration and Development Division as well as Open Innovation Division.
As you know, the environment surrounding the communications industry has been changing significantly. In the communications. 5G as a core, it showed development centering of smartphones. But going forward, we are now in the era of AI and DX communication is penetrating on everything with that. It is now changing the environment with exorbitant speed. If you look at the environment surrounding our lives, it's been said that the President of our company has been changing as the communication generation changes with the growth of 5G, I served as the President for 7 years.
Now if you look at the world, beyond 5G, it's not 6G. It will be the era of AI. So along that line, regarding the person who will be driving the companies, this person has to be extensive experience in technology and someone who was not feeling hesitant vis-a-vis global partners and has to be able to build business.
Now Mr. Matsuda is well versed in technology. He has also been very positively active in cutting-edge technology. He also has deep connections with global partners, which is a requirement. He is 53 years old. He is 10 years younger than I am, and I believe that he will be taking up boldly new business areas. And in the era of AI, I believe he is really the optimum person to lead the company. He is very suited to be the next President.
Since I became the President, about 7 years have passed. I implemented 2 midterm management strategies. Now current midterm strategy, while there have been rapid changes in the environment, it's been extended by 1 year. So the next year will be the final year for the current midterm strategy. Mr. Matsuda will be implementing steadily the final year of the current midterm management strategy. And starting from FY 2026, the next midterm management strategy will be devised by him. Regarding the development of the next midterm strategy, I believe it's important that it's done so under the new management. That's why this timing, I will pass the baton. I would like to thank you for your continued support for a long time, and I hope that you will give us your kind support to the new management system.
Thank you very much.
Next, thank you very much, Mr. Matsuda, if you could.
I am Matsuda, appointed as the President as of April 1. Thank you very much. I will receive the baton to manage the company from President, Takahashi. I am humbled and motivated to take on this big responsibility.
As shown in the introduction, I joined KDD in 1996, and I've been engaged in the telecommunication business as an engineer. The company changed to KDDI in the year 2000. I built my career in the technology development of high-speed mobile Internet and product development and fortunately, was involved in 3G, 4G, 5G system launch from network and product development standpoint.
From 2021, under President Takahashi, I was in charge of new business and management strategy. I focused on understanding our portfolio, implementing satellite growth strategy and explored and co-created business with our partners, realizing partnership with Apple, Google and Qualcomm and SpaceX, gave me a big confidence.
As a promoter of cross-functional data-driven AI project, I worked on improving customers' CX. Along with our internal system modernization, this was also an impressive moment. With the integration of communication and life design and satellite growth strategy promoted by President Takahashi, communication penetrated into the fundamentals of all industries, an initiative to add value and deliver them accelerated. The infrastructure for a virtual cycle that connects business, growth and the resolution of social challenges was built.
I will receive this baton and ensure sustainable growth. 5G is maturing and era to fully leverage AI is starting, a rare and proprietary digital data asset will be the driver to create new value with cutting-edge AI. Through such integration, we will upgrade our power to connect to a new level and crystallize it to our business. That is my responsibility. Despite radical social changes, we will always be customer-oriented and deliver excitement that exceed expectation. And because we are in a volatile era, I will embrace KDDI philosophy and corporate philosophy as an unwavering value and keep progressing with challenger spirit.
I ask you for your warm guidance and support. Thank you very much.
Now we would like to entertain your questions. [Operator Instructions] At the venue, D, front line, please.
Nikkan Kogyo. My name is [ Mizushima ]. Soft question. Mr. Matsuda, your personality. I have a question about your personality, your strength, your weaknesses, how they are analyzed? Now Mr. Takahashi, about Mr. Matsuda's personality. What are the things that you appreciate about him? Second question, Mr. Matsuda, any maxim slogan that you cherish or, sorry to say this, any hobbies did you enjoy?
Thank you for your questions. First of all, my personality. Since I joined the company, technology has been my core. I started as an engineer and then product planning, marketing. Around technology, I built my experience. I think that's something that can be described as my experiential value. That said, my strength and weaknesses. The ones that I like that I'm good at, including external partners with various partners, having a good conversation and explore win-win points and being tenacious in those activities. I think that has been appreciated. Having said that, regarding what I'm not really good at. Well, as a new member of the top management team, I would like to really work on that.
Personality, he is an engineer. He's pretty stoic in his efforts. I think that's one of his attitude, but he is an engineer, but when there's something new, he has pioneering spirit. Maybe it's not really about personality, but in terms of his attitude, that's something that I could really see. As I said, having a global perspective and with global partners, you have to communicate with those global partners. I mean as a company, that's something so important, and I really see that in him, and that's why I've decided this.
And maxim slogan. Different people have different mottos, but including this kind of a meeting, you have to be thoroughly prepared, thoroughly prepared, meticulous, and also you have to be preemptive, then you can win. I love all those words. And you have to be exhaustive in preparation because opportunities prefer people who are thoroughly prepared, you don't know what comes next, but you will always be fully prepared and then you can really enjoy opportunities. So this is something that I like.
Next question, please. Line 3, front row, please, at the center.
Freewriter. Asano is my name. I have got 2 questions. So Mr. Matsuda, so there are new technologies, you've been engaging in new technologies, new -- so what is your most interested technology? What is the area that you're most curious about. On the other hand, after 5G, it is AI, not 6G, but AI, President Takahashi said. So the communication is the core of the business. That's for sure. But the market competition is severe. So there are severe environments. So what is your view on communication?
Thank you very much for the question. I've been working on communication as an engineer all along. And so I have a strong passion on telecommunication. On that basis, which field are we going to venture out to. Our strength, our characteristic is, we go from basic research to applied research. We have this good cycle, positive cycle. So what we have now? We had the green shoot 3, 5 years ago. And so identifying them, we have to look 3 to 5 years down the road in the research we are conducting now. So the radar of the technology is honed. Some come out of our own research, but also from co-creation with start-ups. So those are what we look at in technology.
And second point, related to the first one. Technology communication. So following 5G will be AI. It's important to combine with AI. How 5G can evolve with AI? That is our key theme. So on the extension of that, it will evolve as a network.
[Operator Instructions] At the venue, B, frontline, closer to the MC, please.
Freelance. Koyama. You mentioned communications, but as a recent business collaboration with the settlements with financial businesses and you described yourself as an engineer about financial settlement payments, what is your take on this?
Satellite growth strategy that we have in the center, communication and then finance, energy, many things around that. And then we have to implant technology in everything. It can be our technology or technology from outside can be applied. So energy-related technology, finance-related technology. We have to closely monitor those. In that sense more recently, in some cases, we were early, but Blockchain Web 3, those technology, how they will be connected to FinTech, we are closely monitoring that.
Row B, at the very back, please.
Diamond Murai is my name. Earlier, President Takahashi said, the reason of choosing Mr. Matsuda about his skills and technology. But in the next era of AI, the power to build relationship with partners, you mentioned. So if you could elaborate on that. In Matsuda-san's track record, what kind of track record does he have with the global partners, like Apple and Google and SpaceX? So what part did you think was -- did you appreciate? Apple and Google, I think it's after the smartphone era. So in partner relationship building, do you have any particular event or thing you can share with us?
So KDDI's global partner, as you said, Google and Apple, Qualcomm, Starlink. These discussions were mostly done by Matsuda-san. So that is a good strong track record. Recently, Starlink. The first -- I did do some initial exploration, but he did most of the rest of the process. He is fluent in language and talking with the AI people, they're all young, Sam Altman, he is 39 years old. I'm 63, and I'm studying hard on AI. Sam-san is a different animal or a different person. He is in a whole different world, but hyperscalers -- to work with hyperscalers, you need to be young and have global skills and sense, and I think Matsuda-san is strong in that. And I thought he was the most appropriate. My recent impression of him is Starlink. That was a big contribution, please.
So before entering the smartphone era, the international standardization was important. It's still important, but the spectrum frequency, where to compromise -- the key point, focus of the negotiation was something I learned. And now we enter the smartphone era. The most impressive point is iPhone 4S introduction and the LTE initial model, first LTE model, iPhone 5. We struggled with frequency, the negotiation with the counterpart and internal work. We had to work as one team to follow through, and this is what I felt strongly as I negotiated with external partners and also collaborative with the internal members, internal team.
One more point. So President is changing. So a people -- person chooses person. And so I'm asking a pretty deep question. But Matsuda-san, so President Takahashi, when did you start thinking of and decided to choose Matsuda-san? And when did you convey the message to Matsuda-san, if you could give me some history.
When we thought of the succession plan, as of last year, there were multiple candidates in my mind and discussed with the outside directors -- discussed with the outside directors and had a good thorough study for 1 year. And around the fall, we narrowed down and went to the Nomination Committee. And at the end of the year, we made the rough decision and official decision today. So to Matsuda-san, it had to be finally decided in the Nomination Advisory Committee, but I -- in November, I think, I told Matsuda-san that it will be you if the Nomination Advisory Committee approves.
Matsuda-san, how did you receive that message? What did you feel?
I remember very well. I was called into the President's office and the pending was AI data center progress, that was the pending issue. And so I thought that will be the question. And so that's what I thought entering the room. And heard that I was going to be nominated to the Nomination Advisory Committee.
How did you feel?
Honestly, I was petrified. I could not react really.
A, second from the front, please.
Nike business. Sugiyama is my name. First question, communication quality, concerning the efforts. Beyond 5G, this is going to be era of AI. But on the one hand, you have been working on communication quality, Opensignal. Other companies are trying to get better score, and regarding your confidence or thoroughly prepared, and you have been so careful in all the preparation? What's your comment?
Thank you. Concerning the communication quality, Opensignal, that's one indicator that we look at as a kind of a yardstick or KPI AI. But in principle, high-quality communication must be delivered to customers. That has been an essential attitude. Regarding our confidence, we have the spectrum frequency. How are we going to combine them and to use them or a new technology for spectrum, including that, how are we going to use this? And just like this time, what we're doing, how to use this satellite in an integrated manner, how to offer this service, that's very important for spending a long time. We have been strategically developing them, and they are working out pretty well.
As you heard, D2C is something we're going to see going forward, and we want to be preemptive, we want to be ahead of peers. Not 6G, but the next will be the era of AI. Maybe you are adhering to that, but we had meeting amongst executive officers. In the past, download speed of communication, latency, those are the things we're concerned about. But going forward, assuming the AI utilization, then what's the latency? That's important, not just communication beyond that, obviously, AI, LLM and then the latency, including using all those services. So you can't just focus on communication, including usage of AI, comprehensive quality matters. So in that sense, I meant to say that next will be the era of AI. I just would like to apologize if my explanation hasn't been really enough.
May I ask you the second question. AI data center was mentioned before. Matsuda-san, you have been engaged in the cutting-edge technology combination of AI, and communication is something that you have talked about already, but SoftBank, so sorry to talk about the different company, AI and base stations, integrating them. It's easy to see. But as KDDI communications times AI, regarding that integration, specifically, what are the things that you envisage or AI data centers, how are you going to utilize them?
Thank you. Communication AI integration, how to go about them? There are several ways to look at this. On our part, communication operation that we have been doing, enhancing it with AI, that's one thing. And teleco AI is something that we have to do thoroughly. Now for AI or when AI is inevitable using resources, communication and in other things, how we are going to apply them? In parallel, we are looking at this. Now AI data center is another thing. Linking them to business is something that I said because digital data -- since we have digital data, generative AI can be fully utilized. So to do that AI data center, it's something that we want to have as a foundation.
So row D, second from the front, please.
Nikkei Newspaper. Sakuragi is my name. I have 2 questions. First is a question to Matsuda-san. From the beginning of KDDI, it's been 25 years. So what kind of company do you want to make KDDI into, Mr. Matsuda?
Thank you for the question. As I said earlier, I joined the company in 1996 and became KDDI in year 2000, and it's been 25 years. Our vision is 2030 -- Vision 2030. So power to connect. We are connecting with many things. We want to focus on connecting. So we want to enhance the power to connect and so that anyone can realize their dreams. When I talk with the outside overseas counterpart, I feel that Japan is respected quite a bit. We talked about societal challenges. We are the advanced country in social issues. And therefore, we have our KDDI's specific value creation and resolution and solutions. And in the future, we want to use the use cases to contribute to the overseas side. We are the advanced nation of social challenges. So we want to create value and solutions and contribute to the world going forward.
My second question is also to Matsuda-san. So you've been an engineer for a very long time. So what was the trigger that led you to be interested in engineering? Any -- I often hear about the expo. What did you see? What were you impressed?
Thank you. I think you remember me talking about this once. When I was in junior high school, Tsukuba science expo was held, and I was in Yamaguchi. I took the Blue Train and came all the way to Tsukuba. And the view I saw there was -- I went to the Japanese company's booth. And I still remember -- I had this at home, NEC's CNC pavilion, this plan -- model. And I talked with [indiscernible]. They have this mysterious science kit, a marvelous science kit. It was this shape memory alloy. They delivered the samples. And I got that, and that's what led me to be interested in science and technology. This year, Osaka, Kansai Expo is held, and we are working with Hitachi, and we'll do an exhibition. I hope the children, the future talent will come and become interested in science from my own experience.
B, front line, around the center, please.
Freelance. Ishikawa. First, Takahashi-san, I have one question for you. Looking back to 7 years, anything that you really feel proud about yourself?
7 years? I mean just time flew. So many things have happened. So many, many things have happened. When I became President, Hokkaido [indiscernible], there was that earthquake in Hokkaido last year and in then Noto earthquake. There are many disasters, and we were hit by COVID-19. We experienced so many things. What impressed me most, let's see that communication failure that lasted for quite a long time caused so much trouble. We felt sorry. And with our group of engineers, we want to be #1 in our network service at Opensignal, we were able to achieve #1 and engineers have worked so hard that was really gratifying.
2030 Vision, as Matsuda-san mentioned, this evolution of the power to connect. That's something that we would like to continue, and I was able to sort of create a base which was good.
In addition, life design. Integration of life design with communication. We launched that. Population is decreasing. Communication will be penetrating everything with that assumption on various industries expanding the business. I believe that I was able to build that foundation, we need to enter into many industries. I contributed to creating that foundation.
Matsuda-san, another question. Looking back, Apple, Google events as I interviewed them, you were standing right next to Mr. Takahashi. As I look back in doing the work together with partners, how are you planning to present to KDDI? So from Apple, there are 4 carriers in Japan, KDDI is one of them. But to Apple, how to sort of ingratiate yourself with Apple in terms, how to build such good relations with partners?
Thank you. To a certain extent, it's case by case, but you just decided Apple as an example. In principle, we are standing on the same arena. It's like a beauty pageant. How can we present our contributions. But in areas where we're not really standing in the same field, here in Japan, we have assets. With new technology, what those partners have, how we can enhance them, how we can evolve them. And in that area, they can acknowledge, appreciate our values, we can find win-win. So there are 2 ways. Depending on the time access, it will be different, but I would to be mindful of that together with new partners. I would like to build relationships with them.
Row C, second from the front, closer to the moderator. .
Yes, Freelance. Ishino is my name. First question is to Matsuda-san. So now in the communication, the customer acquisition is now becoming more severe. Data volume is raised and the price is reduced. How do you see this? And what is your plan going forward? Are you focusing on net additions? Or are you broadening the competition framework, the arena?
Thank you very much. Of course, we need to first address the current competition and think of what -- how I want to bring this going forward. So 2 perspectives. We should not just focus on ID, number of IDs, but it's important to have this being used by our customers. But at the same time, we need -- we have the competition to raise the momentum. So I need to think of this in 2 axis.
Second question is to Mr. Takahashi. You will become the Chairman. What is your plan as a Chairman?
Next fiscal year is the final year of the current MTMP medium-term plan. And so this will be in the hands of Mr. Matsuda and his team. I will support that. So I will thoroughly support that. Unfortunately, NTT law is now settling. So the government and the business circle discussion is another area that I will keep being involved in, and we've been working on start-ups. So I want to also be involved in that. I want to energize Japan and so I hope I can support externally and internally.
Next, from online, participants, we would like to entertain your questions. Nishida-san?
My name is Nishida. Can you hear me?
Yes.
Yes. First question to Matsuda-san. Being thoroughly prepared, you like that expression. To be thoroughly prepared, any particular areas that you would like to look at? Of course, communication in AI, but areas that you must really work on, what are the areas you feel that you must address?
That's a very difficult question. In terms of technology, we need to be discerning, for instance, amongst the technology we have, something like paradigm shift, IT devices, the generalized ones are now available. That's the kind of year we find ourselves in. So regarding engineering resources or engineering skills, what kind of skills will actually work out looking at the next future? We need to really look at the tide, change in the tide in technology and so being thoroughly prepared. So it's a package with being preemptive, you have to have foresight changes and disruption, how they will take place. We have to really be monitoring that.
Second question, Takahashi-san. Since you are mindful of succession, what are the things that you regarded as kind of issues? What are the things that you wanted to left behind?
Well, I said before, let's see. 54 years old, who became the Chairman, and I was 56. But now I wanted to make the next present much younger than those. Regarding the company itself, I would like to rejuvenate the company. So again, from your perspective, especially consumers, persons in charge of consumers, they have become younger. So based on that assumption, I came up with the succession planning. A satellite growth strategy is something we have been working on. The strategy itself is a driver for a sustainable growth of KDDI. As Matsuda-san mentioned, we have to be insightful. We need to have foresight so that we can take up new challenges here and I have been talking about this all a while. So with that as kind of something that I leave behind. I hope that he will make a contribution for sustainable growth of KDDI.
I hope I answered your question.
Time is coming up. So we will take one more question from this venue. Row C, first person, please.
[indiscernible] Sekiguchi is my name. I have a question to you, President Takahashi. So you did some look back. So if you focus on 5G, you said that the communication failure, the outage was impressive, and this led to your current achievement in Opensignal. At KDDI, in terms of 5G, you handled this well and you came this far. So KDDI's perspective and the 5G status in Japan, if you look at these 2, in your term as President, what do you see? How do you summarize?
The telecom operators are all working very hard. As I said earlier, the pricing have been reduced. We are now around 50%, half of the U.S. And the other countries are now raising prices. And under such circumstances, we are trying to improve the facility efficiency and invest it in 5G. So we are competing harshly under Opensignal, SoftBank and DOCOMO and us. We are trying to look at the specification to improve 5G. So we have a great, magnificent achievement in 5G.
Some say that we do not have enough use cases in 5G. That is not the case at all. Traffic is growing at a rapid speed, even at the interest level. So it's 10% to 20% growth every year. Starting this April centering on YouTube, we're seeing an enormous speed. So now use cases becoming evident. Latency and SA will become more important. And in the AI era, we need to convey this to the AI, and I think the 5G Foundation is now well built. So this will be succeeded by Mr. Matsuda. I think friendly rivalry in this IT industry will lead to good results in 5G and 6G. So I think this is something I can be proud of. We did well.
Second question, may be a difficult one, to Mr. Matsuda. In your future business, especially in Consumer business, what is your plan? We have the economic zone and 5G smartphone initiatives. So I know it's a difficult question, but how will consumer and KDDI be involved with each other? And how do you plan to grow this area going forward?
Thank you. Consumer Personal Services segment. I was there last year. So I understand the structure. Going forward, in our medium-term management plan, we have a plan under our strategy. So following through with that, we'll lead to the expansion of the economic zone and the enhancement of the communications. Now beyond that consumers, general consumers, we need to research and understand them. It's a very important element in our next medium-term plan. So I would like to have another opportunity to talk about that soon. At the beginning of April, you will do the inaugural speech, talk about his plan. So please look forward to that.
Since it's time, we would like to conclude the questions and answer session. Concerning the online and distribution, again, we would like to conclude the session. Mr. Takahashi, Mr. Matsuda, please stand up. Despite the last minutes change, thank you so much for joining us, both virtually and physically. We appreciate your kind participation.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]