SoftBank Corp
TSE:9434
Earnings Call Analysis
Q3-2024 Analysis
SoftBank Corp
SoftBank Corporation reported a commendable financial performance for the 9 months ending December 31, 2023, with President and CEO Miyakawa at the helm. Revenue increased by 4% to JPY 4.5116 trillion with strong growth contributions across various business segments. The company saw a robust operating income of JPY 731.9 billion, marking a 7% actual growth when excluding a one-time gain from last year, and a significant 30% surge in net income to JPY 406.7 billion. Despite natural disasters like the Noto Peninsula earthquake causing operational difficulties and an estimated JPY 2 billion in damage, SoftBank's proactive strategies in restoring services and supporting affected areas demonstrated resilience and commitment to maintaining network integrity.
Underlying the positive momentum, SoftBank has revised its full-year forecasts upward, projecting additional JPY 60 billion in net sales, JPY 60 billion in operating income, and a notable JPY 42 billion bump in net income, reflecting a solid performance trajectory. This optimism is further cemented by a robust 10% upward adjustment in the net income focus, highlighting the leadership's confidence in SoftBank's financial health and strategic direction.
The Consumer business faced a moderate 2% decline in profit, while the Enterprise, Media & EC, and Financial services enjoyed double-digit growths in their respective sectors. SoftBank's mobile sales are recovering, anticipating an early reversal in declining revenue trends, and the Enterprise business has thrived with a recurring revenue jump of 18%. The Media & EC business and the Financial segment, notably buoyed by the consolidation of PayPay, have also reported considerable gains. PayPay's successive quarter-over-quarter profitability is expected to persist into the full year, bolstering SoftBank’s positive outlook.
SoftBank is not resting on its laurels, with strategic investments like the takeover of WeWork Japan to shore up the business amidst uncertainties following its parent company’s Chapter 11 filing. Investments in global IoT provider Cubic Telecom and a focus on establishing next-generation social infrastructure like AI data centers and advanced networking capabilities illustrate an aggressive push towards future growth opportunities.
SoftBank's dedication to environmental, social, and governance (ESG) criteria has not gone unnoticed. DJSI World's selection of SoftBank for the second consecutive year and rankings as #1 in Japan underscore the company's efforts to harmonize its business growth with societal contributions.
Miyakawa conveyed an array of forward-looking initiatives. The Consumer business is outperforming expectations, and the enterprise is on a stellar path with plans to surpass previous revenue estimates. PayPay is poised for full-year profitability, and there’s a candid acknowledgment of the importance of global expansion and sustained innovation to remain competitive in future transport infrastructure. On the sustainability front, SoftBank is committing to ongoing enhancements with an eye towards fostering constructive relationships both within Japan and on the global stage.
SoftBank's administration has outlined plans for the dividend to exceed JPY 100 billion, providing investors with reassurance on the continuity and stability of returns. This expectation is grounded on a robust stand-alone net income bolstered by subsidiary contributions and the tactical utilization of loss carryforwards.
You don't have any saved screeners yet
Thank you, everyone, for waiting. We will now begin the presentation of the earnings results of SoftBank Corporation for the 9 months ended December 31, 2023. We would like to introduce today's attendees, SoftBank Corporation President and CEO, Miyakawa; Board Director, Executive Vice President and CFO, Fujihara. Today's presentation will be broadcast via the internet. Now President and CEO, Miyakawa, will give an overview of SoftBank's consolidated financial results and business overview.
This is Miyakawa of SoftBank. Thank you so much for your attendance today. First of all, we extend our deepest and heartfelt sympathies to those who have been affected by the 2024 Noto Peninsula earthquake. At the time of the earthquake, 271 base stations became out of service. The Noto Peninsula earthquake has not yet been fully restored, as there are still areas that cannot be accessed.The Great East Japan earthquake of 2011 damaged more than 3,700 base stations. And this time we are feeling a different kind of difficulty in restoring them. We brought in generators to run the base stations. However, the condition of the roads was so bad that it was often difficult to bring in large machinery. For this purpose, we use smaller generators, which require frequent gasoline refills. And when the relay line is down, the [ back hold ] is connected by satellite to restore the line temporarily. If snow accumulates on the antenna, communication will be lost, so it is also necessary to remove the snow. This is the current area map, and the gray areas are those that lost communication after the earthquake.We prioritize evacuation sites and monitored communication quality and established an environment that facilitates connectivity. Although it's tentative, 99% of the areas have been restored. So once we receive permission to enter the site, we'll expedite the restoration work. We ask that you please bear with us for a little longer. Also, the entire group is providing whatever support we can. We will continue to support the affected people as a group so that they can regain their daily lives as soon as possible.Now I will move on to the third quarter results. Revenue was JPY 4.5116 trillion, up by 4% by business segment. The 4 businesses shown here reported increases in revenues. Operating income was JPY 731.9 billion. Excluding the remeasurement gain from the consolidation of PayPay last year, the business grew 7% on an actual basis.By business segment, Consumer business. So a 2% decline in profit while Enterprise and Media EC businesses enjoyed double digit profit growth. As for the financial business improved by JPY 8.3 billion year-on-year on an actual basis. Q3 cumulative results were substantially higher and in line with the plans. Now net income up by 30%, JPY 406.7 billion.As for the consolidated results summary is here. The results were revenue and profit increase on an actual basis. The progress rate toward forecast is operating income has reached 94%. Net income reached 97%. Here is the progress rate by segment. Consumer business and Media EC business are stronger than we expected at the beginning of the period. The progress rate is 90% and 93% accordingly. In light of these strong results, we have decided to upwardly revise our full year forecasts.Net sales of JPY 60 billion, operating income JPY 60 billion, net income JPY 42 billion. This forecast have been revised upward from the initial forecasts. The net income focused, which we have been focused on, we have added 10%.In the last earnings presentation there was a question. Our standalone net income increased by around JPY 100 billion from the previous year. So we expect that total amount of dividends will be well in excess of approximately JPY 400 billion.Here is the forecast of operating income by segment. Consumer business net additions are strong and ARPU is improving. So we raised our forecast by JPY 20 billion. And the Media & EC business, due to cost reductions and cost concentration on selected businesses, JPY 19 billion increase has been made. And the financial business by improving efficiency of sales promotion expenses, JPY 10 billion has been increased. The upward revision is not due to growth in any one single area, but I believe rather the result of the overall functioning of the company as a whole and accumulation of individual efforts.Regarding the 3 themes of the medium-term business plan, the current fiscal year, which was forecasted to be the most challenging, was revised upward. Therefore, we are gaining confidence in our accomplishments.Now, we would like to explain by segment. First, Consumer business. Revenue was down by 0.3%. Mobile sales, which we have been aiming to increase, finally turned around in Q3. As for the impact of the mobile service price reductions, we were prepared for the downward trend in sales to continue for 3 years. However, we were able to get out of it in 2.5 years.In Q4, we expect an increase in revenues over Q3. Therefore, we expect to be able to reverse the revenue. Revenue increase for the full year as well. Originally, in the medium-term plan, we explained that mobile sales would increase from fiscal year 2024. However, we now expect to be able to increase revenues from this fiscal year, 1 year ahead of schedule. Operating income was done by 2%. However, full year forecast, we expect to increase. We had originally forecasted JPY 470 billion, but have now revised our forecast upward by another JPY 20 billion. Net additions to mobile subscribers have continued to grow steadily over the past year. The number of smartphone subscribers also grew steadily, increasing by 5%.Now let me talk about the Enterprise business. Revenue was up by 5% year-on-year to JPY 576 billion. Solution business is going well, which saw 15% of increase. For operating income we saw 15% of increase to JPY 124 billion. Of the Solution revenue, recurring revenue saw 18% of increase. Thanks to growing demands of AI-related product and services, we maintain steady growth. And recurring revenue accounts for 75% of the Enterprise business. So we expect continuous growth of that segment.Now, Media & EC business. Yesterday, [ LynYapoo ] announced their financial results. Therefore, I'd like to briefly touch upon their results. Revenue up by 3% to JPY 1.199 trillion. Operating income, saw 29% of increase. For commerce, we optimized our marketing cost. For media, post COVID-19 pandemic advertisements were coming back. Overall, cost reduction has been progressing pretty well.Next finance business. Revenue was up by 95% and thanks to consolidation of PayPay. For operating income, we saw significant improvement in real term. PayPay's consolidated revenue was up by 28% to JPY 155 billion. Consolidated EBITDA reached JPY 7.4 billion. On the quarterly basis, we achieved profitability for 3 consecutive quarters. We expect it to be profitable full year.GMV of SB Payment Service serviced reached JPY 5.8 trillion or 20% increase year-on-year, especially good was nontelecom sector, which saw 27% of increase year-on-year. They are maintaining high growth rate. Operating income was 10% up. PayPay Securities' point investment users exceeded 13,060,000 in December, which was 66% year-on-year, so they saw JPY 5.4 million increase in 1 year.From here I'd like to change the subject a little. I'd like to explain the most recent topic one-by-one. As we announced recently, our group will take over the business of WeWork Japan. Originally, the parent company of WeWork Japan was WeWork Inc. We had a 25% stake, and we're positioned as an affiliate. In addition to WeWork Japan damaged by COVID, its parent company WeWork Inc, filed for Chapter 11. Therefore, WeWork Japan's future financial situation has become now uncertain. So WeWork Japan filed for civil rehabilitation on February 1, and our group decided to take over the business. Our group will take over all liabilities related to the business with full responsibility. We kindly ask for your understanding and we appreciate that our business partners and users are reassured.Now from here I would like to share with you some of the progress we have made toward building a next generation social infrastructure. So we've been talking about distributing AI data centers across Japan. So this time, we have a progress on the network part. In order to connect data center and data center distributed nationwide, a high capacity power saving network is required. And we've been conducting research and development on this. So as we jointly announced with Fujitsu in October last year, utilizing new optical transmission device, we have deployed low-latency high-capacity and power-saving networks throughout Japan. This is similar to the photoelectric fusion technologies set for IOWN. This is called all-optical network. And we designed for the backbone network. Let me explain about this briefly. The conventional network on the left, as you can see, has multiple routers that the data goes through before it arrives at the destination. And that time in this process, optical and electrical signals are converted to multiple times, resulting in a large amount of energy loss. This new backbone network on the right side, which communicates without converting the data from optical to electrical signals can significantly reduce power consumption. Transmission capacity has been increased by 10x, while power consumption has been reduced by 1/10. This allows for the integrated operation of distributed data centers.Next, I like to share the progress of gen AI with you. First, computing infrastructure built last year is running smoothly. At the end of last year, December, we reached 130 billion parameters and verified it. Our immediate goal is to triple that amount twice the aim of building 390 billion parameter. Concurrently, LLM multimodal development is underway. In addition to text, it supports graphs and tables, images, symbols and coding. By the end of next fiscal year we are working on to complete a multimodal model with 390 billion parameters. And even further, as for the parameter, we will aim to exceed 1 trillion parameter. To achieve this, we are planning to further expand our computing infrastructure.Recently, a large model is built once and then optimized to a size appropriate for the purpose. This has been a trend for building the gen AI. This is called [ distilled ]. So we would like to build our gen AI in this way. Therefore, we would like to target 1 trillion parameter. Our goal is gen AI that understands Japanese culture and business practices. But we want to create it by way of optimization. High accuracy, fast response, low power consumption. We are aiming for a well-sharpened gen AI. So since my taking office, as such as the next generation social infrastructure business, I've launched and promoted projects under the direct supervision of the CEO in areas that I wanted to focus on. So, I believe that we are now in a position to make a speedy decision and take on completely new challenges.So today I'd like to give an update about efforts by Beyond Japan project office regarding global strategy. In December 2023, we announced that we will be investing in a company called Cubic Telecom. The Cubic Telecom is a company that mainly provides a global IoT platform primarily for SDCV. We plan to invest approximately JPY 75 billion in this company and acquire 51% of the equity stake. Cubic Telecom provides a global integrated platform that allows auto manufacturers to centrally manage software-defined connected vehicles in more than 190 countries. It is the leading platform of its kind in the world.As a future global trend, the electrification of cars will advance further and they will be automated. The use of software in cars will expand and we anticipate that the platforms to manage this will become more important. We also predicted that platforms to manage traffic infrastructure, such as traffic lights will be built globally. On these platforms, information from so-called the traffic participants will be linked to create next generation traffic infrastructure. This will bring us a great opportunity for global growth.We aim to provide next generation social infrastructure and our deployment is not limited to Japan. To seize the opportunity of huge growth in next generation traffic infrastructure, we would like to expand globally as a [ platformer ]. Cubic Telecom, which provides services in 190 countries has a very unique position. And we believe that by collaborating with other platforms in the future, the company can become an important part of the next generation traffic infrastructure.Last but not the least, let me touch upon ESG efforts of SoftBank. We were selected as DJSI World 2 year straight. We got #1 scores in Japan. And we are the only one telecom operator in Japan selected. We will continue our efforts so that we will be selected continuously. In December last year we got recognition in Nikkei. And also we got those recognitions by third parties. We will continue our efforts to contribute to the society through our business.Let me summarize today's presentation. First, we revised the full-year forecast upwards. Second, mobile revenue achieved turnaround. And we believe that we can achieve full year revenue growth 1 year ahead of plan. Third, we are progressing toward medium- to long-term ground, including investment in Cubic Telecom and building next generation social infrastructure. Last, but not the least, ESG highly evaluated by third parties.In this financial results we mentioned that we finally went through a [indiscernible], which is a challenge ofmobile revenue decrease. We will continue trying best and we appreciate your support. And we will maintain our corporate philosophy Information Revolution - Happiness for everyone. Thank you very much for your kind attention.
We will now open it up to a Q&A session. We'll take questions first from the floor, then from the Zoom media, followed by Zoom analysts, institutional investors. If you wish to ask a question by Zoom, please access Zoom by the previously announced procedure. Once you have accessed Zoom, please turn off the live webcast to prevent howling. And please make sure to unmute when you are once designated. We would like to receive as many questions as possible from as many people as possible, so please limit your questions to 2 per person. Once again, if you have been designated, please state your company name and your name first. Please raise your hand. In the middle line and sitting in the middle seat.
This is [ Ishikawa ], freelancer. First question, since December 27, so last year you started a new sales promotion. So once I saw it, I said wow, cool, SoftBank is doing this. But I was just at the same time concerned. How has this been taken? And also the response by MIC.
Well, this is a new [ talk zero ]support value support. So we conducted a campaign like [ 1 Yen 1 year ], but so due to the new regulations, we had told that it will be difficult to sell a new device. So we conducted challenges like this. But there was no objections from MIC. Among the customers, some of them want to change the model in a year or like 2 or 3 years average or until keep using the same model until it breaks down. So there are different types of customers. So we started from the options from 1 year and then 2 years options given. So we are taking different approaches. We want to actually accelerate the penetration of 5G so that we could avoid delaying 5G device. So that's one of our initiatives related to 5G penetration. So I think it turned to be positive. So we are trying to do whatever we could do as best.
So not related to today's presentation, but yesterday, the KDDI's investment in Lawson.
Well, that's a question. Could it have come from you, Ishikawa-san? Well KDDI, I think they made a really aggressive decision, but it's different from what I want to do, which means like what we are looking for as a economy is a different style. I mean, not to focus on a certain retailer's digital transformation, but retailer as a whole we want to focus on their entire digital transformation. That's why it was a bit different from what I want to do. So I'm sure there are a lot of business decisions behind on KDDI's side, but it's not a direction that SoftBank would be heading to.
Now next question.
[ Fujita ] from [ TV Tokyo ]. In the U.S., Apple lost Vision Pro. What's your expectation? And I wonder if you have a plan to develop a system or applications for Vision Pro?
Well, I think Vision Pro's concept is great, but I wonder, it may be difficult to sell at that price point and to popularize the product. But VR and XR wants a big giant like Apple moves. I think that trend will get accelerated. I think Apple made a first step. And we have a partnership with Apple in terms of selling their products and services, but when it comes to app, it looks like they are providing apps for consumers primarily. But we will watch how it goes to see whether Vision Pro will be more and more popularized in business field.
Next question. Going back to the middle row and three tables from the front.
This is [ Nagoche ] from [ NHK ]. The same time last year you said -- you mentioned the same thing, but it's regarding the wage increase. Do you have any plan for that?
Considering the next fiscal year, considering the one-time allowance, we will like to consider that. Last year, sorry, this fiscal year was 5.4%. So for the next fiscal year we are considering an adjusting to the 5.5% level. By leveraging stock options, we together with the employees as a whole, and we will like to take initiative to improve corporate value.
Related to this question. Who are the target of wage increase? How many employees? 5.5% of [ Baisap ], like Baisap would be how much of 5.5%? What is the background of conducting this wage increase?
Well, the number of employees for wage raise is about 24,000 employees, the direct employees of SBKK. And Baisap, so we cannot give you the details and figures yet. So let me answer just as 5.5%.
So what's the background of wage increase this time?
Of course, due to the increase of goods prices and also the request by the government for a wage increase and considering the social situation, we would like to create an environment where our employees could work reassured.
Next question, please.
[ Ono ] from [ Yomiuri Paper ]. I have questions about Noto Peninsula earthquake's impact on your business performance. You revised forecast upgrade? And how much damage was taken into account? Damage from the earthquake, I mean. The second question, you have been trying to restore the damage, what's your forecast going forward, how long it will take before restoring the network over there?
First, the amount of damage is around JPY 2 billion. Damage from the earthquake, we expect about JPY 2 billion. And that expected damage was taken into account into our revised forecast. So I don't think that earthquake will affect significantly to our business performance. With regards to the time to take for restoration, to be honest, I don't know. In the Great East Japan earthquake, which was a significant earthquake, we sent out a lot of people from north and south, people and also equipments. It was not very difficult to send out people and resources. But this time, sending resources in this area from the sea, for example, has been very challenging. When it comes to complete restoration, we have to wait until power was fully restored. So I hope that people working to restore the electricity and power will see the efforts bearing fruit. In the meantime, we will want generators to keep the current level of network as much as possible.
Any other questions?
This is [ Mattstaf ] from [ Nipponkesai Newspaper ]. My question is about Y!mobile. So your plan is 1 year ahead of your plan. So SoftBank and Y!mobile new plans have been launched. Is that because of these new plans launch or any other reasons?
Well, as I have told you before, now ARPU is going down, but the entire area is expanded and we were able to cover it. So the ARPU decline has been stopped for now. So of course, it's due to the impact of new plans. So now our new customer acquisition is doing well. So that's why it resulted in the increase in revenue.
Next question from the floor.
[ Yushino ], freelance journalist. I have 2 questions. First, about KDDI. Starting from next year, Sub-6 output will expand so that they can expand big city coverage and by eliminating interference. So I wonder if interference is eliminated, you can get some benefit or advantage. So I wonder by expanding or increasing the power level, do you have a plan to expand area coverage by increasing output power? The second about ARPU, which has been increasing, you said. Why do you think is that? Thanks to Pay-toku plan? Or what are the reasons why you see ARPU improving?
Thank you very much. SKY PerfecTV has been helping to address interference from the satellite, which will allow us to increase the power, then that should help expanding area coverage in big cities, especially SoftBank. We have 3 sectors deployment in big cities. I think that elimination of interference from the satellite will have a bigger positive impact to us. With regards to ARPU. Last year, in terms of third quarter, we saw JPY 210 decrease of ARPU, and this year's or 2023's third quarter we saw JPY 100 decrease of ARPU. In terms of Pay-toku, which should help increasing ARPU and Pay-toku has been doing pretty well. So that should give us a following wind to increase ARPU. And the plan has been welcomed by users. So I think that's primary reason why we are expecting ARPU increase. And we cannot disclose numbers in terms of Pay-toku's positive impact.
Any other questions from the floor.
[ Sugiyama ] from [ Nikkei Business ]. My first question is not related to this earnings results presentation. The other day, Docomo held explanation on the quality. And they talked about Osaka, the advertisement launched in Osaka maybe too exaggerating. So what do you think about that?
I was not aware of that. I did not know the details. But so far, like which carrier has better connection or not, all these things have been fought over among us. And right now, Opensignal or [ Agup Data ]. And yes, we hear that it's #1 right now. So I think the guys on the field became a little bit snobby. I think Docomo is working really hard. So not only SoftBank is the ones who have the better connections, but we are struggling each other.
So my second question is also related to LynYapoo, which had earnings results presentation yesterday. So how you would increase and improve their business in fiscal 2025? They could also target IPO. And also SMBC point linkage and all this economy acquisition is really fierce, competition is really fierce. So I want to hear your opinions on that.
Well, so I'm talking about prime IPO. So LynYapoo is to maintain prime IPO, and we also believe that it's important. And we have -- we are on the same page, and we are -- we intend to cooperate. So we have a solid intention to support that. And how to improve their business? Well, we are different companies, therefore it's not right for me to comment on it. But a little bit more. So yes, they do have a number of products and services, attained #1 levels. So but we should be more aggressively challenging just like before so that they don't really mind too much and focus on figure alone. So that would lead to a better result. So not to like focusing on manage, but to try and challenge. I really hope that you would -- they would go back to that kind of style.
In the interest of time, we will take only 2 more questions from the venue.
[ Sekiguchi ] from [ Keitai Watch ]. Maybe irrelevant to financial results. First question is about Rakuten. In the previous financial results announcement you mentioned potential support for Rakuten. I wonder if you have any update and -- or if you have any plan to do something regarding Rakuten.
Yes. Thank you for your question. About Rakuten, last time I casually mentioned my personal thought. And since then, I have been hearing that there was some discussion on the working level, but we don't think there is a huge progress since last financial announcement. Taking away roaming that they do with KDDI, that's not what we are thinking. Rakuten got the platinum band 700, which was very, very important band. Once they get the platinum band, I want them to make sure that the band is fully and most best used. That's a responsibility as MNO. So I hope that Rakuten will fulfill responsibility as an MVO to build cell sites on that spectrum band. Building sites and laying transmission lines are very, very challenging. So when it comes to construction or maybe we can lend towers or transmission lines or power but I think that Rakuten has capability to expand the coverage. And we are looking forward to talking with them.
Next question is about so-called NTT laws. I failed to ask KDDI yesterday about that. But last financial results since then, discussions around NTT laws, what's your thought again?
So 2025 is viewed as kind of a done deal. Currently 3 working groups are in operation. And the ministry and full-fledge discussion will start from fair competition perspective, from universal service perspective and from economic security perspective, those themed-based working group will start their work in fledged manner. We elect to express our opinions as needed. And if NTT law will be abolished, we will see how it will work. And what NTT possesses as so-called exceptional assets, and such exceptional assets, if they are at risk, it will be a huge issue from the country's perspectives. I think a very thorough discussion is desirable. And also the government announced they would support NTT [indiscernible] as much as JPY 45 billion. And I thought I knew it. Why? Because our semiconductor sector has been going through ups and downs. And if [ semiconductor ] fails, if optical fiber price will increase, that's something that should never happen. So we will do our best to express opinions.
One more person from the floor.
This is [ Asano ]. And I have 2 questions. The first question is about IOWN, just been discussed. So the technology similar to IOWN has been utilized. So for IOWN, do you have any intention to cooperate? And so the IOWN is actually led by NTT. Do you have an intention to cooperate in that moving forward? And the second is about Cubic Telecom, it's IoT for connected cars, which KDDI is also focusing on. I think it has overlap. So what is your purpose of that? And what do you think about advantage over KDDI?
First question about IOWN. So IOWN, using photo electric fusion and then the idea to make it to semiconductor. The idea, I agree on. I've never had any objections. So if this could make it into to achieve a lower power consumption, that will be a great technology. So I really hope that NTT would pursue achieving this. But there is another reason for us not joining in IOWN team. So because of the contract content, I cannot disclose in details. So there is some limitations mentioned in the contract. So as for SoftBank Corporation alone, we are able to join it. So I've been telling that. And in that process, the NTT law topic came out. But the technology-wise, I really respect and then the direction is the same. But NTT is the one that we really openly sit together and discuss is a little bit of a question mark. So the second question about Cubic Telecom, the platform structure is different from KDDI's. So the platform structure that telecommunications would do, the platform for Japan and other countries were different ones. The great thing about Cubic Telecoms is that over 190 countries they have deployed already. So if any automaker wants to sell to a certain overseas market and like in the Middle East or in Russia, for example, or in the U.K., any country, so Cubic Telecom has already completed connections. And so automakers, if they want to sell their cars and they were able to sell in those countries immediately. So this Cubic Telecom has a different way of approaching. So I don't want to be too exaggerating. But yes, we should be able to compete well with KDDI.
Thank you very much. That's all from the venue. Next, we would like to take questions from participants on Zoom. If you wish to ask a question, please press raise-hand bottom. First, [ Hugo-san ] from Bloomberg.
Hugo from Bloomberg. So business performance, stock price have been improving. And I think this financial results announcement, I felt your confidence. I have 2 questions. First is about PayPay. Like Miyakawa-san mentioned, you expect full year profitability. You mentioned before that that while they were losing money, it was difficult for them to go IPO. But now I think that they are ready for IPO because they are now profitable. So the question is, do you want to list PayPay in 2024? And next, in the connected car sector, do you have any plan in the future, like M&A?
First, about PayPay. Full year profitability, what we refer to is as EBIT positive. In that sense, maybe a little bit later. Once EBITDA is positive, whereas amortization was very small, so I think that we can have more confidence. When it comes to IPO, yes. I advised PayPay before that, you may want to go public once you start making money. Which is coming closer in terms of when they can make money. By the end of FY 2024, whether they should go public or not, nothing has been decided yet. From SoftBank's perspective, all we need to do is to figure out the best timing. And in order to unleash their corporate value, we need to of course be selective in terms of timing of IPO. And the growth should be continuously the first priority. In terms of payment, I think there are a runaway success, but in different areas, they should go even further so that we can decide when or if PayPay can go public. About connected car or Cubic Telecom to be specific, in fact in that connected car sector, we have been making investment, though small ticket size. Connected vehicle or Cubic Telecom, the size was big, so we made announcement. But SoftBank has been investing in many businesses in this sector, not only Cubic Telecom but also others. So SoftBank Group and SoftBank [ KK ], now is the time to really deliver synergies with those invested businesses. When SoftBank KK goes global, we would love to be helped and supported by our parent company so that we can go big. Again, about M&A. We don't have any deal that we are significantly or seriously considering at the moment, but we are open to M&A in the future.
And next question is [ Koguchi-san ] from [ CNET Japan ]. Please unmute and ask your question, please.
About smart phones and satellite direct connections. KDDI said they would start providing service this year. And we just experienced the earthquake in the Noto Peninsula. It would be very helpful in the event of disaster, natural disaster. So as for SoftBank, do you have any consideration of providing mobile direct service? So far, Mr. Miyakawa said that you would be focusing on HAPS.
Yes, I have a big mind change. And as for the mobile direct from the air, I have been talking about it pretty severely. And so low-orbit satellites and mobile direct would be realized sooner or later. And we are also exploring the possibility. And from any angles possible, we have communicating with all these relevant companies. And what satellite could do and HAPS could do, they have different purposes and then use. We would like to concurrently work on both.
Thank you very much. Next, we'd like to take questions from analysts or institutional investors. First, Kikuchi-san from SMBC Securities.
About standalone net income, you mentioned JPY 100 billion, which is reassuring. Looking at Consumer and Enterprise businesses, if those businesses -- only those business go well, it cannot reach JPY 100 billion. And why do you think net income should increase by JPY 100 billion? And what are you going to do next year and the year after? What's your forecast of net income in next term and beyond. On top of that, I suspect you will make lot of investments going forward while you want to have net income at certain level. I think your corporate -- current corporate structure has some limitation to deliver JPY 100 billion net income standalone or even more. So my question is, what's your view with regards to the group structure going forward?
Thank you for your questions. At the last financial results announcement, there was a question about the stand-alone income. And contribution from subsidiaries were anticipated back then. So I shared with you my confidence. We have been preparing since the beginning of the fiscal year, so over JPY 100 billion. Distribution from subsidiaries, which we had not been given before, we expect distribution from subsidiaries. And also later, I'm going to ask Fujihara-san, CFO, to talk more. And about the forecast of net income going forward, which I will talk about, not Fujihara-san. In fact, at the beginning of the fiscal year, we said JPY 780 billion, which was rather a stretch goal, and we wanted to achieve the goal even though we knew it was very stretchy. But we have been pretty well, better than we expected. So next term and onward compared to this year, I would think easier than this year. So our midterm plan, I could delegate executing the midterm plan. And I should start working on the next midterm plan. For net income. As far as dividend is concerned, we believe that we should have enough net income to deliver dividends as we promised. About group synergy or group structure that you touched upon, we have been running a group synergy meetings since the days of [ Mioti-san ]. And we have serious discussion about our portfolio. Over 300 group companies are there. We need to make sure that there is a loss from divisions and whether the current level of being public is better or not. So once we see a direction, we'd like to communicate with you as much as possible. Fujihara-san, could you elaborate on JPY 100 billion net income expectation?
Yes. For net income, JPY 100 billion that we have been talking about, thankfully from distribution from subsidiaries. On top of that, we accounted for amortization before. So loss carried forward can be utilized. So JPY 100 billion is mainly thanks to dividends or contribution from subsidiaries. Going forward, I think that we'll continuously contributing to us. So that's why we expect improved income. And also, we have not used up all loss carry forward yet. So I believe that the net income that is enough to deliver dividends, should be possible or at least we want to make it happen. And we need to show dividend ratio and free cash flow and income distributable to dividends. Those are some of the KPIs that we will keep focusing on.
Thank you so much. Due to the time constraint, we would like to close Q&A session. Thank you so much for a lot of questions. We would like to conclude the presentation of earnings results for the 9 months ended December 31, 2023, of SoftBank Corporation. Please refer to our website for today's presentation, which will be available on demand on our website later today. Once again, thank you very much for taking time out of your busy schedule to participate in SoftBank Corporation's earnings results presentation for the 9 months ended December 31, 2023. Thank you so much.[Statements in English on this transcript were spoken by an interpreter present on the live call.]