Softbank Group Corp. · TSE:9984
Softbank — H1 FY2011 Earnings Presentation
82 slides from Softbank's earnings presentation, Oct 27, 2011
Slide 1: Earnings Results for the Six-month Period Ended September 30, 2011
Earnings Results for the Six-month Period Ended September 30, 2011 (April to September 2011) October 27, 2011 SOFTBANK CORP.
Slide 2: Disclaimer
Disclaimer This material was prepared based on information available and views held at the time it was made. Statements in this material that are not historical facts, including, without limitation, plans, forecasts and strategies are “forward-looking statements”. Forward-looking statements are by t
Slide 3: 3 Years have passed since Lehman shock
3 Years have passed since Lehman shock 2
Slide 4: Accomplished 6 months before the target date
JPY 1.9t Commitment (1) Consolidated Net Interest-bearing Debt Accomplished 6 months before the target date Half (by March 2012) JPY 0.7t Mar. 2008 Sept. 2011 3
Slide 5: Commitment (2) Consolidated Free Cash Flow
Aggregate JPY 1.18t Commitment (2) FY2011/H1 Consolidated Free Cash Flow JPY 235.2bn Target of JPY 1t (3 year aggregate) FY2010 Accomplished 6 months JPY 561.3bn before target date FY2009 JPY 390.8bn 4
Slide 6: Achieved commitments for 3 consecutive years
JPY 629.1bn Commitment (3) Consolidated Operating Income Original forecast JPY 465.8bn JPY 500.0bn JPY 420.0bn Achieved JPY 359.1bn commitments for 3 JPY 340.0bn consecutive years FY2008 FY2009 FY2010 5
Slide 7: Operating income x2 in 3 years
JPY 373.2bn Consolidated Operating Income x2 in 3 years JPY 180.0bn FY2008/H1 FY2011/H1 6
Slide 8: Operating Income Increase Ranking
Operating Income Increase Ranking (FY08/H1 vs FY11/H1 forecast) Rank Company Name Increment (JPY bn) 1 SOFTBANK (actual results) 193.2 2 Takeda Pharmaceutical 140.9 3 years increment 3 NISSAN MOTOR 97.9 #1 4 Mitsubishi Chemical Holdings 40.9 domestically 5 TORAY 29.3 6 FANUC (actual results) 28.8 7
Slide 9: Consolidated Earnings Results
Consolidated Earnings Results 8
Slide 10: Highlights
Highlights 1. Net income JPY 217.2bn (YoY x2.8) a record high for 3 consecutive periods 2. Operating income JPY 373.2bn (YoY 18 ) a record high for 6 consecutive periods 9
Slide 11: Consolidated Net Sales
1,535.6 Consolidated (JPY bn) 1,465.0 Net Sales Record high for 2 consecutive periods 5% increase 3 Telecommunications businesses (Mobile communications, Broadband Infrastructure, Fixed-line Telecommunications) Internet Culture Others 0 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1
Slide 12: Consolidated EBITDA
533.1 (JPY bn) Consolidated EBITDA 459.3 Record high for 8 consecutive periods 16% increase 3 Telecommunications businesses (Mobile communications, Broadband Infrastructure, Fixed-line Telecommunications) Internet Culture 0 Others 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1
Slide 13: Consolidated Operating Income
373.2 Consolidated (JPY bn) 315.5 Operating Income Record high for 6 consecutive periods 18% increase 3 Telecommunications businesses (Mobile communications, Broadband Infrastructure, Fixed-line Telecommunications) Internet Culture 0 Others 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1
Slide 14: Consolidated Ordinary Income
(JPY bn) 314.4 Consolidated Ordinary Income 253.8 Record high for 6 consecutive periods 24% increase 0 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 13
Slide 15: Consolidated Net Income
217.2 Consolidated (JPY bn) Net Income Record high for 3 consecutive 76.8 periods x2.8 YoY 0 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 14
Slide 16: Consolidated Free Cash Flow
235.2 Consolidated (JPY bn) 219.6 Free Cash Flow Record high for 3 consecutive periods 0 2008 ’09 ’10 ’11 (FY) H1 H1 H1 H1 15
Slide 17: Net Interest-bearing Debt/EBITDA multiple x0.7
(JPY t) JPY 2.1t Net Interest-bearing Debt 2 /EBITDA multiple x0.7 EBITDA 1 Approx. JPY 1t Net interest-bearing debt JPY 728.7bn 2006 ’07 ’08 ’09 ’10 ’11 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 *EBITDA: sum of FY2010/H2 and FY2011/H1 16
Slide 18: Net Interest-bearing Debt/EBITDA Multiple
Net Interest-bearing Debt/EBITDA Multiple SOFTBANK x0.7 Panasonic x0.8 KDDI x0.9 NTT x0.9 TOSHIBA x1.6 SHARP x1.7 HITACHI x2.4 Kirin HD x2.5 AEON x2.6 NIPPON STEEL x2.7 (Source) Created by SOFTBANK CORP. based on Japan Company Handbook. Based on recent net interest-bearing debt, EBITDA except for SO
Slide 19: Commitment Unchanged
Commitment to Reduce Net 2.4t Interest-bearing Debt 1.9t 1.5t Commitment 1.2t Unchanged 0.7t Zero June 2006 FY2008 FY2009 FY2010 Sept. 2011 FY2014 (target) 18
Slide 20: Summary of Consolidated Earnings Results
Summary of Consolidated Earnings Results FY10/H1 FY11/H1 Increment YoY (JPY bn) (Apr. - Sept. 2010) (Apr. - Sept. 2011) Net sales 1,465.0 1,535.6 +70.6 105% EBITDA 459.3 533.1 +73.7 116% Operating 315.5 373.2 +57.7 118% income Ordinary 253.8 314.4 +60.6 124% income Net income 76.8 217.2 +140.4 283%
Slide 21: Consolidated EBITDA vs. peers
Consolidated EBITDA (JPY bn) NTT DOCOMO (FY10/H1) 860.7 533.1 SOFTBANK 475.2 KDDI 2005 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1 *Created by SOFTBANK CORP. based on respective companies’ publicly available information 20
Slide 22: Consolidated Operating Income vs. peers
(JPY bn) Consolidated Operating Income NTT DOCOMO (FY10/H1) 531.5 373.2 SOFTBANK 266.7 KDDI 2005 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1 *Created by SOFTBANK CORP. based on respective companies’ publicly available information 21
Slide 23: Consolidated Net Income vs. peers
(JPY bn) Consolidated Net Income NTT DOCOMO (FY10/H1) 309.7 217.2 SOFTBANK 140.1 KDDI Surpassed for the first time 2005 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1 *Created by SOFTBANK CORP. based on respective companies’ publicly available information 22
Slide 24: Mobile Communications Business
Mobile Communications Business 23
Slide 25: 1,490k Net adds
1,490k Net adds Apr. - Sept. 980k 660k au NTT DOCOMO SOFTBANK 24
Slide 26: Cumulative subscribers x2 in 5 years
(mil) 31.05mil Cumulative 30 Subscribers WILLCOM x2 in 5 years 20 15.22mil Vodafone Japan SOFTBANK 10 Apr. 2006 Sept. 2011 25
Slide 27: Data ARPU steady growth
3,000 Data ARPU (FY10/Q2) (JPY) 2,540 2,520 SOFTBANK NTT DOCOMO 2,460 au 2,000 Steady growth Vodafone Japan 1,000 2005 ’06 ’07 ’08 ’09 ’10 ’11 (FY) Q2 Q2 Q2 Q2 Q2 Q2 Q2 *Created by SOFTBANK CORP. based on respective companies’ publicly available information 26
Slide 28: Mobile Communications Telecom Revenue
Mobile Communications Business (JPY bn) Telecom Revenue 711.8 625.3 Steady growth 14% increase YoY 0 2007 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 27
Slide 29: Mobile Communications Business Operating Income
Mobile (JPY bn) Communications Business 200 Operating Income 150 Vodafone Japan 100 43.5 50 0 2002 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 28
Slide 30: Mobile Operating Income Significant increase
250.0 Mobile (JPY bn) Communications 207.2 Business 200 Operating Income Significant 150 Vodafone Japan SOFTBANK 100 increase 43.5 21% increase 50 YoY 0 2002 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 29
Slide 31: Mobile Operating Income Surpassed for the first time
Mobile Communications Business Operating Income (JPY bn) 600 NTT DOCOMO (FY10/H1) 531.4 400 250.0 SOFTBANK 200 231.1 au Surpassed for the first time 2006 ’07 ’08 ’09 ’10 ’11 (FY) H1 H1 H1 H1 H1 H1 *Created by SOFTBANK CORP. based on respective companies’ publicly available information 30
Slide 32: WILLCOM Net Additions Turnaround to increase
Net Additions WILLCOM (6 months) (k) 400k Turnaround 300 to increase 0 -300 H2 H1 H2 H1 H2 H1 H2 H1 2007 2008 2009 2010 2011 31
Slide 33: Telecom Service YoY Rate World's No.1
Telecom Service YoY Rate (FY11/H1) SOFTBANK 14% China Mobile 8% AT&T 8% America Movil 7% SingTel FY11/Q1 7% Verizon 6% World’s NTT DOCOMO FY11/Q1 -1% No1 au -7% 32 *Comparison of high ranking market cap mobile operators worldwide.
Slide 34: Operating Income YoY Rate World's No.1
Operating Income YoY Rate (FY11/H1) SOFTBANK 21% NTT DOCOMO FY11/Q1 11% China Mobile 2% Verizon 0.3% AT&T -2% World’s America Movil -3% No.1 au -7% *Comparison of high ranking market cap mobile operators worldwide. 33
Slide 35: Data ARPU Ratio YoY World's No.1
Data ARPU Ratio YoY (FY11/Q2) SOFTBANK 58% au 54% NTT DOCOMO FY11/Q1 53% Verizon Including SMS 39% AT&T Including SMS 38% World’s 19% Vodafone UK No.1 SingTel FY11/Q1 19% France Telecom 18% Telefonica 18% *Comparison of high ranking market cap mobile operators worldwide. 34
Slide 36: Can SOFTBANK continue to grow?
Can SOFTBANK continue to grow? 35
Slide 37: iPhone 4S Comparison Mega Store Survey Example
iPhone 4S Comparison Mega Store Survey Example If you were to buy an iPhone 4S which one would you buy? (Translated for reference only) 36
Slide 38: The fog has cleared
The fog has cleared 37
Slide 39: iPhone 4S
iPhone 4S Launched October 14 Record high preorders 38
Slide 40: SOFTBANK au iPhone 4S
SOFTBANK au iPhone 4S iPhone 4S 39
Slide 41: SOFTBANK iPhone 4S
SOFTBANK iPhone 4S Realtime incoming text messaging SOFTBANK possible Best Data communication while talking SOFTBANK possible smartphone Talk while using apps SOFTBANK possible ever Emoticon email to all operators SOFTBANK possible FaceTime SOFTBANK possible iMessage SOFTBANK possible Visual Voicema
Slide 42: No.1 Operator in Monthly Net Adds (Japan)
No.1 Operator in Monthly Net Adds (Japan) 2007 2008 2009 2010 2011 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 41
Slide 43: Tackle the last hurdle
Tackle the last hurdle 42
Slide 44: Number of Base Stations x8 in 5 years
160k No. of Base Stations 120k x8 in 5 years 20k 0 2006 ’06 ’07 ’07 ’08 ’08 ’09 ’09 ’10 ’10 ’11 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 (FY) 43 *Excluding home femtocell and home repeaters.
Slide 45: Coverage Ratio at Home improved to par level
(%) Coverage Ratio at Home 100 NTT DOCOMO au SOFTBANK 95 Improved to par level 90 85 Source Network coverage survey executed by SOFTBANK CORP. Mar. 2010 Sept. 2011 Sept. 2011, n=3,000 44
Slide 46: Overall Connection Ratio par to DOCOMO
(%) Overall Connection Ratio 100 NTT DOCOMO SOFTBANK 95 Connection ratio 90 par to DOCOMO 85 2010 2011 2011 Nov. May Sept. 45 *Survey by external research company (n=100k/month)
Slide 47: Number of Wi-Fi Access Points
Number of Wi-Fi Access Points SOFTBANK 125,000 (As of Oct. 25, 2011) au Approx.30,000 NTT DOCOMO Approx. 6,800 46 *Surveyed by SOFTBANK CORP.
Slide 48: Wireless LAN on Tokyo Metro
In addition to Toei Lines Start wireless LAN on Tokyo Metro Free use in all stations of all lines Beginning November 1st 47
Slide 49: Scheduled to apply for 900MHz bandwidth
Scheduled to apply for 900MHz bandwidth When license obtained begin service in summer of 2012 48
Slide 50: Consolidated CAPEX JPY 1t
(JPY bn) 500.0 500.0 Consolidated 420.5 CAPEX JPY 1t in 2 years 0 2006 ’07 ’08 ’09 ’10 ’11 ’12 (FY) 49 (plan)
Slide 51: Confident about further growth
Confident about further growth 50
Slide 52: SoftBank Internet Company
SoftBank Internet Company 51
Slide 53: Internet Companies Group
900 Internet Companies Group 52
Slide 54: Change in Competitive Environment
Change in Competitive Environment 2G 3G 4G Mobile phone Mobile Internet Telecom company Internet company 53
Slide 55: Technological Evolution
Technological Evolution Around 10 Years Ago Now x250 CPU 30 DMIPS 7,500 DMIPS x50 1,000k dots LCD 20k dots Communication 64 Kbps x650 42 Mbps speed 54
Slide 56: From Voice Device to Internet Machine
From Voice Device to Internet Machine Around 10 Years Ago Now Number of 200i-mode etc. x4,000 applications 800,000 10 years ago: total number of i appli, ezplus and J-Sky appli at their launch Now: total number of AndroidMarket and AppStore as of August 2011 55
Slide 57: Internet Machine
Internet Machine Smartphone Tablet 56
Slide 58: Entering Internet Machine Era: Smartphones
Forecast No. of Shipped Smartphones Worldwide (bn) 2.5 Entering Internet 2.0 Conventional handset 90% Machine Era 1.5 1.0 Smartphone 0.5 33% 0 2011 2020 (CY) (Source) “2011 Survey Results on Smartphone Market” issued by Yano Research Institute in July 2011 57 Shipment forecast between 2017 and 2020
Slide 59: Entering Internet Machine Era: Tablets and PCs
(mil) Forecast No. of Shipped PCs Worldwide 800 Entering Internet Machine Era 600 PC 70% 400 200 19% Tablet 0 2011 2020 (CY) (Source) Number of tablet shipment: “2011 Survey Results on Tablet Market” issued by Yano Research Institute in July 2011 Number of PC shipment: “Worldwide Quarterly PC Tracke
Slide 60: Ratio of Smartphones Announced
Ratio of Smartphones Announced 100% 92% SOFTBANK 60% NTT DOCOMO 50% 43% au 16% 0% Summer 2010 Winter 2010 to Summer 2011 Spring 2011 Winter 2011 to *Comparison among mobile phones 59 Spring 2012 *Created by SOFTBANK CORP. based on respective companies’ publicly available information
Slide 61: Tablet Sales Share (Japan)
Tablet Sales Share (Japan) 80% Approx. Others monopoly SOFTBANK 77% 60 Source Created by SOFTBANK CORP. based on external research of number of tablets with 3G functionality sold at the major electronic retailers (Apr. - Sept. 2011)
Slide 62: Data Becomes Source of Revenue
(JPY) 6,000 Data Becomes Source of Revenue 4,000 Voice ARPU 2,000 Data ARPU 2006 ’07 ’08 ’09 ’10 ’11 (FY) 61 (Q2)
Slide 63: Further evolution as an Internet company
Further evolution as an Internet company 62
Slide 64: Alibaba Group stock value JPY 2.7t
Alibaba Group stock value * JPY 2.7t Assumed market *Alibaba Group stock value ($35.0bn) 63 value *Converted at 1$ 77JPY
Slide 65: Alibaba Group stock value vs SB equity
Alibaba Group stock value * JPY 2.7t SB equity (900.0bn) Assumed market *Alibaba Group stock value ($35.0bn) 64 value *Converted at 1$ 77JPY
Slide 66: JPY 8t Alibaba Group stock value
JPY 8t Alibaba Group stock value * JPY 2.7t SB equity (900.0bn) Assumed market Market *Alibaba Group stock value ($35.0bn) 65 value capitalization *Converted at 1$ 77JPY
Slide 67: Taobao Shopping Transaction Volume
Shopping Transaction (JPY t) Volume JPY 5t Taobao 5 (Alibaba Group) 4 3 JPY 2.8t 2 1 Source 2007-2009 Taobao shopping transaction volume disclosed by Alibaba 2007 ’08 ’09 ’10 (FY) 2010: Reuters press release Amazon: shopping transaction volume disclosed in annual report 66
Slide 68: One of the largest mobile ad networks in the world
One of the largest mobile ad networks in the world Reaches 340mil consumers Ad impressions 47bn/month 67
Slide 69: Strategic Investment in InMobi
Strategic Investment in InMobi Initial investment $100mil Sept. 2011 Additional investment $100mil Apr. 2012 Will be largest shareholder 68
Slide 70: Worldwide User Reach 340mil users
(mil) 00,000,000 Worldwide User Reach 400 340mil users 00,000,000 300 Rapid increase 00,000,000 200 00,000,000 100 0 2007 ’08 ’09 ’10 ’11 (CY) establish Aug. Aug. Aug. Aug. 69
Slide 71: Worldwide Mobile Ad Market
Worldwide Mobile Ad Market JPY 670.0bn Growing rapidly JPY 215.0bn (Source) PWC Global entertainment and media outlook 2011-2015 0 (CY) 2010 2011 2012 2013 2014 2015 (forecast) 70
Slide 72: Establish incubation JV
bhart! = SoftBank _ Establish incubation JV
Slide 73: India Mobile Operator Ranking
India Mobile Operator Ranking Users No.1 in Rank Company Name (mil) 1 2 Bharti Airtel Reliance Communications 170 150 India 3 Vodafone 140 4 Idea Cellular 100 5 BSNL 90 6 Tata Teleservices 90 (Source) Forecast for the end of Sept. 2011 by Wireless Intelligence 72
Slide 74: Mobile Phone Subscribers
Mobile Phone Subscribers (bn) 15 1.35bn Becoming global #1 1.22bn mobile market 1.0 10 0.55 0.37bn 0.14bn 0 2000 ’05 ’10 ’15 (CY) 73 (Source) Wireless Intelligence (forecast)
Slide 75: Established an Incubation JV (Bharti SoftBank)
Established an Incubation JV 50 50 (Bharti SoftBank) 74
Slide 76: Deploy Mobile Internet Businesses in India
Social Media Game Commerce Deploy Mobile Internet Businesses in India 75
Slide 77: SOFTBANK will continue to grow
SOFTBANK will continue to grow 76
Slide 78: Commitments Unchanged
Commitments Unchanged No. of lines No. of lines 30mil 40mil Consolidated Consolidated EBITDA operating income JPY 1t JPY 1t Net interest-bearing debt Half Zero FY11 FY14 FY1X 77
Slide 79: Which One Will Grow? Telecom or Internet Company
Which One Will Grow? Telecom or Internet Company Company 78
Slide 80: Towards World's No.1 Mobile Internet
Towards World’s No.1 Mobile Internet 79
Slide 81: SoftBank
SoftBank
Slide 82: Accounting standards and definition of terms
1. Application of accounting standard for disclosure on segments The “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” and related “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” are applied fro