Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2011 Earnings Presentation
80 slides from Softbank's earnings presentation, Jul 28, 2011
Slide 1: Earnings Results for the Three-month Period Ended June 30, 2011
Earnings Results for the Three-month Period Ended June 30, 2011 July 28, 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: Highlights
Highlights 1) Operating income: record high for 6 consecutive periods 2) Net income: record high; 5x YoY 3) Refinancing: financial strength significantly improved 2
Slide 4: Summary of Consolidated Earnings Results
Summary of Consolidated Earnings Results (JPY bn) FY10/Q1 FY11/Q1 Increment YoY (Apr. - June 10) (Apr. - June 11) Net sales 700.8 764.2 +63.3 109% EBITDA 227.2 254.2 +26.9 112% Operating income 156.6 175.8 +19.2 112% Ordinary income 126.8 151.2 +24.3 119% Net income 19.4 94.7 +75.3 488% 3
Slide 5: Consolidated Net Sales (Apr. - June)
Consolidated Net Sales (Apr. - June) (JPY bn) 764.2 700.8 Record high for 3 consecutive periods 9% increase 3 Telecommunications businesses (Mobile Communications, Broadband Infrastructure, Fixed-line Telecommunications) Internet Culture Others 0 03 04 05 06 07 08 09 10 11 (FY) Q1 Q1 Q1 Q1 Q1 Q1 Q1
Slide 6: Consolidated EBITDA (Apr. - June)
Consolidated EBITDA (Apr. - June) (JPY bn) 254.2 227.2 Record high for 8 consecutive periods 12% increase 3 Telecommunications businesses (Mobile Communications, Broadband Infrastructure, Fixed-line Telecommunications) Internet Culture 0 Others 03 04 05 06 07 08 09 10 11 (FY) 5 Q1 Q1 Q1 Q1 Q1 Q1 Q1
Slide 7: Consolidated Operating Income (Apr. - June)
Consolidated Operating Income (Apr. - June) (JPY bn) 175.8 156.6 Record high for 6 consecutive periods 12% increase 3 Telecommunications businesses (Mobile Communications, Broadband Infrastructure, Fixed-line Telecommunications) Internet Culture 0 Others 03 04 05 06 07 08 09 10 11 (FY) Q1 Q1 Q1 Q1 Q
Slide 8: Operating Income vs KDDI
(JPY bn) Consolidated Operating Income 175.8 SOFTBANK 140.1 KDDI Record high for 6 consecutive periods 0 05 06 07 08 09 10 11 (FY) Q1 Q1 Q1 Q1 Q1 Q1 Q1 *Created by SOFTBANK CORP. based on respective companies’ publicly available information. 7
Slide 9: Consolidated Ordinary Income (Apr. - June)
Consolidated Ordinary Income (Apr. - June) (JPY bn) 151.2 126.8 Record high for 6 consecutive periods 19% increase 0 03 04 05 06 07 08 09 10 11 (FY) Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 8
Slide 10: Consolidated Net Income (Apr. - June)
Consolidated Net Income (Apr. - June) (JPY bn) 94.7 Dilution gain from changes in equity interest 13.9 from Renren IPO etc. special income Record high 19.4 5x YoY 0 03 04 05 06 07 08 09 10 11 (FY) Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 9
Slide 11: Consolidated Net Income: Surpassed KDDI
Consolidated Net Income (JPY bn) 94.7 SOFTBANK 71.9 KDDI Surpassed KDDI 0 05 06 07 08 09 10 11 (FY) Q1 Q1 Q1 Q1 Q1 Q1 Q1 10 *Created by SOFTBANK CORP. based on respective companies’ publicly available information.
Slide 12: Cash Flow
Cash Flow (JPY bn) FY10/Q1 FY11/Q1 Decrement (Apr. - June 10) (Apr. - June 11) Operating cash flow 132.9 107.0 (25.9) Free cash flow 57.7 30.8 (26.9) Impact of the sales of installment sales receivables +64.6 +26.2 (38.3) (reason for increase in cash flow) 11
Slide 13: Consolidated Net Interest-bearing Debt: JPY 1.3t reduction
(JPY) 2.4t Consolidated Net Interest-bearing Debt 1.1t JPY 1.3t reduction in 5 years 0 June 2006 June 2011 (peak) 12
Slide 14: Refinance of Acquisition Finance of Vodafone Japan
Refinance of Acquisition Finance of Vodafone Japan SBM Loan After Refinance Borrower SOFTBANK MOBILE SOFTBANK Scheme Whole business securitization Syndicated loan Interest rate Approx. 5% (as of June 2011) Approx. 1.4% (weighted average) (at inception) Amount JPY 653.9bn JPY 550.0bn (balance as of t
Slide 15: Interest Payments Reduced by approx. JPY 60bn
(JPY bn) Interest Payments for Acquisition 400 40 Finance of Vodafone Japan 30 300 Remaining interest payments Reduced by 20 200 approx. JPY 60bn SBM loan interest paid for epayment assumption in Apr. - Oct. 2011 minimum case 100 10 (finish repaying in Apr. 2015 After refinance (finish repaying in M
Slide 16: SOFTBANK's Rating Upgrade
SOFTBANK’s Rating First investment-grade rating from overseas rating agency BBB-/Baa3 S&P(BBB-) Upgrade (July 2011) BB+/Ba1 Currently under review BB/Ba2 for possible upgrade Moody’s (Ba2) BB-/Ba3 06 07 08 09 10 11 (CY) 15
Slide 17: Commitment to Reduce Net Interest-bearing Debt
Commitment to Reduce 2.4t Net Interest-bearing Debt 1.9t Steady progress 1.5t 1.1t Half Zero June 06 FY08 June 10 June 11 FY11 FY14 (target) 16 (target) *‘Half’ refers to half the end of FY08 level.
Slide 18: Mobile Communications Business
Mobile Communications Business 17
Slide 19: Net Subscriber Additions
Net Subscriber Additions 730k (Apr. - June) Overwhelmingly 410k No.1 350k 0 au NTT DOCOMO SOFTBANK 18
Slide 20: MNP Port In/Out
190k MNP Port In/Out (Apr. - June) Only winner 0 -70k -120k au NTT DOCOMO SOFTBANK 19
Slide 21: WILLCOM's Net Additions (Quarterly)
WILLCOM’s Net Additions (Quarterly) (k) 200 First >200k net adds in 5 years 0 -200 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2007 2008 2009 2010 2011 20
Slide 22: Cumulative Subscribers 30.13 mil
Cumulative Subscribers 30.13mil (mil) 3,000 30 WILLCOM 2,500 25 SOFTBANK 2,000 20 Vodafone Japan 1,500 15 1,000 10 21 2006/4 2011/6
Slide 23: Data ARPU: Exceeded KDDI
3,000 Data ARPU (JPY) NTT DOCOMO 2,440 SOFTBANK 2,400 au Exceeded 2,000 KDDI Vodafone Japan 1,000 05 06 07 08 09 10 11 (FY) Q1 Q1 Q1 Q1 Q1 Q1 Q1 22 *Created by SOFTBANK CORP. based on respective companies’ publicly available information.
Slide 24: Data ARPU Ratio (FY2010)
Data ARPU Ratio (FY2010) SOFTBANK FY11/Q 58% au FY11/Q 52% NTT DOCOMO 50% Vodafone UK including SMS 42% SingTel including SMS 39% Verizon including SMS 35% World AT&T including SMS 34% No.1 France Telecom including SMS 29% Deutsche Telekom including SMS 29% 23 *Comparison of global mobile operators
Slide 25: Mobile Communications Telecom Revenue
Mobile Communications Business (JPY bn) Telecom Revenue (Apr. - June) 347.5 307.5 Sustaining growth 13% increase YoY 0 08 09 10 11 (FY) 24 Q1 Q1 Q1 Q1
Slide 26: Telecom Revenue Rate of Increment (FY2010)
Telecom Revenue Rate of Increment (FY2010) SOFTBANK FY11/Q1 13% AT&T 10% America Movil 8% SingTel 7% World China Mobile Verizon 7% No.1 7% NTT DOCOMO -1% au -7% FY11/Q1 25 *Comparison of global mobile operators with highest market cap.
Slide 27: Mobile Communications Operating Income
Mobile Communications Business (JPY bn) Operating Income 120 116.4 90 Significant 60 Vodafone Japan increase 30 27.2 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 *FY03-05 data created by SOFTBANK CORP. based on Vodafone K.K. company data. 26 03 04 05 06 07 08 09 10 11 (FY)
Slide 28: CM Preference Ranking Triple Crown Winners
CM Preference Ranking Triple Crown Winners (by company/brand/production) Nov. 2006 June 2007 NTT DOCOMO June 2009 Aug. 2009 Won Triple Crown Aug. 2007 Sept. 2007 Oct. 2009 Jan. 2010 Aflac 28 times/ 33 surveys After change of brand to SoftBank Oct. 2007 Mar. 2010 in October 2006 Nov. 2007 Sept. 2010
Slide 29: Pleasing - Appealing Companies (June)
Pleasing - Appealing Companies (June) No.1 for 1st SOFTBANK 3 consecutive months 2nd UNIQLO 3rd LAWSON 4th YAMATO TRANSPORT 5th SUNTORY (Source) Company likability survey issued by Nikkei BP Consulting, Inc. (June). 28
Slide 30: Summary of FY2011/Q1
Summary of FY2011/Q1 Revenue & profit increase with record high profit Significantly improved capital structure Continue robust growth trend in mobile communications business 29
Slide 31: Initiatives for Renewable Energy
Initiatives for Renewable Energy 30
Slide 32: Renewable Energy Governors' Alliance
Participating local governments Renewable Energy 35 /47 Governors’ Alliance Established July 13, 2011 31
Slide 33: Model Case Introduction
Model Case Introduction Mega solar Wind farm Geothermal 32
Slide 34: Build Mega Solar Test Site
Build Mega Solar Test Site Obihiro City, Hokkaido Break ground in 2011 (plan) 33
Slide 35: Conditions for Renewable Energy Business
Conditions for Renewable Energy Business No overall change in financial commitments Limited impact on consolidated results 34
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Slide 37: True Identity of SOFTBANK
True Identity of SOFTBANK 36
Slide 38: Press Conference on Acquisition of Vodafone K.K.
Press Conference on Acquisition of Vodafone K.K. March 2006 37
Slide 39: Don't call us a telecom company.
Don’t call us a telecom company. March 2006 38
Slide 40: Distribution Publishing Portal
Distribution Publishing Portal Fixed-line Mobile Broadband Communications Communications 39
Slide 41: Every business contributes to the mission of becoming No.1 Internet company
Every business within the Group contributes to the mission of becoming No.1 Internet company. July 2011 40
Slide 42: True Winning Formula
True Winning Formula No.1 No.1 No.1 Mobile Internet Asia Internet Global Internet Competitors Competitors Competitors 41
Slide 43: No.1 Mobile internet
No.1 Mobile internet Competitors 42
Slide 44: Number of Smartphones Sold in Japan
Number of Smartphones Sold in Japan 35.50mil Towards smartphone boom 5x 7.05mil 0 FY2010 (actual) FY2015 (forecast) (Source) ‘2011 Smartphone Business Survey’ on June 30, 2011 by Fuji Chimera Research Institute, Inc. 43
Slide 45: Number of Smartphones Sold (Apr. - June 2011)
Number of Smartphones Sold (Apr. - June 2011) (new subscriptions) SOFTBANK NTT DOCOMO Smartphone KDDI No.1 *External research company’s study of the number of handsets sold at major mass 44 appliance retailers.
Slide 46: Female Users Among New iPhone Subscribers
Female Users Among New iPhone Subscribers 60% 52% 50% 40% 30% 20% 10% Q1 Q1 Q1 Q1 08 09 10 11 (FY) 45
Slide 47: iPhone User Ratio Among New Student Subscribers
iPhone User Ratio Among New Student Subscribers (June 2011) Others 70% iPhone 32% iPhone 68% 46
Slide 48: Number of Tablets Sold in Japan
Number of Tablets Sold in Japan 5mil Towards tablet popularization 5x 1.05mil 0 FY2010 (actual) FY2015 (forecast) (Source) ‘2011 Smartphone Business Survey’ on June 30, 2011 by Fuji Chimera Research Institute, Inc. 47
Slide 49: Ranking of Tablets Sold in Japan (2011)
Ranking of Tablets Sold in Japan (2011) Jan. Feb. Mar. Apr. May June 1st iPad iPad iPad iPad iPad iPad 2nd Galaxy Tab Galaxy Tab Galaxy Tab Galaxy Tab Galaxy Tab Galaxy Tab (SAMSUNG) (SAMSUNG) (SAMSUNG) (SAMSUNG) (SAMSUNG) (SAMSUNG) 3rd ZIIO ZIIO LifeTouch XOOM LifeTouch Eee Pad (Creative Media) (Cr
Slide 50: Companies Using Both iPhone and iPad
(times) Companies Using Both iPhone and iPad 20 18x in 1 year 15 10 5 *Indexed at number of companies in May 2010 = 1 June Sept. Dec. Mar. June 2010 2011 49
Slide 51: Rich Lineup to Match Your Lifestyle
Rich Lineup to Match Your Lifestyle 50
Slide 52: Cumulative Subscribers: 40 million lines target
(mil) Cumulative Subscribers 40 30.13mil Year 201X 40 million lines 30 20 10 2005 June 2011 51
Slide 53: Increase CAPEX to lay the foundation for further growth
Increase CAPEX to lay the foundation for further growth 52
Slide 54: Consolidated CAPEX: JPY 1t
500.0 500.0 Consolidated (JPY bn) CAPEX 420.5 JPY 1t in 2 years 0 06 07 08 09 10 11 12 (FY) 53 (Forecast)
Slide 55: CAPEX and Operating Income: JPY 1t
CAPEX Operating Income JPY 1t JPY 1t 2011/2012 201X 54
Slide 56: Consolidated Operating Income Aiming at JPY 1t
Consolidated Operating Income 1t Aiming at NTT DOCOMO JPY 1t in 201X 629.1bn SOFTBANK KDDI 2005 2010 (FY) 55
Slide 57: No.1 Asia Internet
No.1 Asia Internet Competitors 56
Slide 58: Joint Statement on Alipay
Joint Statement on Alipay Constructive discussion to solve issues in a timely manner Steady progress in negotiations towards 31st AGM (June 24, 2011) a resolution 57
Slide 59: Largest real-name SNS in China
Largest real-name SNS in China 58
Slide 60: Number of Activated Users Exceeded 120mil
1.2 (mil) Number of Activated Users 1.1 1.0 100 Exceeded 120mil 0.8 May 2011 0.7 0.6 0.5 50 0.4 0.2 0.1 00 (Source Renren IR Materials as of December every year. 59 2006 2007 2008 2009 2010
Slide 61: Launch in China
Establish Joint Venture RECRUIT Social Wedding Service Launch in China 60
Slide 62: Renren Connect Adopted by over 800 Web sites
Renren Connect Renren’s Version of “Facebook Connect” Adopted by over 800 Web sites Platform expanded 61
Slide 63: No.1 Online TV in China
No.1 Online TV in China 62
Slide 64: Number of Monthly Active Users
Number of Monthly Active Users (mil) 100mil 100 Steadily increasing 50 0 63 2008 2009 2010 2011 Source PPLive March every year.
Slide 65: Xinhuanet Xinhua Online Platform
Partnering With One of the Largest Official News Sites in China Xinhuanet Technical Provide support content Xinhua Online Platform 64
Slide 66: Exclusive Distribution of Top Korean Content
Exclusive Distribution of Top Korean Content × Korean No.1 TV Korean No.2 TV KBS MBC 65
Slide 67: First Cooperation Between TV & Internet in China
First Cooperation Between TV & Internet in China × Popular audition TV Program Happy Girl Reality Show 66
Slide 68: SOFTBANK's True Identity
SOFTBANK’s True Identity 67
Slide 69: Group A Group B
Group A Group B 68
Slide 70: EBITDA of Internet Companies vs Operating Profit of Mobile Companies
Group A Group B EBITDA of Internet Companies Operating Profit of Mobile Companies NTT Google DOCOMO SOFTBANK SOFTBANK KDDI eBay Amazon Tencent Baidu 2004 2010 2004 2010 69 Source Bloomberg
Slide 71: Internet Companies Market Cap/EBITDA Multiples
Internet Companies Market Cap/EBITDA Multiples Market Cap Rank Name EBITDA Multiple (JPY) 1 Google (USA) 15.6t 15.1x 2 Amazon (USA) 7.5t 43.5x 3 Baidu (China) 4.4t 78.3x 4 Tencent (China) 3.8t 28.4x 5 SOFTBANK (Japan) 3.5t 3.8x 6 eBay (USA) 3.4t 13.9x *Calculated by SOFTBANK CORP. based on Bloomberg
Slide 72: Winning Formula for Enterprise Value Improvement
Winning Formula for Enterprise Value Improvement Enterprise Profit EBITDA value multiple 71
Slide 73: Mobile Company or Internet Company
Mobile or Internet Company Company 72
Slide 74: New Business Model: Mobile Internet Company
New Business Model Mobile Internet Company Company 73
Slide 75: Internet Company and Mobile Company
Internet Company Facebook Mobile Company Google NTT DOCOMO Tencent Mobile Internet eBay KDDI Baidu Vodafone Amazon SingTel Verizon 74
Slide 76: Internet Company and Hardware Company
Internet Company Facebook Hardware Company Google HP Samsung Tencent eBay Dell Apple Acer Baidu Amazon TOSHIBA ASUS Lenovo 75
Slide 77: SOFTBANK's Internet Companies: Mobile Platform
SOFTBANK’s 900 Internet Companies Mobile Platform 76
Slide 78: Striving to Become No.1 Mobile Internet in the World
Striving to Become No.1 Mobile Internet in the World 77
Slide 79: SoftBank
SoftBank
Slide 80: Application of accounting standard 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