Financial Results for the First Quarter of the 2022 Fiscal Year

One of the purposes of the regional decentralization of the organization is to strengthen resilience. We wish to model the predicted conditions that would occur if an earthquake directly hit the Tokyo metropolitan area and verify whether or not conventional countermeasures are sufficient. We chose Takasaki City and Kyoto City after considering factors including past earthquake frequency, inland position, and accessibility by bullet train.

Currently, we are verifying whether the corporate planning department, which judges the continuity of the business, and the general affairs department, which confirms the safety of employees in the event of a disaster, can function together even if they are separated remotely. Therefore, we are beginning this diversification within the holding company. Naturally, we will apply the results of the holding company to each operating company in accordance with their characteristics and think about strengthening resilience in a way that is appropriate for each operating company.

The recent KDDI communication failure is not a problem that is unique to any single company. NTT DOCOMO also caused a failure last year, but since we do not know detailed data on KDDI, we will first thoroughly review our own network's countermeasures.
　Regarding emergency call roaming, as we have said before in several settings, we would like to cooperate so that we can implement it as soon as possible. To attain it, we need to achieve cooperation among operations and arrangements while following the Ministry of Internal Affairs and Communications (MIC)'s instructions. In addition, we need to implement it without spending too much time. Although we need to discuss the callback function, we should focus on what we can achieve in a short period.
　Also, we think that the architecture and operation of networks of the IoT era will need to be strengthened again when considering the future emergence of things such as autonomous driving, so we would like to look into this as well.

As for the cost of roaming, I think that the bare minimum should be borne by the service provider. Of course, we must consider responsibility for cost, taking various stages and the required standards into account. First and foremost, it is my understanding that the service provider is only responsible for the roaming used for emergency calls.

We have not yet made this calculation. The issue is quite complicated, and we must consider to what extent we can provide service beyond emergency calls without causing the network traffic to become congested. When considering anything other than emergency calls, we have to take utmost care to avoid causing congestion. Therefore, we must consider adopting a service menu that mainly provides backup services for corporate customers.

On July 1^st, we introduced a remote standard organizational system for our organizations that applies to over 30,000 of our staff, which makes it possible to work remotely from anywhere in Japan, and we believe that the number of employees using this system will gradually increase. The most recent data I can provide is from a month ago. According to this data, originally, 1,500 people were working from different regions from their homes, but that number has decreased to 1,300 as of the end of July. However, some or even the majority of these 200 people may represent those who chose to work remotely within the cities where our organizations are located rather than relocating. The details are not yet clear, and personnel changes will be made gradually, so I would like to report again after a little time has passed.

Regarding the extent that services should be made available outside of emergency calls, as I said earlier, if one company's network traffic becomes congested, other companies' network traffic may also become congested, resulting in a more widespread failure. We must ensure that we contain congestion as a bare minimum requirement. NTT may provide a service such as SMS. However, we should first form a consensus on the mechanism we should use and how we should work together. Since MIC will have a discussion session, we should think more deeply about this issue there. In any case, it is our basic premise not to spread traffic congestion.

I think we should implement roaming without the callback function. First of all, we should discuss the issue, as you said, so I am not in a position to say what is the best course of action on my own. For example, if there were group consensus on including something like SMS, it must be implemented. If we expand the functions, we will incur additional costs in remodeling the network, so we must discuss how to bear the costs. For these reasons, we must start with discussions as the bare minimum before implementing anything.

The financial results correspond to our earnings forecast, so they were generally within our expectations. Our domestic business is expanding at the expected rate. Overseas, NTT DATA's digitalization demand and NTT Ltd.'s high-value-added services continue to grow, so I think we can say that overseas business as a whole has picked up. On the other hand, the backlog of overseas orders has not yet been resolved, partially due to the impact of semiconductor shortages. In fact, the order backlog increased in the first quarter. I believe that if the delay in delivery of telecommunications equipment is resolved, there will be room for further expansion of our overseas business.

Energy supply is a critical issue. I would like to express my gratitude to the government for making the maximum effort to address this issue. We assumed that the price of electricity would rise by about 20% in our business plan. However, by the end of the first quarter, electricity charges have risen by about 30%.
　Therefore, I think energy costs and the depreciation of the yen will have a significant impact. Since we are a major electricity consumer, we must pay close attention to this factor.

Naturally, providing a network service costs money, so I think Rakuten Mobile's decision makes sense. Whether or not our business is directly impacted by this decision is unclear. Nevertheless, NTT DOCOMO's MNP experienced gains during the first quarter of this fiscal year. Ahamo is also growing steadily.

NTT East and NTT West have both said that they would like to increase non-telecommunications sales to more than 50% of the total by 2025, and they would like to grow the newly launched so-called regional business to about 350 billion yen as soon as possible.

　NTT East and West are both taking on new challenges in various regions, such as initiatives in agriculture and fisheries, the biomass businesses, and so on. A central goal for both NTT East and West is to launch new regional businesses to provide local production for local consumption. Although we experienced losses in the first quarter due to factors such as the impact of the sale of the real estate business during the previous fiscal year, we believe we will achieve our business plan for the current fiscal year. We wish to encourage the creation of new businesses that take advantage of the characteristics of each region.

Although we have not begun discussing the specifics yet, I think it would be good to use public telephones for emergencies. I would like to discuss with each of our companies whether the conventional disaster countermeasures that we have been considering, including Wi-Fi, can be applied in the event of a communication failure.
　Of course, we will need to hold discussions about cost sharing, so we need to think together about how to create an initiative.

Of course, the use of public telephones will still be available, but I think we should focus on public telephones for disasters which can be used in convenience stores to respond to disasters. The number of public telephones for disasters will be overwhelmingly larger in the near future and will be more convenient for customers in times of disaster. I would like to consider various ways we can use them.

We have begun discussions with corporate customers on how to proceed with backups. Basically, I think that backups will be through the line of another carrier for NTT DOCOMO's users, but the question is what kind of proposals the network operators of both sides will make to customers in the future. For example, we may provide services such as inserting two SIM cards, or both companies may become MVNOs. We will consider various measures and think about how to ensure the customer's business continuity. For instance, NTT Communications provides a backup menu in which KDDI's network is used in the event of a communication failure. As an extension of this menu, it is natural for a mobile carrier to provide another carrier's network as backup. For individual users, some carriers already provide two mobile devices and two SIMs services through which users can choose the network carrier. These services come at an additional cost to users, so it is up to individual users whether or not to choose such services.

It is difficult to say exactly when because discussions on the matter have not yet been held. We hope that the four mobile carriers will hold thorough discussions and bring MIC together to realize this service at an early stage.

I will refrain from commenting on KDDI's refund specifically. In principle, refunds should be given based on the conditions written in the contract. In addition, I think it is necessary to decide by considering the size of the communication failure and the corporation's social responsibility, so a corporation must decide according to the situation.

Even if roaming emergency calls without a callback function are enabled, the network will need to be modified. We cannot make this modification overnight, and it will require considerable countermeasures. To make the callback function available, an even larger renovation would be required to maintain the database, and so on.

Overseas operating revenue increased by 98.7 billion yen, of which 57.0 billion yen was due to the impact of exchange rates. Exchange rates have had almost no impact on operating income.