Financial Results for the Second Quarter of the 2022 Fiscal Year

First, our IT and ICT business fields are becoming extremely competitive. In addition, digital human resources are now in high demand not only within these fields but also in various others. In a sense, we have to make our company attractive to work for. Also, there is a general recognition within most companies that it will be necessary to raise the salary level of young employees a little. Based on these two recognitions, we are raising the hiring salary for fiscal 2023.

Other young employees will also receive raises. We will not do anything to reverse the raises later on in an employee's career. Of course, there will be a new personnel salary system that will be introduced from April next year that is based on specialization. The salary for those who have joined the company, particularly in April 2023 or later, will be based on the criteria for promotion that focuses on specialization. So, in that sense, from April 2023 onwards, people with high abilities will be able to be promoted in October, and their salaries will increase accordingly.

As for the soaring price of electricity, if we look at the actual results, it was about 30 billion yen for the entire group in the second quarter. The reality is that electricity costs are about 40% higher year on year. Therefore, on an annual basis, we expect to see an impact of about 60 billion yen, which is about double what we usually pay for electricity. We can't do anything about the electricity bill, so naturally, we are thinking of absorbing it by reducing costs in various other fields and improving efficiency.

As for operating income, both income and expenses are naturally affected by foreign exchange rates, so the impact on operating income is minimal. Of course, operating income would go up, but it would not have so much effect as operating revenues. Therefore, I think that it is fine not to think that there is too much of a positive effect.

This is kind of a stand-alone conversation, but when I met with KDDI President Takahashi and SoftBank President Miyakawa, it was clear that the roaming issue is very important, and the government is currently holding a review meeting to address it. At this review meeting, we are talking about cooperating so that we can take appropriate measures. Therefore, I would like you to think that this is not just a conversation between KDDI President Takahashi and SoftBank President Miyakawa.

Since NTT DOCOMO participates in government review meetings, I think that discussions regarding this issue will continue to evolve. However, roaming alone cannot solve the problem. For example, other than roaming, KDDI and Softbank also mentioned about offering services like dual SIM. I think it is also important to release new services such as products that skillfully combine MVNOs.

Corporations usually have an alternative backup on the network line, so I think it's quite possible that we will also support mobile. In the government's roaming review meetings, we are discussing the issue considering a wide range of perspectives, so I would like to keep an eye on how these discussions evolve. However, I think that the higher the specifications are, the more time it will take. Therefore, I think that it is necessary to solve the problem step by step.

I completely agree with what SoftBank President Miyakawa said. I don't think it's a good business practice. Currently, the Japan Fair Trade Commission is investigating various matters, but I think that resale is the biggest problem, and it is not good for the society.

I don't have any concrete initiative in mind right now. Of course, I don't think it's a good condition for a new product to be cheaper than a used one.

As for hiring salaries, each company decides according to the situation of the market. Therefore, we are planning to raise the base to 250,000 yen for these main companies this time, but if there is a company that wants to raise it further, it will be done at the discretion of that company. If we increase hiring salaries, the gap between the starting salary and the next highest pay grade will narrow, which will likely lead to a lack of motivation, so I think there is a limit to how much a given company can raise the starting salary.

I would like people who join our group in the future to evaluate whether it will be competitive with this amount of money, but it is important to promote DX in our IT field. Manufacturers, banks, and other trading companies are all focusing on this, so I think we are in a competitive environment. Therefore, we sent out a message that we would like to acquire excellent people amongst our competitors.

As I said when I became president, I want NTT to become a company that provides customers with new experiences, value, and excitement. For that reason, we recognize that boosting the motivation of our employees is the most important thing in creating services and products, so I think this increase in hiring salaries is one factor that will also increase employee motivation.

I want to achieve it, even though there are many challenges. Regarding the satellite business, it is still a challenging field. For example, Space Compass is currently trying to achieve broadband data communication between satellites, but I think this is also quite a challenging service development. As you say, there are quite a lot of issues with services in outer space. Therefore, I think that it is necessary to steadily commercialize it while the research and development team firmly backs it up. However, we cannot accomplish something great unless we set a goal and a timeline, so we want to do it in 2025.

Regarding this year's electricity bill, we would like to absorb it properly through our own business, so we are not thinking of raising the prices of our services. However, if we think that this trend will continue for many years, there will probably be a limit to what we can absorb through our business. In that sense, the power problem has a tremendous impact on the national economy. However, the background of this issue centers around the problem of importing energy, and of course the problem of nuclear power plants. We would be very grateful if the government would work hard on energy policies to ensure a stable supply of electricity.

Today, when I was watching TV at noon, the news was about salary adjustments in response to inflation, but right now I don't think about what we are doing as offering inflation allowances at all. I believe that salary increases are extremely important. I think that one of the major issues is that salaries do not rise even amid Japan's economic growth. While thinking about it, I would like to have a sincere discussion with the labor union in the spring of next year. Therefore, I have no intention of saying that I will not raise salaries anymore, and since I have been raising salaries for many years, I would like to firmly continue to raise salaries. I would like to respond after considering the various pay grades.

This is still being negotiated with the labor unions. I would like to have a serious discussion with the union.

High-value-added services are growing considerably. Overall, we achieved the ratio of high-value-added services to total sales has reached 47%. Our target for this fiscal year is 42%, so we have exceeded that, but the biggest factor is the data center business. Compared to the previous year, the growth is about 160%, and the data center is the driving force.
Although we have not announced this, orders for data centers are currently at over 90% of our annual plan. Therefore, I think that we have to increase the scale of investment a little towards the third quarter. The fact that data centers are the driving force and are being taken over by other businesses is a major factor in NTT Ltd.'s revenue growth.