First Quarter of Fiscal Year 2023

As our company is in a neutral position regarding the evaluation of the government's sale of NTT's shares, we believe that it is acceptable whether the shares are sold or held continuously.
However, if the shares are sold all at once, it may affect the stock price, so we have repeatedly said that we would like to ask to consider keeping the impact on the stock price as low as possible. Our company is very grateful that Amari stated that he would like to reduce the impact on the stock price by selling NTT shares over a long period of time.
I believe that discussions are about to begin, but it would be appreciated if they could consider measures that would not affect shareholders.

As for the NTT Law, there are items that should be reviewed considering the era we are in. The obligation to disclose research and development is a law that was established to prevent monopoly in the era of telephone.
In light of recent economic and security issues and international competition, I believe these provisions are a challenge.
For example, the number of landline telephone subscriptions was 13.5 million at the end of 2022, but the number of subscriptions has decreased by about 1.5 million every year, so we will end up with 10 million subscriptions in the next few years. Since we are still in deficit, the burden on business management will increase. I think it's about time to start discussing how we're going to deal with landlines in the future. I think it's very important to have these discussions.

This discussion originally came up in the Special Committee on Defense Budget, so I recognize that it is basically about financial resources. It is up to the ruling party and the government to consider what to do with the financial resources.
However, there is talk of the complete privatization of NTT. Since the NTT Law has been in place for a long time, some aspects of the law have not matched the current era. I think that discussion should be had to that point, and I recognize this as a good opportunity.

Not many companies are owned by the government, so I think we can be seen as government related company. However, there is no specific case that this has had an impact.
Instead, I recognize that the legal obligation to disclose technological development itself poses as a challenge when a strong economic security is a factor when competing internationally.

We operate our business in free competition, so I think it's better that there are no laws regulating specific companies.
When I think about economic security problem, we are in an era to consider what kind of rules should be made for telecommunications carriers, electric power providers, and companies that support the infrastructure of the economy, rather than protective regulations for individual companies.

In this era, we often develop products in partnership rather than independently. There are some cases, partner companies refuse to cooperate because they are concerned about disclosure obligations.
Overall, I believe that the absence of disclosure obligations will strengthen our company's competitiveness.

Given the decline in the number of subscriptions, there will be issues such as management and maintenance of facilities, so we need to consider alternatives such as optical fiber phones, wireless landlines, or mobile phones somewhere.
If the large facilities of the telephone station can be eliminated, the town can be redeveloped. However, the redevelopment will be a very long-term project, so we will have to hold various discussions with this timeline in mind.

It's up to the government to figure out how they're going to sell their shares.
However, we have bought about 5.5 trillion yen of our own stock in the past 24 years, so I think we can take it as an option. In addition, if the government's NTT shares are to be sold over a long period of time, there is a debate on whether to acquire its own shares or put them on the market, but I think this is a safe scheme from the viewpoint of shareholders. Our company will cooperate to the best of our ability.

I think you are asking about NTT EAST and NTT West, but NTT EAST and NTT West provide services not only for NTT Group companies, but also other carriers as well. Currently, the various rules related to NTT EAST and NTT West are designed to maintain the market, so I don't think we can assume that we will change them during this discussion.
The NTT Law also regulates the scope of operations of NTT EAST and NTT West, so I think there will be some discussion on this point, but I don't expect the rules of business operations to change.
With regard to the reorganization, I think the conclusion depends on if everyone recognized that the cost efficiency of the overall telecommunications market and the benefits to the public welfare would be improved if NTT EAST and NTT West became one company, or if the public welfare is better in the current form than if they became one company. Therefore, I think it depends on future discussions.

The rules of the NTT Law stipulate that a foreign national cannot become a director or auditor of a holding company, but considering global business, the knowledge of a foreign national is of course very important, so if there is any discussion about revising the NTT Law, I would like the provision to be reviewed.
I believe that foreign capital regulations will be governed by the Foreign Exchange Law, but this is not just an issue for NTT, and I think it would be good to consider it broadly from the perspective of how Japan's infrastructure business is viewed in terms of economic security.

First of all, we don't estimation of how much it will cost to rewind a landline phone at the moment. However, I would like to think about how to cover the total amount of cash from the viewpoint that the copper wire that has been wound may be sold, and redevelopable real estate may be created by winding, especially in urban areas. Furthermore, I would be grateful if we could create a new business.

In July 2023, NTT DOCOMO launched new pricing plans, "eximo" and "irumo". We'll have to wait and see, but I've heard from NTT DOCOMO that the influence of port out has been positive.
For example, "irumo" was introduced with the intention of competing with competitors' second brands, so I hope to see this effect and answer this question again next time.

I think we have to take a closer look at the situation going forward. Looking at how customers are using the service, the number of people who are watching the video is increasing. Of course, I think "irumo" is a good plan for customers who are satisfied with a small amount of data, but I think more and more customers will choose "eximo" or "ahamo" for those who have a habit of watching videos in their spare time.
So overall, I see more people moving to higher capacity plans and I don't see ARPU going down. In this first quarter, ARPU was 3,990 yen, a little less than 4,000 yen, but I am not worried because I think it will exceed 4,000 yen for the year.

The annual plan for NTT DOCOMO's Smart Life business is to increase sales and profits. In the first quarter, the system burden related to the d-card and the upfront investment in NTT CONOQ were incurred, and we expect the recovery to continue in the second quarter and beyond.
We have not disclosed our original plans for the first quarter, but we are generally on track.

NTT DOCOMO's market share is not so different from that of competitors, so we should compete in the same environment. They have competition on the main brand, but they lose on the second brand, and NTT DOCOMO has a history of losing market share.
The holding company will also support NTT DOCOMO in order to regain market share, as the company has launched a new pricing plan, such as "ahamo," and has begun the second phase of its counter-offensive measures, such as "irumo," launched in July 2023.

I don't think it will have much effect. Currently, NTT EAST and NTT West are both offering the line to NTT DOCOMO and the competitor on the same terms. The rules themselves are basically unchanged, and our company believes that they should not be changed. I believe that NTT EAST and NTT West have an obligation to create the same environment at a high level in order to grow their mobile business in Japan.

We will continue to invest in the Metaverse and Web3. In particular, with regard to the Metaverse, we believe that NTT DOCOMO and NTT CONOQ are obligated to provide new experiences to our customers in order to realize the virtual venue of the Osaka, Kansai Expo 2025, so we would like to strengthen our efforts.
With regard to Web3, we will continue to develop the platform gradually from this year to the next.
We already provide AI to overseas customers, such as pharmaceutical companies, wind power generation companies, and cosmetics companies. NTT Data is also taking the lead in expanding the PoC environment with customers in Japan.
In addition, NTT plans to announce its own development of LLM from the end of October to the beginning of November 2023. In anticipation of corporate services, we would like to launch services that are enhanced by adding LLM functions to the AI that we have been providing, including speech recognition and image processing, so please stay tuned.

First of all, we sincerely apologize for the inconvenience regarding the communication quality of NTT DOCOMO. As announced by NTT DOCOMO recently, the four areas in Tokyo (Shinjuku, Shibuya, Ikebukuro, and Shinbashi) have largely improved on communication quality except for the platform at Shibuya Station. There is a plan in place to install antennas on the platform at Shibuya Station in September, so I think this will improve the communication quality.
The reason for the communication quality issue this time is, since post-coronavirus pandemic, there was a change in communication usage such as increase of video viewing, and we think that the prediction for this scenario was a little naive.
We are now monitoring points across the country other than the priority areas in Tokyo, and we are working to improve the quality of our products in a way that is consistent with the customer journey.
I believe that NTT DOCOMO's biggest selling point is its high communication line quality, so we will continue to invest and take actions to maintain our stance.
We also believe that issue this will have little impact on our company performance. I think I received encouragement towards NTT DOCOMO, so I will do my best to meet the expectations.