NTT, Inc. (9432) Earnings Call Transcript & Summary

[Interpreted] Thank you for joining us at NTT IR Day 2022. We're very grateful for this very large turnout. Thank you for joining us. My name is Nakayama. I'm the Head of Finance and Accounting at NTT Holding Company. Today's program is as follows. This is the program for the day. We will be completing this session at about 5:30 p.m. Japan time. We hope that you'll stay with us until the very end. Now today's proceedings will be available on an on-demand basis. We would appreciate your understanding. The content of this presentation will be provided on an on-demand basis at a later date. So let us go on with the program. First of all, let's invite opening remarks from Mr. Hiroi Takashi, Senior Executive Vice President of the company. Mr. Hiroi, the floor is yours, can we have your opening remarks, please.

Good afternoon, ladies and gentlemen. My name is Hiroi of NTT Holding Company. First and foremost, thank you so much for joining us at NTT IR Day 2022 out of your busy schedule. Thank you so much for your time for us. Now I have come back to NTT Holding Company after 2-year tenure at NTT DOCOMO. I'm very honored to be able to do work with the members of this community once again. I'm looking forward to this exchange. Now it's been 2 or 3 months since I returned to NTT Holding Company. I had chance to have discussions with many of you in the meantime. If I could just share with you some of the impressions as a result of the exchanges that I have had with the investor community in the past 2 or 3 months. First of all, it seems that all of you have a sense of security as well as a sense of insecurity about our company. So what are the source of insecurities, uncertainties about the company? What is this new president going to do? That is the one of the sources for this uncertainty. In the days under Mr. Unoura, we made domestic market and domestic business more profitable. We introduced cost reduction. We also introduced wholesale fiber business as well under Mr. Unoura as the President. As far as the finance side is concerned, we began to strengthen shareholder return and we've been able to meet the expectations of the investors. And also, our business portfolio is now expanding overseas. And we're breaking out from dependence on domestic business, and we've been able to realize increase in scale. Under Mr. Sawada's tenure on the domestic front, NTT DOCOMO became 100% whole subsidiary firm for NTT Holding Company. This was a very big decision. And we implemented and acted upon it. And also, on such a bank, we expanded not only on increase in scale, we also began to focus on profit, and now they are beginning to produce results. And also in the R&D field, I own and sustainability-related initiatives have been fortified. So what is going to take place under Mr. Shimada's leadership? What type of corporate actions are awaiting under Mr. Shimada? I think that is probably one of the expectations that you have. Now having said all this, going forward, what is going to happen to our global business? Actually, you're all wondering, now that DOCOMO is a wholly owned subsidiary firm, what is going to happen -- what is the effect in relation to Smart Life business and other businesses as a result of this new structure? When will ion become profitable? Actually there are many questions on your part, and we have received various inputs from your side. Also, we have rising commodity prices. And also, we also have issues related to resources and decoupling taking place. So the situation is becoming very difficult and challenging. So under those new challenging circumstances, how do we intend to realize growth of our business over the next 2 or 3 years. This is something that we need to demonstrate to you and communicate to you in a very straightforward manner. As far as we're concerned, we intend to maintain communication with all of you. We want to make sure that we heighten our engagement with your community. And we hope that you will not be able to -- you won't have to have first questions about our business. To make sure that we have good relationships so there will be -- so that you'll be convinced about the viability of our business activities. So that being the case, I do hope that you will continue to render your support and your understanding about our IR activities at NTT Holding Company. Today, we'll be focusing on data center business. Regardless of domestic or global data center business is a very important part of our strategy. So we'd like to introduce to you about part of this important strategy for our company. So I do hope that today's presentation will be of great reference to you. And with that, I would like to conclude my opening remarks. Thank you very much for joining us today. Good day.

Thank you very much. We'd now like to go on to the presentation. First, we want to talk about growth strategy of NTT Global Data Centers. So from NTT Limited, we have with us Mr. Sharad Sanghi. We also have with us Mr. Suzuki; and also for NTT Global Data Centers Americas, we also have with us Mr. Douglas Adams, as our speakers. So they will be joining us. So the floor is yours. Thank you. Please go ahead with your presentation.

Thank you, Nakayama. It is indeed an honor for me to represent the Data Center division of NTT Limited along with my colleagues, Yasuo Suzuki and Doug Adams. So I will start the presentation. Just take the plant, sorry. So NTT's Global Data Center business continues to grow and expand at a rapid rate with aggressive investments to build new data centers around the globe. What Suzuki-san will present later is the details of this growth, but the industry accumulated growth rate is 11.8%, and we are growing at almost double that. So that's huge. Even the capacity that we build, we book more than the build capacity over the last 3 years. So that's a very, very aggressive growth. We are funding this growth through a combination of internal capital, external third-party capital. You will meet one of our investors later today, which is Tokyo Century. And we're also funding -- we are also looking to grow more aggressively in markets where we're not present potentially by looking at M&A in the future. Our footprint is in over 20 countries in 93 cities, and we have over 141 data centers today. And we have several data centers under construction. The total capacity that we have is over 1 gigawatt and almost 700 megawatts under construction today. We have a lot of synergy with NTT Data and NTT Communications. And this synergy will help us leverage the digital backbone that we build using our data centers as the core and also our global network backbone. And -- so for every colocation contract, we also have the opportunity to upsell our clients with system integration with managed services, which includes security services with application services now with NTT Data coming in together. So for every colocation dollar, we can have several dollars for our enterprise clients upsell this with the synergy that the NTT Group offers. And honestly, that's very unique. There is nobody else that can offer end-to-end IT services like the NTT Group can. But one of the key elements of data center business across the world is stickiness. So what happens is that clients are very sticky. It's very difficult once a client sets up its infrastructure and our data centers for them to look at moving. And this stickiness results in recurring revenue and contracts that last for several years, thereby our profitability increases every year because the stickiness of the clients. And so this is -- the data center business is highly stable, sticky and profitable, and this increases year-over-year, and we expect this trend to continue in the foreseeable future. At the core of our data center build across the world is sustainability. NTT Group has already announced that we want to become -- our data center business would be carbon neutral by the year 2030. And towards that, we are using a lot of renewable energy in our data center. So we've signed PPAs in Europe. We've also set up captive solar and hybrid wind solar plants in India. And we also -- we believe that by the end of '22, we'll be close to almost -- Suzuki-san will elaborate, but almost 40% of our energy will be through renewable energy. The design and innovation that we do in our data centers also helps in improving energy efficiency and making our data centers more sustainable. And we've done a lot of innovation in cooling. And so we do -- we've used DCLC and liquid immersion cooling, for example, in some of our data centers, which helps reduce the power usage efficiency. We've used other cooling techniques as well that really, really makes our power usage efficiency in our data centers amongst the best in the industry. And that helps in reducing the carbon footprint and also the benefit of that is also shared with our clients. So also the modular design that you will see later when Doug-san presents, gives us flexibility to be able to cater to needs not only of our hyperscale clients but also enterprise clients. And this also helps us to roll out data centers faster. And it also helps us to target Tier 2 cities. You will hear Suzuki-san talking about the edge strategy as part of its growth strategy. And this modular design helps us to roll out faster in some of the smaller markets as well. So with that, I would like to hand over to Suzuki-san. He will present about our growth strategy. And followed by that, Doug-san will present a case study of the America market, along with the modular design, as I talked about and also a case study of a collaboration with NTT DATA. Thank you. Suzuki-san, over to you.

[Interpreted] Thank you. Thank you very much. Thank you for joining us today. My name is Suzuki, responsible for data center service at NTT Limited. Today, I'll be talking about the growth strategy for NTT Global Cata Centers. These are the contents that I'll be covering. I'll be taking about the Data Center Market Dynamics, GDC Footprint, GDC Financial Snapshot, Strategy and Priorities, Data Center - centric GTM, Expansion, Sustainability and US business update and collaboration with NTT Limited and NTT Data. Mr. Doug Adams will be taking part in the very end of this presentation, just to highlight the case study in the United States. So let me now talk about the current market trends. This is the size of the market. In 2019 -- from 2019, up until 2026 CGR will reach 11.5%. So they are showing a very major growth. Now one noteworthy point is as follows: from 2020, we began the so-called COVID-19. So generally speaking, there was a slump in the economy. But as far as the data center is concerned, and also in our data center business, we continue to enjoy growth even under COVID. Why is that? Because within the COVID-19, the workstyle reform took place. And so we saw further progress in digital transformation. So as a result of the cloud service providers, large wholesale clients and enterprise customers, their demand for outsourcing began to increase as a result. So that being the case, we have seen very robust growth in the demand for data center business. So that is the situation that we have found ourselves in. I guess the backdrop. What about our market share? This shows NTT, GDC position in the marketplace. As far as the revenue share is concerned, as far as the colocation revenue is concerned, we categories overseas businesses, NTT is third following Equinix and Digital Realty among those operators that are active in the global market, we are #3. [indiscernible] will show you the share by revenue were designed to shows Global IDC MarketScape vendor assessment. This is a very long company. And this is an assessment of the vendor's capability. And again, we're also #3, following Equinix and Digital Realty in the vendor assessment as well. Now let us move on to the GDC footprint. NTT Group's data center footprint is we have more than the footprint in more than 20 countries, 3 sites and 141 buildings. In the case of data centers, on a megawatt basis, we often talk about capacity. We have more than 1,000 megawatt IT power in our data centers. And as Sharad earlier mentioned, we have 702 megawatt under plan. And we'll start services soon. And where are our locations -- this data center operators have Tier 1 cities that is accumulation of data centers in the various countries. And we have been taking the location strategy to cover these major places. And as a result, we are now able to provide services globally and also incorporating local and regional demands of customers. And now financial snapshot. Data center finance. In 2018 to 2022, -- in 2018, we had $1 billion, in FY 2022, $2 billion. Over 5 years, we doubled our growth, which is 20.8% CAGR. Earlier, I talked about 11.5% global average growth. In comparison, NTT groups and data center business has been growing much faster, you can see. In this, as I mentioned earlier, 2020 onwards, since the start of COVID, our sales have been very strong. CapEx-wise, in 2018, USD 0.7 billion and 2022, USD 1.5 billion. But if you look at 2020 onwards, if you look at the yellow part, $1.2 billion in the graph, -- this is the constructed capacity, but we were selling 6% more in booking capacity compared to the inventory, our sales was greater. Therefore, we could not completely cater to customers' demands. And in FY 2021 by incorporating external capital by using third-party external investor capital, we have been able to increase our investment, but still our booking capacity has been increasing more than what we invested in. So FY 2022 together with external capital, $2.5 billion in total compared to 2020, this is more than double the CapEx. But then booking capacity grew even more than that. And this year, our outlook is 40% booking capacity more than the constructed capacity. So compared to our CapEx booking is way more. And today, we are not able to spend enough in CapEx. Then why are we selling as much? This comes from our differentiation strategy. If you look at these metrics, comparison with competition from company A to D, they are companies that actually exist. And if you look at the vertical axis, they are the data center users often used services. And looking at this table, you can see that only NTT Group is able to provide everything from top to bottom, all of the areas, and we call this provision of full stack services. We provide full stack services. This may seem seemingly only effective for enterprise customers. However, this enterprise-grade service provision is also possible to wholesale customers. This means cloud operators and large-scale wholesale customers from their perspective, full service wholesale provider wise, we are also receiving very high credit hyperscalers and very large scale business orders, we are able to connect to you. Now to strengthen our competitiveness, what are we specifically doing? We have 4 pillars. We are working on these 4 priorities. There are full stack IT solutions from colocation services, managed services to application layers, we provide all the services as full stack. And our data center users, out of the users, for instance, AWS and Microsoft Azure, they also need connectivity to public cloud, therefore, connectivity to such cloud services. And then globally common contracts and customers portals. For example, if customer applies in the U.S., the customer would be able to use global services. In other words, we have one stop service, one voice to customers. We have also service standardization and technology automation and adoption and creative process innovation. And as I mentioned, we are using external capital to invest and increase investment. And by 2030, not only are we going to increase investment, but we will respond to the need of the society and customers to achieve 100% renewable energy. And then as Sharad also mentioned earlier, so far, we have been covering the major Tier 1 cities that has been our strategy. But on top of that, we are now going to also cover Tier 2 cities or the 8 cities. We will be considering coverage of edge markets. And then finally, about the engaged engagements, not only are we increasing customer satisfaction, but also by investing in our employees, partners. In the end, we also want to further increase customer experience. This is what we are working on. And now the strength of the full stack services. And here at the bottom, you can see the digital backbone. This is the infrastructure part, data center, network service -- these infrastructure part services. And starting from there, connectivity, managed services, application services and consulting services, we connect to these other services. Sharad earlier mentioned sticky. The data center users -- they also invest their own facilities in the data centers as well. Therefore, they use for a long time. If there is a 5-year data center colocation order on us in addition to connectivity there will be further needs for managed application and consulting services. We can provide various proposals and using the data center as the leverage we can lead to selling other services. This is the full stack service strategy. Starting from October, NTT Data and NTT Communications, together will be selling together in and out of Japan. Now data centers. Data centers is in the big building where the server rooms of companies are much bigger, and there is a lot of importance in connectivity. And the strength of our company is, globally, we have data centers across the world, but we also have a lot of subsea cables. If you look at the Japan and U.S. to the right-hand side dotted area, we are going to soon start up a new cable JUNO. In Asia, APRICOT, the green line and to the left, you can see MIST. And then the yellow data center have these subsea cables directly interconnected, which means when the customers go out globally there, from there, there will be lowest latency and this will be of the benefit to the cloud operators and enterprise customers who use cloud operators. And also ISPs and contents customers who require the least latency. So synergy with subsea cable is 1 strength for our differentiation. Now growth expansion strategy. Basically, by region we capture the needs of the region to expand. And here are the 4 strategies for Americas, Broaden key metro footprint and capture demand. EMEA, Double-down in FLAP, Germany, the main market where we have strength and increased investment in Tier 2 markets as well. India, Sustained investment required to capitalize on market opportunity. APAC, Japan and various markets have various characteristics in line with the market characteristics, we will accelerate the investment strategy. Japan is one of the major markets and to capture the strong demand, we intend to accelerate investment in Japan. And the bottom boxes, you can see Organic Growth. We have built over a long time, our operational know-how, and we will be expanding our own data centers and development on our own. And for data center expansion, location is very important how to obtain land beforehand is very important. And electricity related to land is important to secure. Therefore, keeping these aspects in mind, we want to achieve long-term growth. And as presence wise, where we don't have enough coverage -- for such places, as an option to move into new markets, we will consider possible M&As as well. This is the global data centers list, the recent data centers, specifically FY 2022, 11 locations of data center service launch is scheduled. And from FY '23, '24 to '25, 14 locations as shown on this page. And this page shows already approved for construction data centers that are listed. So as we have more approvals, the number of data centers will increase even more on top of this page. And then today, we have made this press release as well that is Japan expansion strategy, as a part of Japan expansion strategy in Osaka in Keihanna region. And in Osaka, we have data center demand within Osaka City and in Northern Osaka, Ibaraki city. These are the clusters of data centers. And Keihanna is at the next potential area of promise. And there is the MIC certified project for data centers and aiming for the third quarter of 2025, we intend to complete construction of our data center. Currently, this is within the premise of the NTT R&D facility. Within this promising intend to build a 30-megawatt data center. 30-megawatt means in Ibaraki City in 2019, we completed construction of a data center, and this has maximum 30-megawatt. So equivalent maximum capacity scale, comparable scale of data center will be constructed here in Keihanna region as well. And we already touched-upon use of third-party capital to accelerate investment. And later, we will hear about India from Tokyo Century and in the suburb and Central Mumbai, we have been developing data centers. And with Ho Chi Minh City of Vietnam, the local SI operator with QDTek, we are forming joint venture to construct a data center. Also U.S. and U.S. Europe is our largest market. In 2020 -- in 2022 in April, with Macquarie Asset Management, we decided to grow a partnership. It will be considering joint ventures and other collaborative arrangements with this company going forward as a result of this agreement. Next, let me now talk about sustainability-related efforts. So in 2030 or by 2030, we will be aiming for 100% renewable usage. That is what we're aiming for in 2020 -- in 2030. So this is the road map. Specifically, we're going to achieve this. There are some concrete initiatives. So there's 7 work streams as we are aiming to achieve the medium-term plan. It's not just renewables. So we have also focused on sustainability. Usage of water has to be sustainable and limiting any potential waste. So we have to address sustainability as efforts. And we now have a special group that handles this. So in 2021, the percent on a global basis, rate reached 28.8%. Renewable energy usage ratio reached 28.8%. And for this year, we are aiming for 38.7%. So we see a steady increase in the energy situation for renewables, as you can see from this chart. So I would like to show you -- I'd like to conclude my presentation at this juncture and focus on the examples in the United States. Invite my colleague, Doug Adams to talk about the United States at this juncture.

[Foreign Language] Again, my name is Doug Adams, and I'm the CEO of the NTT GDC Americas data center business. I'd like to start by talking about my fellow GDC region heads. Florian Winkler in Europe; Shaker-san in India; and Kumar-san in Asia. They all run an amazing business and they're equally as prepared and have equal accomplishments that we have in the U.S. I'm honored that Shimada-san asked me to present kind of a case study of what we're doing in the U.S. and how we're experiencing hyper growth and how we've enabled that hybrid growth. But I do want to start by saying that my fellow counterparts in the rest of the world also have amazing businesses and have grown equally and showed tremendous profitability. With that, let me start by giving a quick overview of the United States. Today, we're in 7 markets. We have Chicago, Illinois, Hillsboro, Oregon, Sacramento, California, Santa Clara, California. We're in Phoenix, Arizona and Dallas, Texas and Ashburn, Virginia. Within those 7 campuses, we have 13 operating data centers. We're building another 7, by the way. We booked 99 megawatts year-to-date. 99 megawatts is enough power to power 99,000 homes. So very large bookings year-to-date. We have 299 megawatts of operational IT load within our data center platform, 480 clients, a little over 500 employees, $680 million worth of CapEx we're deploying this year alone, about $4.1 billion in flight with what we're constructing. And we've got a pipeline of over 750 megawatts. So it's a very large business that we've grown in the United States. One of the ways we've grown that business is through our -- what we call our flexible modular design. And I'm going to show a video at the end, how that works. But it's one of the innovations that we've done that allow us to increase quality, increase speed to market, increase flexibility and also reduce cost. And in essence, what we do is we have a centralized factory in the middle of the United States, that's an outsourced factory. We produce electrical and mechanical modules within that factory, and then we fungibly ship them to our sales demand is in our different data centers. And that flexibility allows us to build very quickly at a super high quality and very affordable. And again, at the end, I'm going to show a quick video of exactly how that works. Within the U.S., we've taken the global strategy of our data center group, and we've modified a little bit to meet the demands of the U.S. market. And this is the strategy that we implemented over the last 5 years. So we started 5 years ago by retooling our team. We brought in a team of seasoned data center professionals that have worked within many companies across the globe, and I'll show you those companies in a few minutes, and I'll talk about a few of those team members. But that was the first step was bringing in the right people because you have to have the right people to grow a platform at the speed that we have. Then we retooled our product. We took our products that was more retail focused, and we focused it towards enterprise companies and hyperscale companies. We actually changed the design. We changed our supply chain. We implemented vendor managed inventory so that even in difficult times like right now with supply chain, we're able to continually build and supply our data centers with infrastructure. We also win in new markets. When NTT bought our company 9 years ago, we had 2 markets. We're now in 7 markets. That made a big difference for the growth that we're experiencing. And then we created very, very durable relationships with our customers especially in hyperscaler and enterprise. And you see in the center, we implemented the value of NTT, which is really the managed services and the resources that NTT can bring to our customers. This is the base strategy that's allowed us to grow over the last 5 years at the rates we have. I'm going to talk about a few of these components individually. The first one I'll talk to is people. We have an absolutely amazing team at NTT GDC America. I'm not going to talk about everybody. I'll talk about a few people. Ben Stewart, been in our industry for over 20 years. He actually has a PhD and he heads our operations, and he does an amazing job. Joe Goldsmith. Joe, was one of the early pioneering salespeople at Digital Realty many, many years ago. He actually was head of sales for a company called Colo.com, which was one of the pioneers in our industry and has very deep relationships within the industry. Brittany Miller is our Head of Construction and Design. She actually has a degree in construction. She is one of only 15% of female executives in the construction industry. And she had 20-plus years of experience in purchasing and in construction with Intel, with Microsoft, great heritage. The last person I'll talk about is Denise Hannan, who's responsible for our legal and our HR, 27 years of experience. The point I'm making is we have a team of seasoned professionals that have a great degree of vertical expertise. In fact, over 150 years of experience for the combined team. I'm one of the founders of the original company NTT bought. I've got 23 years of experience with the company. The people make a very large difference. And to Shimada-san's point about how we're going to transform the company, we're going to do that through creating a better client experience by concentrating on the people. And when you start with people that have a lot of experience in the industry that becomes easy. I'll talk for a moment about our differentiation because I think this is a very key piece. We -- if you look at GDC, I believe that we're very unique and differentiated to the industry. It starts with the fact that we have a global platform. There are very few companies that are truly global in our industry. We're one of them. You take that global platform of data centers and on top of it, you add the NTT networking, which is second to none in the world. On top of that, you add our managed services. Combine that with our 3 client segments, the first one is hyperscaler. Hyperscaler clients by very large quantities of infrastructure for very large time -- long periods. What that does for us is that it allows us to operate at very large economies of scale. So the fact that they will purchase half a building at time, the full building at time allows us to buying power and the kinds of scale to have reduced cost, which is very important to attracting enterprise customers and retail customers. And again, enterprise customers and retail customers not only expect a global platform, but they get value from our managed services and from our network. So it becomes a virtuous cycle. You have a global data center platform. We've got cloud customers with on-ramps to the cloud. That brings in enterprise and retail clients because of the managed services and the networking. It's a very special differentiation that our competitors cannot enjoy. And it's part of the reason we're growing so fast. Speaking of that growth, this chart has several segments. The top right shows that we have a very diversified client base. We're not just concentrating on 1 client. The part on the bottom shows that we have 0.3% of churn in our customer base. That means that we're taking very good care of our clients, our voice of the customer, which we do regulate our customer shows over 60% customer satisfaction. And that's on a 1 to 10 scale using voice of the customer techniques. So anything above 50% is world class. So a very good score. On the bottom left, you can see our revenue growth. 2016, we were at $131 million. 2022, we'll finish the year at $430 million. So very, very strong revenue growth. What's driving that revenue growth, of course, it's the bookings. So if you look at the top left chart and you see the gray area, that's the sand chart, the gray shaded area is our inventory level by year. You'll notice in 2018 through -- excuse me, 2017 to 2019, we were booking on average about 15 megawatts a year. We implemented our strategy during that time period. And in 2020 was the real -- the first year we really saw the results of that strategy of concentrating on the people, changing the design, creating durable relationships with the hyperscale customers. And you can see in 2020, we increased to 40 megawatts and then 2 bookings. So that's the blue bar, by the way, the blue bar. 2021, you'll notice that blue bar goes above our inventory for the first time in the history of the company. We booked 108 megawatts, record year for GDC. In 2022, we will book over 200 megawatts, and you can see that we're booking unbuilt complete buildings to get above our actual sustainable inventory level. That's hyper growth, and that comes from focusing on a very well-thought-through well-implemented strategy. And we're now getting 77%, 73% year-over-year bookings over the last 5 years. So very strong growth from concentrating, I think, on a very strong strategy. I talked earlier about that strategy and that center piece of the strategy, which was really the NTT relationships that we have and how we're not just bringing our customers the value of data centers. We're bringing the value of our customers on ramps to the cloud as well as managed services and connectivity. This slide is a great slide. What it depicts is on the left-hand side, in green, you can see the pieces of the equation that the data center brought to what we call a multi-tower sale within NTT. So this was a sale that was led by NTT Data. So they took primary on this. The customer wanted an end-to-end full stack solution. Our data center competitors cannot do that because they don't have the resources of our brother and sister companies like NTT Data. So NTT Data brought us to the table and they said, we want you to do the data center pieces. We want NTT Limited to the network piece, and we'll handle the compute, the storage, the disaster recovery, the information security and the transition services. So we were able to create -- this is an actual example. And I can't tell you the customer name unfortunately because our customer is very secret about that they're in our data centers. But this is an actual example of the solution that we implemented this year with a customer, the actual solution looked like this. It was a disaster recovery solution. They use their primary existing data centers. They moved into our data centers. They use the public cloud for connectivity, which was managed by NTT Limited, and Data provided all the data security and the solutions around that. This brings value to our customers and is unique and is differentiated, and our competitors cannot do it. This is what NTT brings the table in global data centers, it's a great example. And super profitable and it's actually a large TCV opportunity. Another example real quick, this is data center to data center. So I talked earlier about my counterparts within NTT running the different regions and the relationship we enjoy and that they all have equally impressive feats in the revenue that they're generating and the growth that they're generating. This is a customer called Island that was a customer in the U.S. and they wanted to enjoy our global footprint and expand into EMEA. And so it's a relatively small opportunity, 251kW -- 250kW, excuse me, but they went into London, and they were so pleased with the solution and the service and our ability to work together as a global platform that they actually asked us to do a case study with them and did a press release around it. So this is that company Island. With that, I'm going to go back to the fungible modular design strategy I talked about earlier. Because I think it's important that you understand some of the innovation that's occurred within global data centers and the way that we build our facilities. Again, we have a centralized factory. We build modules of electrical mechanical. By the way, that's the expensive part of a data center is the electro and mechanical pieces. While we're doing that, we build the data center in whatever market it is, and then we merge the 2 together, and it is a very efficient cost-effective way doing it. So I'll start the video. [Presentation]

I'll end by saying if you look at Shimada-san's 3 primary objectives: increasing the customer experience to increasing the client experience -- excuse me, the client experience, increasing the employee experience, sustainability being carbon neutral by 2030. And by transforming from a digital communication company to a digital service company, I think the data center division is a perfect example by working with our brother and sister companies of creating that transformation. And again, the message for the U.S. is growth and profitability. Thank you very much for your time. I think from here, we start Q&A. [Foreign Language]

[Interpreted] We would now like to take questions from the audience. So we'll first take questions from those of you in the audience, and they will also take questions from people who connected online. And to come back to questions to people on the site later on. [Operator Instructions] So if you have any questions, let me ask you to raise your hands, please? Thank you. Let's start with this gentleman.

Thank you very much. My name is [indiscernible] from SMBC Nikko Securities. I have 2 questions. Page 11. I'd like to ask about Page 11. There are many -- there are a lot of questions about what's written on Page 11. So I'd like to ask 2 questions on Page 11. Page 11, please. It's about the GDC Financial Snapshot page. So with regard to profit, there is no indicator about your profitability. But what about EBITDA? Or maybe EBITDA is a better indicator. How do you see the growth rate for EBITDA? What is the growth rate for EBITDA right now? So how profitable are you right now? Or against the asset. What is the profitability versus assets? And how is it growing? In the case of NTT Limited, when we take a look at NTT Limited PL, very simplified information is available in NTT IR information. And we know that the revenue for data centers are increasing, and it looks that it is going to grow further down the road. Now there is OP information. This contains a lot of cost, I'm sure. But OP doesn't seem to be growing all that much. Now is data center business really profitable? Is the profit for data center business growing? Do you have any quantitative numbers that you're able to share with us? We've got some quantitative information about the growth in the profit for data center business.

Thank you, Suzuki here. With regard to data center business, profit level is concerned, I'm afraid we are not disclosing official numbers with regard to profit per se of data center. But there's one benchmark. Let's say, our competition such as, let's say, because they're 2 top competitors, these 2 top -- if you compare with the top 2 competitors, we are actually -- our profitability is very much in line with the profitability of the other deducted players in the marketplace. With regard to the growth, in line with the growth in the revenue, I believe our profitability is also enjoying very strong growth. That is all I can say.

Okay. That's fine. What about -- well, you're going to be increasing investment right now. So -- and if you want to finance investment through cash flow that could be very burdensome. Your profitability with regard to PL is in line with your competition. What about the return against the asset? What about ROIC? What is the future of your numbers? What is the future of your company?

With regard to ROIC, again, we cannot share with the concrete numbers. Please understand. We do not disclose those numbers. It is true that with regard to CapEx we have done a very large scale CapEx. That is true. Now this applies to the cash flow. This also applies to the burden on the PL. Yes, there is some pressure on the cash flow as well as on PL. Now having said all this, we mentioned that our bookings and the sales of data center is very strong. Ultimately, in the case of data centers, when services are launched -- and this applies to any other operator, including ourselves, but the services are launched. In the next 3 to 5 years, they try to fulfill the space. That's the plan for various businesses. That is the general plan. But in actuality, the recent situation is this. Even before the completion of the construction of the data centers, we're able to have clients knocking on our doors. So we have use of clients on day 1. So as far as usage is concerned, it's improving significantly. So as far as profitability is concerned, with regard to the speed of return, the speed of collecting the return -- this investment is increasing, but also our pace of recruitment of investment is also fast. So I think it is in line.

My second question, if I could turn to my second question. This was in Doug's presentation. Two questions. Let me see. Please. I'll ask in Japanese. It's on Page 32, Page 32. Page 32. Now the bookings this year enjoyed strong growth. This also enjoyed strong growth in the previous year as well. And you're growing at tenfold, twentyfold in certain cases. Was there any special factor? Is it due to a special client? Did you have like one of large client bookings? Was that the driver for this growth? Or you received bookings from a very large number of clients all at once, suddenly. So competitor and that's where you're going to tenfold, twentyfold compared to 3 or 4 years ago. Can you talk about the driver behind this very strong growth?

That's a very good question. Thank you. It was driven mostly by a few select set of customers that had a lot of demand. And as I spoke earlier, we retooled the company over the last 5 years to be very enterprise and very hyperscale centric. And so most of that demand was from large enterprise companies -- a large hyperscale companies. Did that answer your question?

[Interpreted] Okay. I understand. My second question, second question. This is on Page 33. The next page, Page 33, Page 33. You talked about partnership with NTT DATA. Now you mentioned that once you construct, supply can -- you mentioned the supply cannot keep up with the demand. So I'm afraid that maybe you have the capacity. Even if you have a partnership with NTT Data, maybe you have no capacity to offer because you're fully booked. So that's my concern. So that's my first point. And also secondly, this type of partnership with NTT Data, what about the staff and people experience that are involved in the partnership? So NTT -- do you have a team of people that can actually fully engage in this type of partnership on both sides? Now of course, we understand having -- maybe it's a good idea to partner with 2 different companies. But is there capacity sufficient talent to really be -- to be able to really implement this partnership? Even now you to -- I'm sure you mentioned that you already involved in negotiations offerings with concrete clients. When will these services be launched? Is it going to start next year, for example? Will this new services based on partnership be available this year or next year? So can you talk about the outlook, concrete outlook for your partnership with NTT Data.

Another very good question. Thank you. So I'll start with the first part of the question, which we had to do with inventory. Remember, we're a global platform. It's not just the United States. So in the United States, we have less inventory than we do in other parts of the world. But we do always have some level of inventory because we always have customers that are leaving or doing something different. And so there always is a small level of inventory that is available. Most of these fully managed opportunities that we're talking about, the beauty of them is that they don't take large pieces of inventory. What they do is they have advanced managed services and full stack services. So it's usually not. We're not talking about megawatts. We're not talking about even in 0.5 megawatt, we're usually talking about racks. And so we can almost always find space within our existing data center footprint to accommodate opportunities like this. As far as staff is concerned, the second part of the question, we do have dedicated people on our team that work directly with our brother and sister companies, NTT Limited and NTT Data. And remember, these full stack opportunities are driven by their staff. We're a part of the equation, but they're almost always primary on these opportunities because we're very, very good at data center services. They're very good at implementing complex solutions. And so they're very well staffed in these areas. And I have people on my staff that work jointly with them. In the U.S., it's 2 dedicated resources, and then they've got part-time resources beneath them. And we've never outstripped those resources. And we land partnership opportunities with our brother and sister companies on a very regular basis. And in most instances, they're very profitable because of that full stack fatality. Hopefully I answered your question. [Foreign Language]

[Interpreted] The next question, the person in the very front row, please?

Nomura Securities, Masuno speaking. I also have several questions. Firstly, the profit part, Page 11, the drawing. The number here need to put together a forecast. So setting aside the current, the contract time period, how long? In the case of hyperscaler, maybe 10 years and then extension 10 years, 20 years, but CapEx depreciation time period, building and servers. May be servers 4 to 5 years. The building, I would say, 20 years for depreciation, then the breakeven should be shorter than 3 to 5 years. Is that truly the case? Can you reach breakeven before 3 to 5 years? I want to hear the profit mechanism of your business and currently 1,000 megawatt and then 700-megawatt upcoming, which means 70% increase in capacity. The 70%. How long will it take to convert into sales? You will be constructing in 2 to 3 years. But so profitability and growth. These 2 questions I have for you.

I would like to respond to your questions. Thank you for your questions. 2, 3 years may not necessarily mean the payback. I could have mislead you. But the customer's contract in itself is different from country to country, but it is true that the customers' contracts tend to be long, depending on the country enterprise customers shortest 3-year contract and renewal every 3 years or a 5-year contract. So the contract time period is different from country to country. And as Doug explained earlier, the churn -- when the renewal timing comes, how much churn is there actually there. In the case of U.S., only several companies in a year. So once CapEx is made -- and because of customers' business regions, if there is the need to exit, that is a different story. But usually, there is a very long-lasting use of our data center. More than 10 years by 1 customer, we have many such cases. So inclusive of the full stack services, we will continue to sell and market and the 700-megawatt part, the 700-megawatt construction is ongoing. This may be some of a repetition, but under the recent situation, 700-megawatt data center once it is built, in many regions and in many data centers, there are such anchor tenants. We have customers already available. And once we can start business, customers will immediately start using our services. So in terms of turning into profits, we can have profit in a single year basis or turn into profit in the following year. We are able to turn into profits pretty early. This is the case of the business.

Allow me to confirm hyperscalers. They can sign a contract initially 10 years or not? Will they sign a contract for 10 years initially?

It depends on the region, but yes, you're right. Basically, 10 years or longer contract. More than 10 years, and then every 5 years renewal option, for example, or in other regions, every 5 years, renewal of options, there are different patterns. But you're right. 10 years is the most common pattern. Yes. And then extension would be another 10 years.

So first and in second year, you talked about possibly turning into profits. But then you said breakeven into 3 to 5 years was misleading. This is confusing.

I was confusing with cash flow breakeven. Breakeven-wise, within 2, 2, 3 years, almost all data centers turn into profits.

You mean on an operating profit basis?

Yes, operating profit basis, turning to profit, operating profit into 2, 3 years.

Next question, Japan, you're going to accelerate investments in Japan. Currently, in Chiba, Equinix and Digital Realty, looking at their investments, there is so much excess of supply and such strong competition, you are avoiding Tokyo, and you said like Osaka in this time, you are skipping to [ Casa ], I think this seems to be the right strategy. But do you intend, again, to invest in Chiba? By accelerate, do you intend to invest in places like Chiba?

Not only hyperscalers, but large-scale clients diversification of location is necessary. And Chiba is I think, what -- you mean by Chiba is in region in the area, there are several hundred megawatts of supplies coming and continuing. And in this case, in the case of a hyperscaler -- if there is more than a certain scale, there is too much concentration in 1 location. They surely have needs to diversify their locations. That can be in Chiba and other locations to diversify into. Therefore, whether NTT will invest in Enzi or not. As of now, as you say, there is already a lot of supply that instead of Enzi in NTT in Japan, network connectivity and fiber assets, we are at a strong advantage. In other words, in the U.S. or India, if there is a new market to be created, this is going to be quite challenging if we wanted to create a new market ourselves. But in the case of NTT, we have a lot of fiber assets. We want to use this advantage and create market ourselves. This is the possibility we are thinking of.

We will go to the gentleman in the third row.

My name is Ishino From Tokai Tokyo Research Center. I want to ask about the data center. You mentioned that the bookings for data center are increasing. But what is the substance or the contents of this data? For the content, is it someone like Netflix? Are we talking about Netflix type of data, what type of data is the core of this growth? What is the core of the data right now? Going forward, what will happen? Do you believe the real-time type of data will be increasing down the road? If that is the case, the customers of your data center business, customer allocation may change depending on the change in the substance of the data that you handle. Now right now, in the United States, how do you see the characteristics of the customer profile? We do -- when you take a look at the data process, you mentioned that you're #3 globally. But is there -- is there any -- is there a concentration among customers? Do you have customers in the growth sector? That's my first question.

We have customers across all different verticals where we're seeing the most growth is what you would expect. It's in cloud computing, it's in AI, it's in analysis, blockchain, things of that nature, IoT. All of those usual suspects is where we're getting much of our business from, I think, globally. We also, at NTT, afford a very strong reputation for operating very high-quality data centers. So we get a lot of financial business. We get a lot of government business, especially in the U.S. And so I would say we have a very well diversified portfolio of clients as one of our strengths from a concentration standpoint. As you start to move down and you look at individual regions, of course, there's going to be greater concentration. But when you look at it globally, we have a very well-diversified portfolio. And it is the usual suspects of those growth areas that we're getting, especially in cloud as everyone is digitizing and moving to the cloud. Did that answer your question?

[Interpreted] If that's the case, when you talk about cloud, what about ADAS or [ ARS ]? I think in the United States, it's a car-centric society. So Ford and GM are now working together with the government. And you involved in Las Vegas project. But will that demand increase going forward, do you think? So do you believe that type of booking will increase in the United States as well?

So we're already having conversations with car manufacturing about autonomous driving. As you know, we have a smart city project in Las Vegas, which has spurred a bunch of other conversations with other cities. If you think just in our short lives, going back 10 years, the amount of data we used to access on our cellphone was just basically text messaging. Now I can access movies. I can watch Netflix on a plane or connect to distabout anywhere. All of that content is really what's driving the explosive growth of the data center industry. And yes, I'm a very strong believer that the autonomous driving and IoT that you're seeing in cities will be deployed and deployed across heavy swaths of the globe. A lot of that starts in the U.S. because the U.S. is where the data center industry started. So we're seeing a lot of that activity now. But I think you're seeing some of that in Europe as well. And so -- that is the primary driver.

My second question, you talked of a hyperscaler. In the past, companies like Intel, they created a CPU Intel corner of the market with CPU recent days. Now as hyperscalers can on their own, make their own development. So the added value of semiconductors are now being absorbed by the hyperscalers and the cloud service operators that in the case of NTT Group, what is your prospect? You mentioned that you're doing this at a very early phase. You mentioned that you're doing work very quickly. Now supply chain for semiconductors are problematic. Are you going to be doing yourself, convert this on you own? Can you talk about the semiconductors and the supply chain issue? I know the past 2 years have been difficult for your supply chain. What are the prospects for NTT when it comes to this particular question?

Yes, you mentioned supply chain, especially semiconductor supply chain. Yes, you're right. The delivery period has become very prolonged with regard to semiconductors and had implications. But what is going -- what is the impact of the data center business? As you pointed out, with regard to data center construction, yes, we need to procure a lot of components and materials. So it is true that delivery -- there's a risk the delivery period could be prolonged and that this could lead to delays in the construction. That is the risk. But as, as mentioned by Doug Adams earlier, we take the modular approach. First of all, data centers when in the beginning construction, they do UPS and also the air conditioning design, battery design. You actually make procurement with vendors for each of these materials. But in the case of modular approach, what happens is that in advance you actually secure materials beforehand. And while procuring materials beforehand, you make sure that you flexibly assign those materials who are needed. So you have a very flexible approach with regard to modular approach. So you talked about the prolonged supply chain. So we have envisioned the prolonged supply chain. And with this assumption, we have taken methods to mitigate any impact from the pressure on the supply chain. So we're taking all sorts of measures against this backdrop. So you talked about semiconductor supply chain pressure. Is it affecting your performance? No, that is not the case in our company. Also, with regard to delivery to the customers with regard to the launch of the data centers, we have not had any significant delays up until now. The case of Intel is separate, but we've never had such major delays in the...

So I'd like to expand just a little bit on this because supply chain, everyone knows, is a global issue that affects all industries. We were very fortunate in a few years ago. We started the process of locking down our designs and standardizing our designs. So each region across the globe has a very standardized repeatable design. And what that does for us is it allows us to assign primary, secondary, tertiary suppliers to each element of the data center. And then we create framework agreements that are long-term 3- to 5-year in nature with our supply chain providers. And then we use what's called vendor managed inventory, VMI to make sure that we have a continuous supply. So I'd like to say that we manage our infrastructure by maniacally managing the supply chain. We are very, very, very mature and prescribed in how we manage our supply chain. And to date, we've had some small delays, but if a manufacturer can't come through with their framework agreement, we just switched to our secondary or tertiary manufacturer. And we work across the globe to also ensure that we're -- have harmony across the equipment that were used. You can't use the same equipment in all areas of the globe because there's difference in voltage between Europe and the U.S. and things like that. But we've got our supply chain down pretty well, and that's a benefit of being such a large company. It's also a benefit of having hyperscalers within our business ecosystem because the hyperscalers allow us to build at this very, very, very large scale that the small providers cannot build at and so they're not able to lock up the supply chain like we can. Hopefully, that answers your question with a little bit more detail about the construction side.

Point of clarification with regard to semiconductor. What about the CPU design, CPU design? The hyperscalers adding CPU design, does NTT intend to design its CPU because this is the core, right? Does NTT cannot or will not do CPU internally? Is that the case? Is that the making of NTT?

Well, right now, on this matter, of course, we're involved in a lot of R&D. With regard to business -- with regard to making this into business. Well, maybe going forward in the future in relation to the Ion concept, maybe white box type of possibility might be there. But with regard to data center business, as a data center business group, we were not aware of such a plan.

Thank you. Thank you for all the questions. We have been receiving many, but in the interest of time, many apologies, but we would like to stop questions and answers for now. We would like to conclude the session about the data center now. Thank you very much. And please allow us some time about 5 minutes to prepare for the next session. We will resume at 20 minutes past 4 p.m. Thank you. [Break]

Thank you very much. Thank you. As to this time, we'd like to resume the session. Next session, we'll be focusing on business collaboration with NTT and Tokyo Century. We'll be inviting President and CEO and Representative Director, Mr. Koichi Baba to take the floor. Mr. Baba, please.

Good afternoon. Thank you for your kind introduction. My name is Baba of Tokyo Century. We hope that you will be patient for a little while longer and stay with us for Session 2. Thank you so much for joining us online as well as on-site despite your busy schedule. We really appreciate in your interest. Furthermore, I would like to thank NTT Holding Company and their team for hosting this event. Thank you for giving us this very valuable opportunity. This is indeed a great honor for me, and I'm very appreciative of this wonderful opportunity. Now today, as the title indicates, I would like to focus on business collaboration with NTT and Tokyo Century. Afterwards, I hope to take questions from the floor. While the time might be limited, I look forward to this opportunity. Thank you for joining me. Now please be mindful that I should be adding honorifics to the companies, but I will not be using the honorifics to the companies. I hope that you will understand. So first, allow me to introduce a little bit about our own company. This might not be a very familiar company to many of you so I'd like to briefly introduce to you about our overview. In 2009, we started [indiscernible]. And in 2016, we reroute the lease, and we reroute ourselves a Tokyo Century corporation. We want to go beyond financial -- finance. We want to go beyond this sector. As far as the other outline is concerned, I believe this is self-explanatory. Our major shareholders are ITOCHU Corporation, Chuo-Nittochi and NTT. Now our business segments -- operating segments are 4. Equipment Leasing is the main business. We have approximately 25,000 companies that are company -- that are the clients. We have strength in IT equipment leasing. With regard to domestic market, we have auto leasing and command door services for the corporate sector. And we offer full lineup services. Direct market that is fairly to you. In the case of Nippon rental car, used to be a subsidiary firm in the past. So the third area is Specialty Financing. This relates to aviation and shipping, renewable energy, real estate and principal investment. So these require specialty in financing activities. As for International Business, we have provision of specialized services meet 50 companies. So we have IT equipment leasing, and we also provide auto leasing in the field of international business. So this is some of the financial highlights that we want to give it to you. We show ordinary income and capitalization up until now. In 2009, after the merger, our performance has continued to expand. And from the second year, correction next year, the new fourth medium-term management plan will start. So with collaboration with NTT, we want to expand our business segments and seek to expand our business as a whole as a result of this alliance. So capital business runs with NTT. This was spurred by Capital Alliance. So let me talk about the Capital Alliance. In February 2020, we felt that this alliance would actually enhance enterprise value. So NTT or 10% stake in TC begin their largest shareholder, and that led to capital alliance. Now the -- let me go back in time with regard to collaboration with NTT. This shows you the past steps. The first collaboration began 15 years ago, back in 2005, when we were involved in auto leasing, we actually merged our respective auto leasing business. With regard to collaboration, the first collaboration was auto leasing. And the fourth collaboration with the data center. Let me talk about the first -- up until the fourth collaboration for your reference. As with the fifth collaboration, which is real estate, we've already begun actual concrete joint cases. We went to further expand collaboration in this area. Furthermore, -- so we want to expand for the collaboration. We hope they will be able to have 6, 7 of the collaboration going forward. We want to -- this will be cocreative. We had to accelerate co-creative businesses. So let me talk about the first collaboration in relation to auto leasing. Nippon Car Solutions. I want to talk about NCS and Nippon Car Solutions performance. Shareholding ratio is NTT 40.5%. TC has 59.5%. Ever since the company started in 2005, we have expanded our performance. In 2013, in October, we had the merger between Tokyo Auto Leasing. Our ordinary income was JPY 2 billion in 2005, but this actually increased meaningful up to JPY 14.3 billion in fiscal year 2021. With regard to EV-related efforts, let me talk about the EV as well. The NCS is from the [indiscernible] expanding EV services, but even before, carbon neutrality became the keyword. They are much involved in providing electricity charging in the face of disasters. So we are top class in terms of the handling of the AV cards. This shows NTT Group's EV100 initiative. And what we're doing to support this, this is indicating. With regard to buying power to purchase TVs in large quantity and high-quality service support because of Telematics offered by work with NTT Comware. We also offer consulting. We offer total solutions. And this, I believe, is the strength of NCS auto leasing. With regard to EV business, you need batteries, you need charging facilities. So how do you manage that? That is very important in managing this type of business. So batteries can be this -- it's possible to have secondary usage or EVs, EV batteries that have can be a cycle. So we can actually sell them. We can also have profitability as a result of recycling. So shifting to the EV, we have companies that have strengthened assessment of batteries. And also, we are able to have huge companies that have the technology to draw out battery power. So we're beginning to strengthen our business, which focus on the social aspects. So NCS can offer full line of services. And we believe that we want to strongly support NTT Group's target of being 100% renewables by 2030. Let me talk about NTT Group's EV pursuit. We have 800 locations, local governments that are announcing decarbonization. We're offering ad packages to those local governments that are a leaders in decarbonization. So by offering charging facilities and also by managing maintenance, they're working with construction companies that have close relationship with NTT. We believe that we'll be able to collaborate renewables with various group companies, which means that the users will be able to support the realization of neutral carbon goals set by various local governments who are -- who are clients. There is a very rapid expansion of the marketplace in this sector. So NCS is trying to capture this increase in demand. And we want to support and promote the decarbonization efforts at the various local governments. Let me now talk about the second collaboration, NTT chasing lease. Let me talk about this collaboration involving NTT TC leasing. The NTL has called out leasing of the international businesses. NTT has 40%, and our company has 50% as shareholders in this company. Please take a look at the right-hand side whereby leasing of communication and other equipment. We also offer very good tablets for education. We have our leasing for these problem, we're also able to shipping and aviation leasing. So we have leasing in both domestic and outside Japan as well. Particularly look at the bar graph on the left-hand side. In July of 2020, we began our operation. The segment assets was JPY 1.2 trillion at that time. Also, the July assets. This is the source of profit for the leasing company. And the growth has been very strong. And this is a very important barometer if you want to gauge the growth percentage. By end of March 2022, the segment asset balance increased to JPY 1.6 trillion. In just 1.5 years, about JPY 400 billion increase. On the other hand, recently, with the impact of COVID the lease companies execution investments seen from the lease business industry associations numbers, if -- before compared to -- before COVID continues to be less than 20%. Even under such difficult situations, NPL has one of the largest business scale in Japan and is strongly growing, as you can see. Our company and NPL's collaboration example is following. If you look at the middle of the slide, the balance sheet, ship assets financing for ship owners financing is shown. Senior loan is provided conventionally with banks and we conducted ship financing with banks. But now that NPL has abundant financing capabilities. And with our arranging abilities, we can partake in senior loans and general loans and provide one-stop solution optimally to customers. Not limited to shipowners, but real estate and other project finance requiring a lot of finance such schemes can be used for our great advantage. Specific example, is collaboration in real estate lease. In Toyama City, where the public local wholesale market is being redeveloped in NTT TC Leasing and TC jointly conducted a building lease. NPLs lender function and our company strength of the real estate arrangement functionality are combined in realizing this collaboration. Going forward by using similar schemes, we think we can increase the number of such projects, and there will be upcoming rebuilding and infrastructure improvement demand due to aging of the public facilities going forward. We want to focus on these types of businesses. So these were some of the co-creation examples and use of NTT's capabilities. And we want to grow our business to #1 in Japan. Now third collaboration. Environment and Energy Business. Since October, we have -- together with NTT Anode Energy, we have been running large-scale solar power plants as shown in the pins. And we want to further collaborate in the renewable energy business, and we want to build 100 -- we established a fund with aiming for JPY 100 billion funding size. Mainly for large secondary solar power assets, we are enlarging our asset scale. We want to continue investment in assets and contribute to renewable energy and sustainable society. Using the example of India where there will be more demand, I would like to explain about data center business. In addition to Mumbai8, which is already up and running, there is a plan to build 13 data centers in NAV2 project. We have a collaboration in F2, and this will be more than 4x equivalent the space of Tokyo dome. Our additional investment to Indian data centers are planned at tens of billions of yen. Going forward, in Indonesia and in Thailand, our alliance partners Lippo Group, major conglomerate in Indonesia and Tisco, Integrated financial group in Thailand in collaboration with them, we want to secure land locations and the renewable energy power and using external capital and move into other regions. Together with NTT Group, we are collaborating globally under CSI leasing. CSI has leasing business in more than 50 countries and also ITAD, IT Asset Disposition Service based upon U.S. In 2016, since becoming our wholly owned subsidiary, with the network expansion and business scale expansion, the profits have been increasing in a double-digit manner. This is a core to our U.S. business. And the subsidiary of CSI is EPC. EPC's ITAD service. I would like to talk about in more detail. ITAD service may not sound that familiar, but ITAD stands for IT Asset Disposition Services. Refurbish recycle, including the destruction and processing of IT equipments are covered here. We are able to provide safe and appropriate services. The left-hand photo shows EPC employee erasing data. Right-hand side is hard disks and memory chips being pulverized and destroyed. You can see the size comparison with the coin to the right. On the right-hand bottom truck, this is dedicated truck for ITAD visiting customers, plants and offices, the truck will visit customers directly. And then on site, we will conduct destruction and polarization of IT equipments and data. And with increasing IT usage, the importance of ITAD is growing more and more. And international certification is also in need. And we receive ITAD certification globally and ensure quality. And when recycling and data ratio are conducted, the right-hand side, international certifications are issued to provide peace of mind to customers. Next, here, together with the NTT Group and with CSI, this is the image of our overseas operations collaboration. NTT Data Group will provide services inclusive of device. Plus, if we add CSI's financial functions and asset management and data ratio functions, we will be able to respond to customers' ICT life cycle on a one-stop manner. We provide life cycle management services to customers. We can provide continuous approach to customers. Global companies for efficiency have tendency to replace IT equipment companies. And the scheme for the leasing company to bear high lease situal value equipment have economic validation. And ICT-related investments are accelerating globally. NTT Group's ability to produce and add to connect, can be combined with CSI's asset management and consulting abilities we want to contribute to NTT's global businesses. And finally, NTT and Tokyo Century collaboration, what kind of future are we aiming for? With collaboration, business activities, we want to solve social issues. This is a combination of NTT's corporate philosophy and ours as well. NTT's emphasizing ICT business considerate of sustainability. This would apply to children's tablets, renewable energy, building, power generation facilities, vehicles, investments into such social infrastructure and manage exit and reuse of these assets will be required. The children who will undertake the future will use tablets on a day-to-day basis in schools or carried by NTT TC lease. We are working with NTT Group. And together with NTT Solutions, under the GIGA School initiative, we have the top share. We are contributing to the education enhancement. And for automotive, CASE. CASE systems for connected, A autonomous, S sharing and service and E electric, electrification. I think you have been hearing these words for quite a while. With telecommunications cars are connected and connected with the outer world connected and autonomous driving are the future way of cars. NTT has ability to connect and working with NTT and NCS has expertise in managing. I think the 2 can become best partners. In our group, we have been developing asset business and our asset business capabilities will -- in NTT's growth area, be able to support the business further and together, in collaboration, we can solve social issues to realize sustainable future and the sustainable future of what we desire. This is my explanation. Thank you very much, and thank you for your attention.

Thank you very much. That was Mr. Baba, the President. We'd now like to go on to the Q&A session. I'll take questions from people who are here on site, and then we'll be taking questions, people who are connected online. [Operator Instructions] So we'll first begin with the people who are here on site. Please raise your hand if you have any questions. Anyone? Yes, we'll go to the gentleman in the front row.

My name is Masuno from Nomura Securities. What we heard about the data center business. And you introduced to us your involvement in India. So the -- you have 75% stake in Mumbai. And in the next project, in Navi Mumbai, you have 50% investment stake -- was stake in the company or in this business. So NTT taking 70% -- you're taking 30% would actually show the structure -- but what is the your company taking 50%, 75%. Your investment ratio, your stake is very large compared to your partners. So what are the strengths that you have? Well, I suppose you can gain a lot of returns. But what is your strategic intention behind you're taking such a large stake in these data center businesses? That's my first question. And my second question, NTT TC lease has JPY 1.6 trillion balance. But in principle, as we see it, we do see that this strong growth. Can the strong growth being sustained? What would drive the sustained increase or return for your business? So that's my second question.

Yes. Well, thank you for your question, and thank you for your comments. I'd appreciate it. So the first point -- your question was about the data center business that we're involved in, in India. So that was your question. As was covered in the presentation earlier, when it comes to IT equipment, since the past, we were involved in leasing -- we are actively involved in leasing of IT equipment. So we thought that we have a certain level of know-how with regard to IT equipment. We were -- now against this backdrop, I talked about the capability of our asset management. So we own assets, we manage assets, and we dispose of these assets. That was our mainstay of the business in the first phase. So in the IT age, not only IT equipment, but data is contained in these IT equipments. So our business model has changed. It has evolved from IT equipment down to data center business. And I think data center business is a natural extension of our business, and we feel that we should be involved in this business in the future. So that is the premise of our business. Now your question about the investment. You asked about the breakdown of the investment between NTT and our company. Bearing in my mind, NTT's investment policies and intentions, we have continuous dialogues with our partner, and we make our decision. So going forward, I'm sure that there will be many projects. I will be very happy if there are many questions, many projects rather. But we have to bear in mind, the investment policy of NTT and then consult them -- and in places where we can contribute, we would like to contribute. So that is our basic position. Now your second question related to the earlier slide. In 2020 April, when we began the pro forma, which the balance to show you the level of assets. Now corporation and collaboration really was very successful, and we were able to do this in a very speedy manner. Now as far as Tokyo Century is concerned, they have their investment policy. And NTT TC leasing has also been investment policy. They have independent policies between the 2 companies. And they have some -- the credit rating and the examinations are totally separate. So what have we seen for the finance will be geared up by these companies, they will independently make their decision. Against the backdrop. Tokyo Century risk appetite and risk profile will be studied and also NTT leasing profile risk appetite will not be identical. So when demand for customers emerge I'm sure that these 2 companies they will leverage their feature and to try to respond to the customers. And from our side, we might invite activities listening to join in a certain project. And as first could be true as well. So we have gained the communication with the 2 good companies. We have to continue silent about co-creation and that has been very fruitful and that has allowed us to grow this far. Now we began with auto leasing in the first place. We began the work to work in the auto leasing. With the successful -- we have the successful model already in place. And that has led well to the second collaboration. So this success has really led us to a very good growth track. And you see the data line image in a few years on the right-hand side of this page. It is our hope that we'll be able to grow the numbers further. Naturally, we have to improve our profitability as well. Make sure that we had to take initiatives so that our absolute level of profit can also grow. That is my response. Thank you for your question.

Then at this point from remote participants, if there are any questions we would like to accept. The operator will explain how to ask your question.

[Operator Instructions] Mitsubishi UFJ Morgan Stanley Securities, Mr. Tanaka, your question, please.

This is Tanaka speaking. I have one question. Collaboration number three, Energy and Environment Business, JPY 100 billion solar -- solar power plant totaling JPY 100 billion. Page 14. What is the profitability situation? What is the outlook of profitability? Please explain.

Thank you for your question. Thank you for the remote question. So Environment and Energy Business, we have started a fund together. What is the portfolio situation? And the profitability outlook. I have received the question. As the earlier slide shows in the red pins, you can see the actual projects. We will further accelerate -- and December last year, we put together the framework and started our efforts. Therefore, as of this stage, there are various pipelines and due diligence are taking place. And for example, secondary exit renewable energy projects, if they exist, we want to buy and acquire them. The profitability for the individual projects and areas, they vary. But our stance is in consultation with NTT, we want to have certain profit orientation, and we have been working accordingly. And under this policy, the red pinned areas, we have a certain profit here and IRR measures in our mind, which we cannot disclose about. But these are the projects -- and we want to able projects more than our indexes or measures. And solar cell plants are highly popular these days. There's a lot of competition. But sourcing NTT Anode Energy has a lot of track record. And we have about 700-megawatt solar plant development, we have more than like 130 sites. We have track record. And lately, as we have been disclosing, the solar cell asset management -- we have AMPM company established, and our asset management ability will be our weapon to secure the projects. Then first of all, the fund is JPY 100 billion. So there is no additional investment plan. You will be seeing possible projects coming and then be building up? Yes, we intend to build up within this fund.

Okay. Are there more questions from those in the floor? So we'll take a question from the gentleman in the fourth row.

My name is Ando from Daiwa Securities. So you have this collaboration with NTT. You're doing a lot of business with NTT. That was what you introduced today in the course of your presentation. In terms of your assets, how did the risk for your asset between NTT and yourself and maybe a third party? Is there a difference in the risk-taking profile? Can you really work with different risk-taking profile among your different partners? And also, with NTT, how do you divide roles? This might be a very basic question. I would appreciate your swirling out this type of information for us.

Thank you for your question. Your first question probably relates to NTT and TC lease in our company and other lease companies and our people in the industry. How -- is there a difference in the strategies for our portfolio? You're interested in the differences in how we structure our portfolio. We have JPY 5 trillion in assets right now. So if we do apple-apple to comparison, it's not the same. On an apple-apple basis, it's not the same between other countries -- companies in terms of our portfolio, our conventional -- we only have 30% of domestic conventional assets, which means that we need to consider how we allocate our assets at Tokyo Century, and we have to allocate our business -- our assets on the 4 major business segments. In the case of NTT TC leasing, they are very safe, safety oriented, very few nonperforming loans. So they're a company that is involved in very healthy, sound fiscal management. With regards to equity, mezzanine, the risk-taking. I mentioned the differences in risk profile. Again, risk appetite is different between our companies. And so there's a difference in the returns that our companies are taking. But that's how we're working in this partnership. Turning to your second question. In the case of NTT TC Leasing and Tokyo Century, how do we divide roles? It's been 2 years. And I think we know how we do our business. We also are very knowledgeable of our respective portfolios. So that being the case, this is what we want to do. So entities, we might recommend certain projects that we can recommend to NTT TC leasing. We have garnered such experience in the past 2 years. So based on this know-how, we want to further strengthen our collaboration and our contact with NTT TC leasing. Now the difference between the third parties. That was one of the questions that you highlighted in your first question. Well, we are -- we focus on leasing, then banks, independent operators like ourselves and manufacturers, there are a lot of different players involved in this leasing business. So the -- so we will bear mind the features of the respective players, excuse me and engage in this business. Thank you very much.

Many apologies, but in the interest of time, we would like to close the question-and-answer session. At this point, I invite our President, Mr. Shimada. Mr. Shimada, over to you.

Thank you, Mr. Baba. Thank you for joining us today.

No, thank you for your wonderful invitation.

Ladies and gentlemen, you have observed this presentation I'm sure. So with Tokyo Century and our company, we've been working together since 2005. We have had very long-standing partnership with this company. And our partnership has gained even greater depth as time went by. So it's not just here in Japan, outside Japan in overseas as well. And by the way, on October 1, NTT DATA, Inc , will be launched. So I -- NTT DATA, Inc., they have their global business. And I do hope that we'll be able to gain the support of Tokyo Century so that we'll be able to gain greater growth going forward. Thank you, Mr. Baba. We look forward to your -- Mr. Baba, thank you. We look forward to your continued support and cooperation.

No, thank you. Thank you very much.

Thank you. So that is the end of collaboration between -- business collaboration with NTT and Tokyo Century presentation. That's the end of the business cooperation with NTT and Tokyo Century. But Mr. Shimada will remain on stage. Needed to go on to the final part of this program, where we have a Q&A session. The general Q&A session. We will take questions from all of you. Mr. Shimada, the President and CEO, will be responding to your questions. As is the guests we'll take questions from people on site. And then this will be follow-up by questions from people who are connected remotely. So if you're here on site, please wait for the microphone to be brought over to you before you ask your question. And please be sure to state your name and affiliation and then go on to your question when you're designated. So are there any questions with -- are there any people with questions? So yes, we will start with this gentleman first in the first row.

SMBC Nikko Securities, Kikuchi is my name. So Mr. Shimada, I think this is the first time that you are involved in this large presentation in front of this investor community. So the program kicked off with Mr. Hiroi. And Mr. Hiroi talked about some of the changes in the policy to be followed under your leadership. So Mr. Shimada, as the President and CEO of NTT Group, how do you intend to lead and guide NTT Group under your tenure? What is your vision? Can you talk about the Envision business which you intend to lead the group down the road? You have predecessors -- you have very strong predecessors. If you could introduce yourself, please.

Thank you very much, Mr. Kikuchi for that question. Yes, I am not a very flamboyant person. So I want to make sure that I do my work in a very steadfast manner. Now Mr. Hiroi had already taken the floor earlier. As is mentioned in July, we had the creation of a new DOCOMO group. And very soon we will be -- we will have design NTT logo, who have new data Inc. will be launched under this new dynamic NTT -- dynamic NTT loop logo. So when we -- so as opposed to business transformation and structural change, is one way to bring about change. So -- but we need to produce results as a result of this change. So I want to focus on producing results as a result of introducing these many changes. Now when I first appointed as the President, I made this clear, we want to be a customer-centric business. We want to carry out customer-centric business that is what I made clear. So we -- so there are a lot of products and services. When you take a look at our products and services overall are we offering high-quality products and services compared with their competition in all fields. Maybe that is not the case in certain segments. So what I say internally, within the group is that we should be improving our quality overall. Now of course, improving our quality will entail costs. But if you leave the quality alone, then you'll be losing in the competition, you'll be losing the next year competition. So we need quality where we can be successful in our competition. How can we create such a maximal level quality? To do that, we have to spend cost. But in the -- but if we spend the cost by , if we can gain a return out of that, they will be appreciated by the customers. And the customers will continue to choose NTT as their partner. I feel that this is the most important part. So for right now, I'm concentrating on improving quality, and that has been the instruction and guidance given to all the NTT Group companies. In order to improve the quality, what needs to be done? The employees have to out the culture and mentality of improving quality -- to change the culture so that they'll be focusing on quality, first of all. I think the mentality of the group up until now is based on stability, I want to really emphasis stability. In August this year, NTT was cost disruptions. And we cost inconveniences to the society. So of course, we had to prioritize stability of services. But stability alone would not suffice. It's important that customers be able to gain new experiences. We need to inspire new -- inspire these customers. so we need to upgrade our capabilities so that we can inspire our customers. So first, we want to nurture and change the mentality and awareness. That is what I'm focused on right now. Now next fiscal year, will be the final year of the current plan. No, I cannot -- I'm thinking about the timing, but will be coming up with a new medium-term management strategy. So at that juncture, I hope that I'll be able to express my vision in a more concrete manner. So I hope you'll be patient until then. Thank you very much for your patience in advance.

My second and last question. Mr. Shimada, you were the CFO, but you're now the President. The balance sheet and the financial situation of your company a couple of years ago and right now is totally different. I think the biggest change is that DOCOMO has become the wholly owned subsidiary firm of NTT Holding Company. So when it comes to shareholder return, what about your policy for shareholder return? How do you intend to carry out to your shareholder return policy? Right now, you are taking very bold cash management. You're doing a lot of overseas businesses with Tokyo Century. I think this was on the major agenda. When it comes to your policy about financial returns and providing shareholder returns, can you talk about this?

I suppose you want to know how we introduce cash in the future, right? That is how I interpret your question. Now there was a question -- there was session about Tokyo Century NTT TC leasing. This is part of the presentation but they were involved off balance and they had JPY 1.2 trillion asset and off balance to return a lot of off balance sheet initiative based on which we -- and that is -- and we also implemented NTT DOCOMO becoming wholly on subsidiary firm. So how we observe the balance sheet is a very critical component of how we care business in the future. So how you consider the road ahead, what is going to be involved? In the case of data centers, we have such strong appetite among the customers. So we have to accumulate assets that translates into greater returns in this case. So in certain cases, we use third parties cash. if the market growth is very fast, then, of course, we have to increase our own investment, but at the same time, this year, data center, we invested JPY 300 billion but we only just -- we only invested JPY 180 billion of that, JPY 120 billion was from third party. In vest, it was JPY 145 million last year, it was JPY 135 million 3rd party. So therefore, we are increasing our own investment, but at the same time, in order to catch up with the growth in the marketplace, we do also leverage third-party finance as well so that we can actually capture the growth in the marketplace. That is what we're doing. So we need to invest in data centers. I'm sure. And also, in order to shift to digital business, we might consider certain acquisitions as well. So we want to place cash in areas where the business is growing. So we need to invest in growth segments. Also, in the recent, we cared a share buyback because the government released some of the NTT shares. So how can -- so we need to spend cash so that we can spur growth. At the same time, the shareholder return is a very important matter for the management and the medium management strategy, [indiscernible] the current strategy plan. He mentioned that in principle, his policy was to continue to increase in the return -- in the dividend as well. And also, he also -- we also have the track record of flexibly carrying out share buyback in the past. So that is something that I would like to continue. Thank you.

We would like to accept the next question. The person in the second row, please.

[indiscernible] is my name. And I have just one question. From us investors perspective, under the new President, Mr. Shimada, numbers, balance sheet and PL, out of them, what do you think you want to focus on -- where do you want to change most in? Please give me a hint. Maybe when we look later, we can see what -- and how the tracking record has changed. But if there are any signs of where the track record is going to change, please let us know.

And your question is very difficult to answer. But why did we today talk about data centers. This is one tip for you to think about, third party cash to be injected. Our data center business and telecommunications business, we have worked to raise ROIC. And as a part of that, using other capital well is one story that we have. But when we are truly growing, we ourselves have to invest in. Otherwise, the fruits of the investments will not become ours. If we bring in others capital -- third-parties capital, then the returns will go to the capital investor. To pursue growth, if our ability alone may not be sufficient. We also need to use others capital too, but we have to be involved. We have to participate in order to gain returns. This is the thinking. Of course, the business portfolio can be varied. And the growth area -- and the growth portfolio and how you think about asset efficiency, this is one big theme to think about going forward.

Next question, please. The gentleman in the first row, please.

Masuno, Nomura Securities. Two brief questions. Point in March '28, what will happen to the role of NTT Holding Company in a couple of years' time? Because in the integrated ICT segment, DOCOMO by March '26, we'll have a synergy of JPY 700 billion. Mitigate global business segment, data has a medium-term plan. So that being the case, we take a look at March 2028, what role will be played by NTT Holding Company? What business factors are you going to be focused upon? That's my first question. March 2028. If we assume that the new medium-term plan will be 4 years period, I'm asking what you will be in the final year of the next medium-term management plan.

Okay. Well, in principle each group operating company has their own medium-term plan of their own. And naturally, we hope that each group operating company will achieve those plans and targets containing the plan. So if we took out with the new medium-term plan next year. What about the consistency with other group operating companies medium-term plans? I think that's the gist of your question. Natural we'll be mindful of that. But I think it's always okay to review those plans. So if you -- so you can actually exceed your commitment containing the plan. Now DOCOMO -- just because DOCOMO clients there, we're not going to be bound by DOCOMO's medium-term plan strategy. So I hope that's how you understand these plans.

I see, I understand. Okay. My second question. This applies to the ROIC or return on invested capital. What about -- are you going to be focused on ROE? In the case of telecom business, less investment increases, I think your asset efficiency will increase. So you'd be -- are you going to be investing in non-telecom sectors? And what about net worth ratio? If we take in the case of shareholder ratio, I think your worth ratio -- your net worth is going to increase. So how can you improve profitability? You mentioned that you're going to continue to increase. How do you strike a balance? I would appreciate your thoughts on this topic.

As you pointed out, Mr. Masuno, with regard to domestic telecommunications business, ROIC is very important for the domestic telecom business. That is very important. So we want to improve the asset efficiency and make sure that we develop our business in this backdrop. Now as for the new business areas, what are our thoughts about the new business area? That is something that we need to revisit and consider. Of course, in potential growth areas, it's important that -- I think we should be prepared to take certain leverage in areas where growth is growth potential sign. So how do we restructure the new medium-term management strategy, really consider all these elements. So there's a question about the profitability of data center business, and we mentioned that we cannot respond specifically. But when you take a look at the consolidated margin, actually, operating margin on the group some of the basis for data center is not that high -- it's high, correction. In the case of data center, operating margin is somewhat more challenging in the United States because of intense competition. But if you go to places like India and Europe, the operating margin for data center business is very high. So we need to take a look at each of the portfolio and make strategic investment and make sure that we gained high return as a result of those investments. So that is the strategy which we need to consider. Now right now we are beginning to shift to that type of management strategy. So at this juncture, we do not have any major set response when it comes to the strategy financial strategy. But that is the direction which I would like to pursue.

What about profitability? How do you see the profitability per se?

Well, which particular area are you talking about?

For the company as a whole, I'm asking about the profitability of the company as a whole.

Well, in the domestic business, we are very -- we have high hopes for the Smart Life business for DOCOMO. We hope that DOCOMO business can further brush up and improve their profitability. Also when it comes to our global business, I mentioned that the data center business profitability is increasing. Clearly, profitability is increasing in this business market segment. So I think in support that we focus on this high profitable. So support that we focused on areas where we can improve our margin. In the case of legacy, there's downward trend, that is a given. We need to offset that consider possible acquisitions to offset that. So I think that type of business ranges going to be important going forward.

At this point, we would like to receive questions from remote participants. The operator will explain how to ask your question.

Those of you participating remotely, we accept your questions. [Operator Instructions] There seems to be no question remotely. So finally, from the venue anyone with a question?

All right. Excuse me, yes, Mr. Ando, please. Please bring the microphone to Mr. Ando.

Thank you. Daiwa, Ando speaking. And this is a follow-up on the earlier questions and answers, which means Mr. Shimada, capital versus profitability, you intend to change the framework somewhat, and you want to grow the growing businesses. This is how I understood. This is how it sounded. This is your new strategy for growth. This will be the thrust of your growth strategy, Mr. Shimada? Oh, your strengths are, for example, HR and certain areas may be releasing possibilities in such areas of your strength? Do you intend to accelerate growth? Can you explain where you have high hopes for going forward, including various areas and possibilities?

As you said, originally, CX creating by EX. As I said so, ultimately, it is the employees who create new customer experiences. It is down to the employees. And we need to provide environment for the employees to maximize their potential. And realize their potential, and we already have several working groups inside the group. For example, in financial area, life cycle area, CX area. And in energy, we have been working from the past due, but also energy. We have several cross-group working group. And we have, in fact, put together subworking groups. What is the member structure there? People in their 20s and early 30s, these are the members. We don't put particular restrictions. If one becomes a certain level of management personnel, how much investment would be necessary or restrictions are brought. So we first say, no restrictions, no limitations and think in the working group and raise to the executives. This is a new mechanism we have been introducing recently. We are trying new efforts. Some point in time, the output results maybe we can introduce to you somewhere, maybe within the calendar year might be difficult. But I think there will be an opportunity. In this sense, we want to enhance employee experience and create new portfolio. This will be important. Globally, we want to conduct this initiative as well. About 2 weeks ago in Brazil, Sao Paulo, we had the town hall meeting. We had relatively young people attending to. We received various comments too. Globally, we can have new proposals brought in, and we hope new challenging and exciting ideas are brought in. Of course, there can be initially the need for financial goals that we want to sort out to, but employees with new ideas, new perspectives, generate new products and services. We want to create such an environment.

Any other question Yes, we'll go to the gentleman in the third row, please.

Ishino from Tokai Research Institute. I would like to ask 2 the questions. I wanted to ask about Smart Life business. You mentioned that in the context of Smart Life content Financial business, how do you intend to add value and business expansion of Smart Life business in relation to these 2 sectors? And also going forward, you have a new ion, new -- you have to -- an invest and do research based on ion concept, I would imagine. Now Mr. Shimada, you're not from the -- you're not an engineer, but then you've been working very closely with Mr. Sawada, so you're knowledgeable about science and technology. so can you provide us with an update on the progress of ION? And how should we view the road map for ION in the future?

Let me start with the latter part of your question and address the question about ion. So you asked about the road map for ION. So ION 1.0. Hopefully, around November, we'll be able to talk a little bit about the so-called ION 1.0 or plans for ION. So we are making some preparations. I think we have to have a good product. Right now, it is a vision. It is a concept that we're talking about. But also, we have a product. I don't think we can talk about the potential of profitability. You can talk about the return without a concrete product. So hopefully, something like a strategy of the product can be shown because we needed a long-term vision, but what about the short-term views? What are some of the short-term plans? I hope that on this point, I'll be able to talk a little bit come fall this year. I'm afraid I do not have any concrete things that I can talk about at this juncture. Now let me return to the first question. How do I see finance and content in the context of Smart Life business, how do we intend to reinforce content and finance in the context of Smart Life business going forward? Yes, content is an area where the competition is very, very intense and harsh. As you are probably familiar, NTT [ Kanuku ], which is a new XR company of NTT was announced yesterday. Ms. Miriam, who was the Senior Executive Vice President of DOCOMO will be the head of this new XR company. So Metabirth, digital twin. We are also interested in Metabirth. This is an area where new contents are likely to emerge. And I think it is important that we have that capability. In the case of conventional content business, of course, we want to make effort so that we can grow the conventional business as well. But at the same time, though, it's important that we generate growth in new growth areas. That effort is very important. Now turning to the finance sector. We have the [ GP ] program. We also have the dCARD and we also have the [ GPON ] program. So that is the basic pillar of our strategy in this finance business. Now with Mitsubishi UFJ, we have -- we will have a new collaboration with Mitsubishi UFJ Bank. Hopefully, we'll be able to launch new products. And also, we want to promote collaboration with other players in the payment business as well. So hopefully, they will be able to illustrate to demonstrate concrete products for you eventually. Thank you very much for that.

Anyone else? Then the gentleman in the second row, please.

Thank you. BoA Securities. Kinoshita is my name. Now to add to the earlier question, financial domain. So this expansion strategy going out into financial demand. And ROIC and asset aspects that were raised earlier. What are your thinking can you explain? For financial, are you going to use Alliance and to be off balance, will this continue to be your main principle? How do you intend to go out into the financial area.

Mr. Kinoshita, your question probably intends to ask how large the scale of the business is going to be. Whether you see on the surface or from the back -- if there is a certain scale and if the asset is going to be ours at some time, we have to think about off-balancing at a certain stage. If can be handled within our own capacities, I think we can do on our own. In as much as we can do within our capabilities, we can do on our own. But if things go very well and grow, like we did with Tokyo Century and like we heard from them, there are various partners. And by having various partnerings, we can consider about our own risks. In the financial business, as you are aware, security cost is very expensive. We need to take these aspects into consideration in order to have proper returns, we should think very carefully. Thank you.

Thank you. Well, as this is -- as time has come to end the session, I would like to conclude the Q&A session at this juncture. So that concludes NTT IR Day 2022. This is the end of the program. We look forward to your continued support to NTT going forward. Thank you for your patience, and thank you for staying until the very end. Thank you very much.

Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]