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

Thank you for joining us. I'd like to start the presentation of the Fiscal Year 2023 Third Quarter Results for NTT. My name is Hanaki of Investor Relations office of NTT. I will be the facilitator today. Allow me to introduce the attendees from our side. Representative Member of the Board and Senior Vice President, Mr. Hiroi; Executive Officer, Senior Vice President, Head of Finance and Accounting; Mr. Nakamura; Executive Officer, Senior Vice President, Head of Corporate Strategy Planning, Mr. Hattori are the attendees from our side. Please be advised that today's meeting is being broadcast live. Later today, we're planning to have on-demand-based distribution over the web. Please take a look at the Investor Relations website for the presentation, which is based for the meeting today. Also, please, you'll find comments with regard to forward-looking statement on Page 1 of the material. Feel free to read to that page. Thank you. So with that, would like to like to turn Mr. Hiroi to talk about the outline of the financial results, after which we will take questions from the floor. So Mr. Hiroi, the floor is yours.

Thank you very much. My name is Hiroi. Thank you for attending today. Before we start the presentation, I would like to express our sincere and deepest sympathies for those people who are affected by Noto Peninsula Earthquake 2024 as well as to their families. We sincerely hope for the earliest possible recovery and reconstruction of the affected area. NTT Group intends to continue to make efforts towards the recovery and restoration of the affected areas. So let me then start the presentation of the fiscal year 2023 third quarter results. Please turn to Page 4. This is the outline of the financial results. Operating revenue increased -- well, operating profit declined year-on-year. Operating revenue reached new record high level as to the third quarter. Operating profit and profit recorded increased for the third quarter on a standalone basis, although on a cumulative basis, they have recorded a decline. As for operating revenue, revenue from electricity business declined JPY 190 billion since NTT curved their power purchase to the rise in procurement costs. Integrated ICT business segment and Global Solution business recorded increase in revenue. So operating revenue increased JPY 144.3 billion year-on-year, up to JPY 9,716.9 billion. Now of this increase, impact from currency was roughly JPY 120 billion. As for operating profit, Regional Communications segment faces challenges related to fiber net adds and voice traffic because coverage-related demand has run its course. There is also an increase in costs related to removal of unnecessary assets for the proposed trimming assets. So operating profit were down JPY 34.6 billion year-on-year to JPY 1,486.2 billion. As far as the annual plan is concerned, there were some unaffected cost related securities and costs from disaster. And so cost going forward, these costs are expected to increase. We expect additional cost reduction measures, and we also trimming down non-core assets. So therefore, we aim to achieve increase in our [indiscernible] portfolio, which is the target for the consolidated plan. As for profit, declined JPY 21.4 billion to JPY 1,011.1 billion due to drop in operating profit and increase in interest payment. As for EBITDA, EBITDA declined JPY 16.2 billion to JPY 2,571.7 billion due to decline in operating profit. Please turn to the next page. This shows you some figures by segment. Let's start with the Integrated ICT business. Integrated Business, Smart Life business and consumer communication business all recorded an increase in revenue on a year-on-year basis. Now as for operating profit, there was a decline in Smart Life due to some reactions to factors in the previous year. However, there was increase in profit in Integrated business in line with the increase in revenues and also due to decrease in customer communications business as a cost efficiency, operating profit increased year-on-year, as for regional communications segment. As was mentioned earlier, on top of decline in fixed voice revenue, we also expect most of the increase through trimming down of non-core assets will be reflected during the fourth quarter. So operating revenue and operating profit both declined year-on-year during the third quarter. As far as the end of plan is concerned, as I mentioned earlier achieving the target for regional communication segment will see challenging since the disaster recovery cost is expected, but we'd like to cover the cost as much as possible through the reduction of non-core assets and cost reduction measures. So we would like to make efforts so that we'll be able to cover any decline in this area. Let me now turn to Global Solutions business segment. There was increase year-on-year due to increase in revenue in the public, finance and enterprise sector here in Japan. Also, we saw increased global business as well. So therefore, operating revenue increased year-on-year. There was impact from currency to [indiscernible]. That's operating revenue. This increase is due to structural transformation and also impact of increased revenue. So that being the case, we're able to record increase in operating profit in this segment. As for the Other segment, as I talked about earlier, operating revenue declined year-on-year and its curved the power purchase to rise of procurement cost. So revenue from electricity business went down. As a profit, this declined because of the impact from ENNET. So therefore, we saw a decline because of the impact in terms of the profitability of the electricity business. From third quarter onwards, we will be continuing to monitor the situation very closely. Let's make sure that the profit from electricity sales will be maximized and we make sure that we'll be able to minimize any impact from the market situation. Now let me turn to this page. Let me talk about the outlook for operating profit for fiscal year 2023. During the first and the second quarter, primarily in the Regional Communications segment, we saw a decrease in profit year-on-year as proactive cost was necessary in [indiscernible] assets. But we saw a steadfast improvement in profit in each quarter through cost reduction measures. So by each quarter, we're seeing improvement. So third quarter recorded increase in profit year-on-year on a stand-alone basis. During the fourth quarter, we expect base profit to expand due to expanding in both areas of further cost reduction, we also expect increase in profit through reduction of non-core assets. So while the situation remains challenging with expenses for disaster recovery, we will emphasize the consolidated profit target. Let me now turn to topics. Page 8. IOWN APN, we will use this IOWN APN in order to realize a distributed data center. Well, within this fiscal year, NTT Group, major data centers will be connected via APN within this fiscal year. Furthermore, from 2024, this will be further expanded to cover the regional data centers so that we can construct what is called distributed data centers, leveraging the properties of APN, by connecting data centers located in remote locations in real time, it becomes possible to utilize them as if it would operate as a single data center. Next, on Page 9, I would like to explain our new initiatives undertaken jointly with Tokyo Electric Power Holdings or TEPCO Group. We entered into agreement with TEPCO Power Grid to establish a new company. In the Inzai-Shiroi area of Chiba prefecture, we plan to develop a data center aiming to launch service in the second half of 2026. Also with Tokyo Electric Power Company Holdings, we established a limited liability company in November 2023 to operate a battery storage business in Tsumagoi Gunma prefecture. We will aim to launch service in 2025. We will continue to utilize the assets and know-how pertaining to the power and telecommunications business that we receptively own and aim to create new value and realize a sustainable society. Next, let me turn to Page 10. This is our new initiatives in the area of new green transformation. We created a new solutions brand called NTT GInno to strengthen initiatives in the GX field. Also, we launched the Green Energy business integration platform to help renewable energy producers with their GX initiatives and establish a new platform. And in addition, with respect to the visualization of platform for CO2 and other emissions, we successfully increased the number of suppliers introducing the platform to around 1,000 companies aiming to realize carbon neutrality up to Scope 3. Next, on Page 11, let me explain here how we are supporting the areas affected by the Noto Peninsula Earthquake. We restored our communication service and conducted some 300 on-site visits to evacuation centers, including non-designated centers to provide mobile phones, Starlink and Widestar II service, DOCOMO satellite phone service. As a temporary public telephone for disaster cases, we provided pre-installed type phones in 171 locations and additional portable satellite equipment in 23 locations in response to the request of the evacuees. Furthermore, for those staying in the shelters for a long period of time, we started video service and online medical consultation service to care for their physical and mental health. Going forward, we will work together with the local government and create consultation desks to address the concerns and challenges of evacuees and those affected by the disaster. On Page 12, this shows the number of our shareholders. Let me share with you the number of shareholders as of December 31 after the stock split. The graph on the right shows the number of shareholders as of December 31. After the announcement of the stock split, the number of shareholders increased significantly and compared to the level of March-end, it has increased to 1.7 times and those under age 40 as per report. So as you can see, the age composition also diversified as a result of the stock split. On Page 13, this is the progress of our actions in the medium-term management strategy implementation. So I won't go into detail. So please read them through by yourself. That is all from myself. Thank you very much for your attention.

We now like to go on to the Q&A session. [Operator Instructions] From Nomura Securities, Masuno-san, the floor is yours. Mr. Masuno, please, from Nomura Securities.

I will ask several questions, if I may. The profit for the fourth quarter, you mentioned earlier that this situation is very difficult, but you are likely to aim to achieve the aim. Are you talking about the regional communications segment, are you talking about consolidated basis, are you talking about being able to achieve the profit target for this particular regional communication segment or for the overall consolidated basis, if that's the case. If you add JPY 56 billion increase in profit, this is the view how to achieve the consolidated target. How do you intend to increase your profit by this much? Which segments are you intending to increase your profit as per explanation. Now of course, I would have mentioned this to JPY 56 billion profit from the sales of real estate at NTT. Can you please explain how you intend to increase your operating during the fourth quarter.

Thank you for your question. We're talking about consolidated as well as Regional Communications segment overall. So I think both in regional communications segment and consolidated basis, we want to achieve the target. But then, of course, there is a difference in nuance which in the case of the regional communications segment, yes, we will be carrying out sales of real estate. But yes, the foundation remains very difficult and challenging. So of course, we want to achieve the target individual communications segment, but the situation is very harsh still. On a consolidated basis, yes, of course, it depends on how much recovery we can make in regional communication segment, but there are other segments which are available. So hopefully, we'll be able to drive and offset any decrease to other segments. So we want to make sure that we achieve the target on a consolidated basis at the end of the full year.

Okay. What about the sales proceeds, processes of real estate, how much amount are you anticipating? Will that be the part of the third quarter or will all the impact from the sales of real estate be in the fourth quarter? You only have 2 months left until the end of the year.

I cannot give you concrete numbers, but yes, part. Yes, we are making preparations. And some of the profit was realized during the third quarter. But most will be reflected during the fourth quarter. Yes, that's how you should understand the situation.

Next, let me ask the following. You talked about additional costs. Also during the press conference, it was mentioned about JPY 10 billion of roughly adjusted recovery of the cost. We talked about cost -- security costs. Will that be mostly this year, most of them is going to be next fiscal year? So these temporary costs, what are your thoughts about the temporary costs?

Yes, we cannot prejudge the outcome, we cannot be complacent. The situation remains still fluid. Now going forward, we need to respond to various customers' requirements. And so it's up to decision should pertain to the customers' requirements. So how much impact will there be? We're not yet sure. That is not visible at this moment. But having said that, with regard to this matter on hand, there's likely to have any potential negative impact from the current credit circumstances. So Enterprise business revenue is likely to be affected because there's going to be some reduction in the transactions. That is likely to be reflected both in this year as well as the next fiscal year as well. Also, there are many temporary costs as well. For example, we need to address customers' needs. We need to talk to various customers, and we're not sure what will happen, but there may be cases when we need to make some payment of cost.

So how can we finalize this cost in a reasonable manner by the end of this fiscal year.

So depending on that, the profits for this fiscal year and next fiscal year will be affected. But I think it is still premature to make a concrete response on this matter.

What about the upside elements in energy.

During the fourth quarter, it's likely to be not affected by the special factors here, you'd like to drive profit in the fourth quarter, in Integrated ICT business, Enterprise business and Integrated Solutions business is doing well, started to have positive impact for the fourth quarter. Also NTT Limited data center-related asset sales will be reflected in the fourth quarter. So you're likely to enjoy proceeds from the sales.

So can you talk about the upside, because you had covered the downside. Can you talk about the upside elements as well?

Okay. Yes. As you pointed out, Mr. Masuno, for us, we have some growth business, such as Integrated ICT business that's part of our growth business. And also Global Solution is also another growth business for us. As far as DOCOMO is concerned, they're doing very well in terms of Smart Life business, they're very well in terms of the Smart Life and Enterprise business, they're trying to drive the growth in both of these elements. On the global front, as we pointed out, the data center sales proceeds is likely to kick in through the fourth quarter. So through all these elements, we're likely to reinforce our profit. Also, DX is doing very well here in the domestic market and revenue profit from DX here in Japan. So we hope to add on further operating profit from this business. So through that, we'll be able to make a recovery in the consolidated basis and achieve the consolidated profit target at the end of the day.

Now let me move on to the next question. SMBC Nikko Securities, Kikuchi-san, please begin your question.

I also have 2 questions. In relation to Masuno-san questions, this may be somewhat overlapping. So on Page 6, regarding the streamlining of your non-core assets, meaning that this will be the real estate disposal for NTT East and West mainly or are there any other assets in mind? Like, for example, data centers, I don't think you'll call it non-core or the disposal of data centers may not be indicated by this. Is that correct?

Well, yes, it's all about interpretation actually. So mainly when it comes to the streamlining of our non-core assets, it's basically about not only at NTT East and West, but it relates to non-core assets for each business. So basically, it's about real estate disposal. And data center sales. For this matter, data center business is currently our core business, we are focusing on that. So it's just part of the reshuffling of the portfolio. So we will dispose them as part of that. So it's how to count the profits as a result of that.

Okay. So just as a re-confirmation, it's basically about real estate. So you don't really refer to any different type of assets such as receivables, for example. So it's basically a real asset that you're talking about here. Is that the case? That's the point of confirmation. And also on Page 6, it doesn't really make sense here about JPY 60 billion or so. It sounds like this is about JPY 60 billion. Is that the right size that I can think about.

Well, I think real estate, you can interpret that this is basically real estate and rather than trying to size this bar here of profit, it's very difficult for me to comment on the detailed numbers. So please allow me not to make any comments regarding that matter.

Okay. So the second question regarding regional communications business. On a consolidated basis, that is going to have a very difficult impact. And in first half, you recorded a decrease in profit for regional communications. Going into next fiscal year, do you think the situation will come back to the level before COVID-19, so the decline from voice revenues will be covered by the cost reduction. Would it be possible to achieve that or do you think this after coverage situation, many things have changed. And therefore, do you think this situation will remain tough in the next fiscal year onwards as well? And also related note, PSTN will now be converted into IP network. So that will be completed by the end of this fiscal year, I believe. So if you have foreseen the impact on the business, please let us know. This relates to regional communications, I believe, and also NTT Communications also. So if you can also comment on the magnitude of that impact, that would be appreciated.

Well, first of all, regional communications business, the structure of this business is that as Kikuchi-san just rightly pointed out, with COVID-19, remote work became a common place. And of course the net additions of the Hikari business was quite favorable. And in the beginning, in the early part of COVID-19, the voice revenues expanded. So that was a positive impact coming out from COVID, but this is no longer the case. These positive impact has already disappeared. So as you rightly pointed out, things are going to return to the pre-COVID situation. The Hikari net additions, actually, when you look at the trend, the growth has decelerated the level before COVID '19. So we'll have to review the cost structure so that we can take initiatives so that we can achieve a sustainable growth. So for 2024, we will step-up the initiatives in order to achieve that target. And as you know very well, the net additions of optical fiber has slowed down in terms of the growth pace. So if that has a deceleration in growth, that will have a negative impact in next fiscal year. So the revenue growth will be slower. So therefore, we believe 2024 will still be a very difficult time frame for us. So NTT East and West will have to make steady actions in order to address this issue. And in addition, regarding PSTN migration, yes, PSTN migration, thoughtfully, as of January as of the new year, we were able to switch over without any accident at the New Year's time frame. And this PSTN migration impact, the specific impact from PSTN migration, I cannot comment on the numbers, but I think you are already aware, regional communications positive impact to some extent and NTT Communications site, NTT Communications because the network position will change, and therefore that will have a negative impact on NTT Communications. Well, in the Integrated ICT business segment, the negative impact will be absorbed with the Integrated ICT business. So that is the backbone of our business plan or profit plan going forward.

Next question from Citigroup Securities, Tsuruo-san, the floor is yours. Mr. Tsuruo of Citigroup Securities.

First question, I'd like to ask about cost reduction. I would like to confirm about the outlook for your cost reduction going forward. Based on the material, we're able to confirm the pace of cost reduction, JPY 45 billion in the first quarter, so there's a consolidation. So can you give us a breakdown of the cost reduction for each quarter, if you could give us a rough image. Also, Page 6 is that of further cost reduction. So can you talk about some upside or increase in cost reduction? That's my first question.

With regard to cost reduction -- with regard to NTT East and West, we have a cost reduction menu. So should we respond on this point?

But isn't this about cost reduction for the overall company in relation to the midterm plan? I thought that's what these numbers implied? Isn't that the case?

Of course, whichever is fine.

I'll leave it up to you to respond to those questions, sir.

Point taken. Well, basically, NTT East and West and DOCOMO Group are the main players involved in this picture. At NTT East and West, they are involved in maintenance of each facilities. Those have asset maintenance costs, which they're trying to reduce. So consignment expense to vendors as well as maintenance costs, they'll continue to make efforts to reduce these costs. So that's NTT stimulus. As for NTT DOCOMO, there are vast variety of different cost reduction measures at this moment, especially in the recent, they're trying to improve the cost structure. In the past, call centers were distributed to direct regions are not being consolidated. And also support for various agents are now being consolidated, are now being reduced because these centers are also being consolidated. So these cost reduction measures are now ongoing as well at DOCOMO. So that is likely to have a positive contribution to the picture.

Can you talk about further cost reduction measures that is mentioned on this page. In terms of midterm plan, do you believe that there's an upside to the cost reduction, are prepared to -- is there any upside for the fourth quarter in terms of further cost reduction against the midterm plan target.

Well, as far as the fourth quarter is concerned, there is the cost reduction menu, which we had already visited, and we want to implement these measures in surface manner. So there is further contribution from cost reduction during the fourth quarter because of that. So that's how you should understand the situation. There might be a shortfall. That is the case, as I mentioned earlier, we'll be covering that through sales of real estate. So we want to make sure that we have to cover the situation at the end of the day.

Let me turn to my second question, this is a more broad question about the capital allocation. Now NTT law is now being discussed in various forms. And I think stage-by-stage the discussion is progressing. With regard to share buyback, is it possible to have increased flexibility with a good share buyback in the light of the ongoing discussion with regard to NTT, can you share with us your views. Also recently, can you talk about the CapEx in relation to IOWN project. So can you talk about the basic principle related to CapEx going forward. I appreciate your comments. That's all for my questions. If you could respond, please.

With regard to NTT law discussion and the share buyback, I just think there's a direct link between these 2 elements. So with regard to capital allocation, there is no receptive element with capital allocation set for under the entity law. That is not our recognition. As far as the capital allocation, talking about, for example, in terms of business under entity law, there is no restriction pertaining to capital allocation because of the parameters. And there is no restriction pertaining to various capital transactions. So as far as we're concerned, we don't see any problems retaining to the current law. And we want to continue with the share buyback in line with the current policy. Let me see the other question you raised. Yes, it's about IOWN. Thank you for the clarification. Yes, we are very much focused on development underway in the context of IOWN we have a company called Entity Innovative Device. And this is a company which is established, and we are making capital introduction there, and they are making various investments for R&D. So that being the case, we want to continue to pursue the development based on this structure, there's no change in our policy. Now did you want to ask about impact from NTT law. I don't think there's any impact from with regard to NTT law. So we got the CapEx overall. With regard to IOWN, we're working 2.0 and IOWN 3.0, we are pursuing with device development in this context, also we're trying to use roll out new APN. And we've been making investments into those areas. So we actively continue to make investment in these IOWN-related projects. Now having said that, if we look at the CapEx, we're going to expand our CapEx with regard to equity investment in these areas. Naturally, we have to consider the impact on profit on a short-term and medium-term basis. It's important that we have sustainable profit generating structure. It's important that we will be generating profit while we continue to pursue R&D. So please understand we manage our position.

Moving on to the next question, which will be from Daiwa Securities, Mr. Ando. The floor is yours.

This is a detailed question. Actually, 2 questions, so sorry. Regarding the Regional Communications segment, for the fourth quarter 3 months stand-alone profit, you just returned to the same level last year, you just managed to do so. In the second half of the year, I think in the first half of the year, you struggled in terms of the profit vis-a-vis the last fiscal year. So what's the reason behind this recovery? And in the fourth quarter, can we expect a further improvement. Of course, there's an Noto earthquake impact, but the general trend, excluding the impact of the real estate, can we confirm that we are on the recovery trend and can see further improvement. And in the first half of the year, you talked about the system renewal and also the evacuating the buildings from the land. And did they make a positive contribution to the performance? And also the system integration revenue has started to show some increase. Is this sustainable. So from the outside point of view, those are things that stand out to me. So if you could comment and analyze these factors, that will be appreciated.

Well, for Regional Communications business, if you look at it, to be honest with you, the revenue trend has not really changed that much. Cost side, rather, expenses and also the write-offs. Those have been suppressed. So that's the big picture. Actually, the write-off has been controlled and also on the expenses side, as you rightly pointed out, the internal system expenses has been increasing. But all included, we have been able to absorb this with other elements, especially in the facility-related expenses, we have been able to work on cost reduction, and that has paid out. So if you could appreciate that way, that would be appreciated. The solution revenue is expanding. And of course, all the companies are now making efforts to increase the revenues in this front. Usually, in the third quarter to the fourth quarter, the revenues are on the uptrend on the increasing trend in the usual circumstances. But we would like to maintain this current level. And all the companies are striving towards that goal. But whether that is sustainable, of course, there are fluctuations quarter-to-quarter. That is the general trend. That's it for myself.

And my second question, East and West. Their profit level this fiscal year seems to be challenging according to your explanation, but you'll try to cover that up with the performance of other companies. Which part is going to grow on a year-on-year basis, it's conspicuous that the other business in the fourth quarter, it was negative previously, but this is going to turn positive this fiscal year in the fourth quarter. So that I think is the factor behind this recovery, but the other business, other segment, maybe this is real estate. So I think it might be possible for you to generate profit, but you are going to control that business. So, so sorry for this very get question, but what can we anticipate in this field?

For the Others segment, for the profit income, the urban solution has a big impact. Actually, this is the real estate business and not Energy is also having a big impact. Urban Solutions for this term because they are going to expand a cyclical business, and therefore, the revenue is expanding. Profit is expanding. And also in the fourth quarter, this trend will be maintained. On the other hand, Anode Energy, well, in the beginning of the presentation, I touched upon this. The baseline profit and its electricity business because of the legal framework, and this is operated as a framework. So therefore, the profit can be steadily expected and be generated on a steady fashion. But through in it, mainly enterprises on these users, when it comes to retail business to these enterprises and other general customers, there will be fluctuations in profit and that is becoming larger than before. The fluctuation is becoming larger than before. As for the entire year's business, we secure the energy in the beginning of the year, and that price is actually fixed at that point. But as we run the course of the year, the electricity demand fluctuates. And then if there's extra energy, we will just sell these electricity to the market and that could potentially be positive or potentially be negative depending on the circumstances. In 2022, we were able to achieve significant positive performance. But this fiscal year, we were not able to achieve a significant positive upside. And there is a possibility that this will turn negative this fiscal year depending on the market circumstances. So getting into the fourth quarter, we still believe that this will perform unsteadily and we have to anticipate some instability here. So this other segment, profit outlook will be challenging in your view. Yes. The other segment in the fourth quarter, to some extent, we will have to say that this is challenging. I think you can interpret it that way.

Next question from Mizuho Securities, Hori-san, the floor is yours. Hori-san from Mizuho Securities, please?

I have just 1 question. If I could once again ask about the global data center business outlook and your operations. I would appreciate your thoughts about the operation of our global data centers. Now the global operating companies, their stake is roughly about 55%. NTT data has roughly 55% in the global data center business. So domestic data center is more complicated and there are cases of NTT Limited is not involved. But outside Japan, it mostly relates to NTT Limited if you talk about data center today, also last year, last fall on NTT Day, you give a presentation about data center. NTT Data was not involved. Although they are the main player, entity, global business center had and also deliver -- but even if the operating global operating profit for that should increase if the data centers isn't going to improve. So therefore, you're not going to have a good valuation by the analysts. And I think even if you want to practically utilize this, if you want to do this based on NTT Data's balance sheet because we began weekend also because of this up in the U.S. stability. In the case of NTT's balance sheet, I think you have more capacity compared to data's balance sheet. So maybe NTT Holding companies were active in making investments compared to other group operating companies. And if you want to catch-up the economics and the reality, should you not make more active investment, I think you see IP eventually. So who's the main player in this picture? It's not yet clear. Will this issue be continues down the road? So if you create a more streamlined structure for data center business that were clear to those of us who are outside of your group, yesterday, we listened to the data presentation business that they don't tend to change. They don't change it right now, but they will not have discussions with NTT on this matter. So for the NTT, what is your position with regard to NTT data center, what is the best structure in terms of your data center business for the group as a whole? That's my question.

Yes. With regard to the promotion of the data center business, what is the relationship between entity of the company and NTT Data, I think that at your question. So to get the bottom line first, NTT Data and NTT Holding Company will always discuss very closely and make sure that both of us are able to expand and grow our data center business. So for this very last week, we are always in discussion on a day basis. As you pointed out, for NTT space balance sheet, yes, there is room for further investment. With regard to NTT Data's balance sheet, such investment could be quite urgent. So there could be breaks on any investment banking data with regard to data centers. So with regard to NTT Data and also for the investor community as a whole, focus is relevant. But how we see the business that needs to be explained. So on a single year basis, we provide you with P&L. And you focus on the bottom line for single year PL. But with regard to the data center investment, it's going to be a prolonged process. So in the initial phase of the investment, as you pointed out, yes, the interest rate as well as depreciation and amortization. It is true that there are some burdens in the initial phase of the investment into data center business. However for future growth, we cannot be complacent when it comes to -- we cannot relax when it comes to investment in data center. So it's important that down the road, we actually recoup the investment as we go further down the value chain of data center investment. With regard to how we see data segment, if we see this segment based on system integration, that shouldn't be the case, we should not be focused on just one single segment, we should see this as an asset-only department. So we are more broad-based company. Once we see the company in a holistic manner, we cannot realize growth. So I hope that the market players will also see our business structure in that manner. If you can value our business in that manner, we will be very grateful if you can give us further understanding. Responding to your question, yes, we take note of your comment.

Are there any other questions? [Operator Instructions] All right. Then it seems that we have exhausted all the questions, so we would now like to finish this presentation session at this juncture. Now we would like to continue with NTT DOCOMO presentation. So participants, if you could kindly stay on the connection and stand by. Thank you. Thank you very much for today.