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

Thank you very much for participating today despite your busy schedules. We would like to now start the briefing session on NTT's Fiscal Year 2024 3rd Quarter Financial Results. I am Hanaki from the IR office and will be serving as the MC today. First, we would like to introduce today's attending members. Hiroi, representative member of the Board, Senior Executive Vice President; Nakamura, Executive Officer, Head of Finance and Accounting; Hattori, Executive Officer, Head of Corporate Strategy and Planning. The audio of today's briefing is streamed live. We are planning to have on-demand streaming on our website at a later date, so we seek your understanding. As for today's materials, please refer to presentation materials on our IR website. On the first page of the materials points to be noted are listed. So we kindly ask you to please go through them. First of all today, Senior Executive VP, Hiroi will explain the overview of our financial results, followed by questions from all of you. Without further ado, Mr. Hiroi, please.

Thank you. My name is Hiroi. Thank you for joining us despite your busy schedule. We appreciate your attendance today. So I'll just explain the financial results for the third quarter of fiscal year 2024, starting with consolidated results. Please turn to Page 4. Upper revenue increased while operating profit and profit decreased. Operating revenue set a record for the third quarter. Also operating revenue increased by JPY 332.9 billion reached JPY 10,049.7 billion due to increase in domestic and global revenue at NTT Group as well as increase in revenue from the Smart Life business at DOCOMO. Now of this increase, the impact of foreign exchange rates was approximately JPY 135 billion. So this is a good high level as the operating revenue for the quarter. Let me now turn to operating profit. Operating profit decreased by JPY 87 billion and reached JPY 1,399.2 billion despite an increase in profit at NTT Group and increase in Smart Life business. This is due to decrease in communication service revenues in mobile and fixed line segment as well as measures to strengthen DOCOMO's customer base as well as the impact of slowing down noncore assets, which is implemented in the previous year. In regard to net increase in optical fiber services, this has increased year-on-year due to efforts to enhance marketing. And as a result, mobile number profitability or MNP is showing strong results in the recent. Now achieving the annual plan for the profit may seem somewhat challenging, but we'll make the utmost effort toward the goal to the efforts of individual respective operating companies within the group. As for profit, this was JPY 850.7 billion, down JPY 160.4 billion year-on-year due to decline in operating profit and also rebound from gains on the stock sales from the previous year. EBITDA was JPY 2,552.5 billion, down JPY 19.2 billion year-on-year due to decline in operating profit. Now let me turn to Page 5 and talk about contributing factors by segment. Let me first start with integrated ICT business. This segment posted year-on-year growth despite the decline in mobile communication service revenues mainly due to growth in financial payment in the Smart Life business. Now also profit increased in the Smart Life business segment, overall profit declined due to measures to serve the customer base in the allocation service development. Achieving the target might be a challenging, but we'll make utmost efforts towards recovery by taking purposeful measures to reduce cost and also improve network quality and serve the customer base. Let me now talk about the Regional Communications business segment. In this segment, both revenue and profit decreased due to decrease in network revenue and also rebound from the impact of selling down noncore assets implemented in the previous year. But net increase in optical fiber service posted increased year-on-year due to stronger sales of 10 gigabit plan and also all unit plans for the condominium market. Both operating revenue and operating profit are generally in line with our expectations, and we will actively review our cost structure, including the selection of the concentration of businesses and the reform of operations, in order to achieve medium-term growth. Let me now turn to Global Solutions business segment. In addition to increased sales in the public, financial and corporate sectors in Japan, sales increased year-on-year due to the impact of foreign exchange rates. So this part was very strong. Operating profit increased year-on-year due to higher operating profits here in Japan as well as higher operating income -- profit in the data center business overseas. As for the other segment, here in the other businesses segment, sales and profit increased year-on-year due to the expansion of data center engineering and NTT urban solutions. Also NTT facilities did very well as well. Sales business increased year-on-year in terms of sales and profit. Although operating profit increased driven by increase in revenue, profit remained unchanged from the previous year because of the loss from the sales of properties. I would like to move on to the topics. So please refer to page -- Slide #7. I will first explain our initiatives towards regional revitalization and urban development. In connection with the Expo 2025, we're scheduled to open hotels, parks and culture facilities in the Osaka area, Patina Osaka, Naniwa, NANONIWA, Tokyo. And the commercial facility within the park, ”NANONIWA” will open this spring. Furthermore, stadiums and arenas are scheduled to begin operations in various locations. Slide 8, please. I will explain about holding the NTT DATA leadership event in India. To mark the start of IOWN APN connections and connections to MIST, the submarine cable between India, Singapore and Malaysia at the Mumbai data center, we will be holding an NTT DATA leadership event in Mumbai in March. In addition, we will expand our data centers in India and further strengthen our data center business, which has the #1 market share in India. Next, please go to Slide 9. Mobile World Congress, the exhibition of us there. Every year, we are doing this. At the Mobile World Congress in Barcelona in March, we plan to exhibit the NTT Group space business strategy, network operation solutions using a generative AI and more. In addition, as part of the IOWN Global Forum, we are planning to hold sessions and exhibitions of solutions. So if there are people who will be going to India, please come and visit our booth as well. Slide 10 is something that we are showing you every time. This is the progress under the medium-term management strategy. And therefore, we would like you to take a look at this at your leisure time. This concludes my presentation.

Thank you very much, Mr. Hiroi. We now like to go on to the Q&A session.

[Operator Instructions] First, we'd like to start with Mr. Masuno from Nomura Securities.

I have 2 questions. My first question. This relates to the integrated ICT business into the Consumer Communications segment. With regard to ARPU, also with regard to service revenue, ARPU revenue, I was somewhat more negative. But then it is within the expectations, but then the profit is actually much lower than our expectation. So I think the level of deficit correction. So we've had the situation in the 9-month period and March is going to be a very competitive situation. Now, there's a gap of tens of billions of yen at this juncture. Isn't there a possibility that at end of the year, the gap could be much wider than tens of billions of yen? So as you make a run up towards this March, are you not going to change our marketing position and marketing approach. If that is the case, I suppose you have to increase your marketing expense. Yes, in terms of net increase and also MNP potential service, but I think you're not able to make a recovery to your revenue. What are your thoughts about the current situation?

Yes. Hiroi, I would like to respond to your question. Thank you for your question. When you take a look at the financial results, yes, if we take note of your point, that is true. As far as ARPU is concerned, the plan is somewhat high. And so compared with the high plan, the actual situation was somewhat weak. With regard to expenses and costs, it is true that in terms of expenses, and I did cover this in the presentation earlier, we've been reinforcing ourselves and marketing. So that indicates the expenses are expanding. So that is going to put pressure on the profit naturally. Now as we have consistently mentioned, since the past, as far as we're concerned over the medium term it's important that we secure the profit naturally. It's important that we also maintain our market share. That will help us to create a good source for revenue down the road. So we are trying to enforce our efforts, so they will be able to enhance our customer base. Yes, although the short term is, yes, there is a stringent impact on the profit over the short term that is true. But as far as we're concerned, we'd like to take a look at our situation for the medium-term view. With regard to investment and costs, I think we'll be able to recoup this over the medium term to our efforts. So it's a point that we guarantee strong customer base. So gaining strong customer base is something that we will strictly implement.

We're now already in February and March will be a very competitive situation, a major sale season. You're not going to change your approach towards the sales coming March and the competitive season?

Well, I think Mr. Shimada has also talked about this. We mentioned that we're going to secure the market share. We think about that repeatedly as we head toward the year-end.

What about the intensity of our efforts?

I think we have to watch how the competition reacts as well. So we have set a target. We want to reinforce our customer base, we want to gain a strong customer base. And we will do this -- we'd like to do things that are necessary to achieve this plan. Now how much in reality, I think we have to consider that as the time comes. But we're not going to just casually use sort of our measures that are available. As I mentioned in the presentation earlier, we'll also be focused on cost reduction. DOCOMO is really making efforts in terms of cost reduction at this moment. So we want to make sure that the impact of the increased sales and marketing can be absorbed in other areas. And we will also carry out cost reduction simultaneously as well. That is our thinking.

My second question also relates to the enterprise section of the integrated ICT business, in the enterprise businesses as well. As my own views about the profitability. My sense is that the profit in the enterprise section is somewhat weaker. Yes, there might be an impact of migration to PSTN. But I think at the end of the day, revenue itself seems to be somewhat weakening in the enterprise sector. You had increased the revenue in the second quarter, but then you turned to negative revenue growth in the third quarter. So there's elements that are aside PSTN migration that is affecting your revenue. I'm hoping there could be other elements that could help you to boost your revenue down the line. So what are your prospects about the possibility of improving your revenue in this sector going forward? How do you intend to change that? How do you think you can change the course? I will appreciate your prospects.

Yes. Thank you for your question. Yes, with regard to integrated ICT business, in particular, DOCOMO's Enterprise business, yes, I think this situation is exactly as you pointed out in your question, Masuno-san. Yes, they are finding it difficult. The challenges, in particular, are with the SME market. The growth in the SME market is somewhat lackluster. It's not weak -- it's not strong, and so they're not able to increase revenue and profit from that particular sector at this moment. So when we integrated DOCOMO and NTT applications, we've been looking on this particular sector. In particular, in terms of midsized companies, we will focus on this right now. So we're focused on midsized companies in regional cities. There's also -- marketing in this area is somewhat weakening. In terms of DOCOMO's Network business as well, we're seeing some erosion. That is true. So it's the point that we fortify our network business. At the same time, offer solutions that match the SME market. I think we need to reinforce our capacity in these 2 areas. That is the challenge we face. So right now, DOCOMO is very actively tackling this challenge at this moment. Now with regard to large companies, we had a very positive impact of combination between NTT DOCOMO communications and COMWARE. And there have been some growth. However, the pace of the growth has become so much slower, and you're right in pointing that out. There's a strong growth in the markets because of the requirement for DX and digitalization, so it is a point that we capture that. Also at this moment, AI market is really expanding very fast. And it is a growing market. So we need to reinforce our abilities in the AI market as well. We need to accelerate our growth overall.

That's my last follow-up question. If I could ask one last follow-up question. So with regards to digital communication business, social transformation is really working, and we can take comfort with the next fiscal year. As with regard to data, they're doing very well, just driving profit. And so real estate and energy, they are doing very well as well. So what remains is integrated ICT business. So with regard to integrated ICT business, what happens first for next fiscal year? Can you really generate positive profit in the next fiscal year in this segment? If you could answer that question.

I think this is the only worrying section -- or, yes. In terms of the plans for the next fiscal year, we have to consider how we're going to deal with that, bearing in mind the current challenges that we face. We're in the midst of deliberation on this matter as we speak. So if you could give us a bit of time before we can fully respond to your questions, I appreciate your patience.

We would like to take the next question. SMBC Nikko Securities, Mr. Kikuchi.

This is Kikuchi speaking. I have 2 questions. The first is regarding -- well, in the fourth quarter, I believe that there is no real estate sales like you have done last year. Is there going to be a major cost reduction? Or is there going to be an operation or initiative that is going to generate further profit? Is there something that you're thinking of? I would like to know. The results this time and next fiscal year, as Mr. Masuno asked, is it really going to be all right is my concern. In a regular company, structural reform plans will need to be announced is the way that your company is in right now is what I think. So cost reductions or making efficiency for the cost, are you having any initiatives in mind? You have done quite a bit until now. So is that going to be a bit difficult to do? That's my first question.

This is a Hiroi speaking. What you have pointed out, you have correctly pointed it out. With NTT DOCOMO, NTT Communications together, the fundamental cost reforms is currently planned and various initiatives have been implemented. However, something that can meet expectations, that's something that will show an effect in the fourth quarter and something that will mitigate the declining profit situation right now. In that scale, it is difficult to do. However, of course, at the DOCOMO side, we're consolidating the distribution outlets or sites and there are various transactions with the subsidiary companies or they're outsourcing the operations, how it's done, they will review it. And with the network quality issue, they have various initiatives implemented, and they are reinforcing the network and area tuning and they're working on increasing the base stations as well. But on the other hand, they are working on improving the efficiency of the network operation. As a project they're working on it. And therefore, the structural reform that you have mentioned, Mr. Kikuchi, we are working on them. And you did mention if it was regular company, which is quite a harsh word. But as the other regular companies are doing, we are looking at the cost structure and implementing initiatives so that we can go back to the growth or improvement trajectory. So I would like you to understand that point.

My second question. Nonconsolidated of next fiscal year, you had a dividend income which is at the center from your subsidiary companies. So this quarter's integrated ICT business segment or DOCOMO situation, the nonconsolidated income is going to go down. So then the shareholder returns and various financial items such as repaying the debt, I'm sure you have those plans. I just believe that a nonconsolidated basis is quite a tough situation. I'm sure that you will be coming up with the plans for next fiscal year. But from next term onwards, how should we look at your shareholder returns?

Well, of course, if the profit goes down, if the subsidiary companies' profit goes down, it is a 100% dividend payment. So the dividend from them will go down as well. However, when we think of our current cash flow and the main items in there, we believe that the decline is within the range that we can control and manage. What I mean by that is that basically, regarding shareholder return, it will be conducted in line with the conventional policies for next fiscal year and onwards as well. And as for dividend payment, it will be steadily increasing is what we are thinking. And share buyback, basically, in a flexible manner, we will be conducting it as well. Therefore, the share buyback in the level of what we have been conducting in the last several years, we believe we can control the cash flow that we will be able to conduct all that.

Just a while ago, what you did, securitization, maybe on a nonconsolidated basis, I don't know how you're going to do it, but the securitization or to increase the cash flow, the method of increasing cash flow further? Is there any measure that you're thinking of? Well, specifically looking at the situation, from the perspective of working capital, as conventionally been explaining to you, DOCOMO's finance business, expanding it, is that going to have a major impact. And in addition to that, DOCOMO's securitized -- receivables securitization?

We are always thinking about this. So volume-wise, it will be expanded. And also, the technique that we can apply for a securitization is evolving. So we are studying at this point as well. Therefore, we would like to -- we believe that we can expand the scope of this securitization efforts next year. And once it becomes a solid, I would like to share this with you at an appropriate timing. So in various methods to shorten the conversion cycle and others, we look at the overall consolidated situation, and we're going to do everything we can. And it is considered to do it next fiscal year. So once everything is ready to be shared with you, I will. Thank you very much.

The next question is from Daiwa Securities, Tokunaga-san.

I'm Tokunaga from Daiwa Securities. I have 2 questions. The first question with regard to when you see the third quarter results, I think with your annual target, things are very challenging for you. Is it simply because DOCOMO is now undermining the annual guidance. Can we take it that other companies outside DOCOMO are doing well. Also, we concluded the period -- I think in 2 quarters, previously you had positive effects from the proceeds of sales of various assets. That is not the case this year. So can you talk about the impact of this?

Yes. Thank you for your question. Yes, Tokunaga-san, as you pointed out in your question, I think your characterization of the situation is quite accurate. So let me start with the data. Yes, they're maintaining their very strong momentum as NTT East and West, although the guidance is declining profit, but they're now within the expectation. And I think we disclosed the initiatives at the NTT IR Day, and they're making progress in line with those expectations and guidance. With regard to DOCOMO, well, they had very bearish outlook for -- bullish outlook for the ARPU. But then the market situation was somewhat challenging. And from the standpoint of securing customer base, they had to strengthen marketing measures and the cost has increased. So that being the case, that particular sector, it is negative against the initial expectation. That is true. Now towards the end of your question, you talked about the third quarter -- impact from the sales of assets from the previous year. Well, the impact of the fourth quarter was quite strong in the previous year. But the third quarter wasn't really that affected by the sales of assets. So I think that's how you should understand the situation.

Okay. That's very clear. My second question is about the update. This is with regard to the progress of the midterm plan. And the third quarter EBITDA is now a negative trend. So at the press conference, there's talk about possible buying up of banking as opposed to CapEx and acquisition. There's some news about the third quarter results. So what are your thoughts about expanding investment to secure and expand revenue about your progress. Also at what time can we see full-fledged outcome from your efforts.

Okay. Thank you for your question. I think this is also covered during the press conference earlier. And we understand that there now have been some movements in the stock market as a result of what was mentioned during the press conference. As far as we're concerned, we want to expand investment into growth areas in the context of medium-term plan. Now as far as the acquisition, acquisition, of course there are other parties involved. So this is not just where we can totally control. As far as growth-related investment is concerned, we've been able to expand investment in this area in a very positive way. And with regard to acquisitions, for example in the past 2 years, DOCOMO has been expanding their acquisition as well in the area of data, in particular, because of the strong demand for digitalization not only the customer but also because of the need to expand their IT because of the demand to expand data center. Again, we see very positive expansion of business opportunities in these areas. So in terms of the general picture, yes, we are in a very positive situation. But you commented about EBITDA. The pace of return is somewhat slower than we had expected. So as we move to 2027, this is one area where we need to accelerate naturally. So yes, so that is challenging. That is a challenging part, yes.

I'll ask a follow-up question, one on EBITDA. Is the drop in EBITDA, is it due to increase in the marketing costs at DOCOMO, what about the others? Are there other market segments in other businesses that we're actually concerned about?

Well, generally speaking, as was mentioned earlier, as far as DOCOMO is concerned, in the communication business at DOCOMO, we're trying to reinforce our capacity there. So that is having an impact on the growth of overall EBITDA is slowing down the overall growth of EBITDA, that is true. Also, I have to mention NTT East and West. Compared with the time when we came up with the midterm plan, decision at NTT East and West is actually behind from what we had initially expected. So I think when it comes to telecommunication business in both fixed and mobile segments, the market situation has become much more intense and the market situation has been much more harsher and also competition has become much more intense. And because of inflation, the business environment has become more challenging. So these are the reasons why we're somewhat behind.

Are there any other questions? [Operator Instructions] Daiwa Securities, Mr. Tokunaga.

Sorry for the second round. Just one thing. This fiscal year to aim to achieve your targets, you said that you will conduct cost reductions. But there's room for cost reduction at which operating company has how much of room for cost reduction?

Well, cost reduction measures, the improvement of efficiencies measures. And each operating company, they are working on the measures in line with their profit plan, whether it's progressing well or not. That's one way of looking at things. So if we look at it from the perspective that is it in line with the plan, DOCOMO is slightly off the plan. And at NTT DOCOMO, the ARPU is weakening and they are reinforcing the sales and marketing activities. If we exclude these factors, in securing the profit, they are half and are going to further work on cost reductions. So they're working on the improvement of efficiency. However, as I have been explaining, this fiscal year, there are points that they are reinforcing. And to do so, they are using more cost. And that to be all absorbed through the cost reduction for this quarter and next quarter, it is going to be slightly difficult. However, I answered Masuno-san's first question in terms of the other initiatives.

Okay. Understood. So further cost reductions at NTT East and West, it's already in line with the plan. So you may aim for the upside for that, but DOCOMO seems that it will be difficult to achieve the target?

Yes. Well, each operating company is working on as forecasted. With all of the companies, while covering or filling the gap of DOCOMO, of course, is also done cost reduction or the revenue ending up having upside are the cases as well. So in that way, more than the assumption within the companies that have an upside within the group. We will have them implement measures that will further accelerate that upside, so that towards the achievement of the overall profit target, all the group companies are working on it.

Let's go to the next question, Citigroup Securities, Mr. Tsuruo.

I have many questions about DOCOMO. So I'll ask questions about operation outside DOCOMO. I have to ask about the fiber ARPU at NTT East and West. They're actually doing well than your internal plan. So can you share with this backdrop? Is it inflation? What efforts are you taking in order to absorb the impact of inflation? How do you see the prospects for the fiber? If you can disclose that I would appreciate it. It's not just fiber, I suppose but with regard to copper cables as well. I think the pricing -- is there something that you can do about copper pricing as well? I would appreciate your thoughts on that as well.

You're asking about ARPU, right? Okay. Well, with regard to ARPU, well, we have Hikari Cross as a product. And this is -- but in principle, with regard to ARPU, we use the center as the conventional fiber services. So that being the case, it's not that the upside is much larger than we had expected. So can you share with us the context of what you're asking, of course, I would appreciate it.

Okay. So maybe my understanding wasn't sufficient. For example, the basic charge seems to be somewhat higher than your annual guidance, it's higher than the average. That's why I thought that ARPU was higher.

Okay. Thank you for the explanation. I appreciate it. I suppose on a quarterly basis, there could be some gaps from quarter-to-quarter, that is true. But with regard to FLET's, it's more or less flat rate service. So service revenue from these, we need to reinforce that, then we need to increase the subscribers. If we want to increase our revenues in the segment, we have to simply expand the subscriber base. So that is going to be the ultimate goal of this particular sector. So right now at NTT East and West, they are now targeting all unit sales at condominiums. They're also expanding our sales and marketing in that area. And so there are also greater sales on a wholesale basis, especially to mobile service operators as well. So they're trying to expand the sales of FLET's optical services. This fiscal year, we have seen positive results out of those efforts. So these subscribers for fiber has been expanding in a very positive manner during this fiscal year. So we have very bright prospects in this sector. With regards to ARPU, we haven't made any significant changes. So maybe simply an issue in terms of yen's variance in the case of calculation.

Okay. How do you see the most -- to ask about your efforts to realize some optimal pricing for fixed line service down the road?

You're talking about optimal pricing for which line service?

Sorry. I was talking about inflation. I was talking about the impact of the inflation measures because that seems to be at pressure. Can you reflect the inflation impact on your pricing down the road?

Okay. I understand. Yes. There's impact of inflation naturally. So as far as pricing is concerned, we hope to be able to reflect that. We need to discuss whether we can pass on the increase in inflation. But then we have to consider the competition in the marketplace, of course. As Mr. Tsuruo mentioned, do we also had to mention about cost increase as well. Also, we are a public entity utility business, if you will -- public entity business. So that being the case because we are in [indiscernible] type of business can price increase really be acceptable to the marketplace. That's what we need to be mindful of that as well. But for a very long time, the inflation trend continues, but we are seeing a trend change to inflation, and the inflation is really picking up at a very fast pace. So the review of the pricing as a result. If there's is a sense of urgency, I think we need to consider matter in various terms. So we need to really consider this matter.

We would like to take the next question. Nomura Securities, Mr. Masuno.

I have 2 questions. The first question is related to the revenue and cost. The AI-related initiatives in your company is what I would like to confirm. NTT DATA has various initiatives related to AI and have stated the target for revenue, et cetera. But in DOCOMO's Enterprise business, well, there was a mentioning of Suzumi, but I did not know -- understand the money amount basis. And what kind of initiatives and what money amount is there. And for the cost structural reform, I think utilizing AI, you can expect the best in terms of cost reduction. So other than NTT DATA, including NTT East and West, how you will be increasing the revenue through AI and how you're going to improve the efficiency and cost? Can you once again elaborate?

Utilizing AI, well from the perspective of selling it to the customers that will increase the revenue perspective, well, we are working as a whole group on this point. As you mentioned, Mr. Masuno, what is the revenue or sales amount of it? We have started the marketing activities and started to reinforce it. And we have about more than 1,000 inquiries. And when it comes to the actual receiving orders, the number is going to be less than that. However, NTT Communications, our enterprise revenue is going to be reflecting that as it gets realized. However, it is also a fact that it has not grown into a volume that we can share with you. However, if we can have a bit more time, we will be able to share more details with you is what I think. And also in the internal business operations are utilizing the AI and through that, reducing cost. Well, regarding this point, in various ways, as I have mentioned at the start, at DOCOMO regarding the network operation, our logistics operations are being reexamined. And also, I did mention this at the IR Day, even with the infrastructure's application receiving, opening up the line in a consistent basis that they will be utilizing AI to improve the efficiency so that they'll be able to increase the sales and maintain the profit. Regarding the individual initiatives, how much of an impact will they have? I cannot share that with you in specific terms here. But within the reexamining the operation, the AI and software is indispensable for each company. So they are implementing it.

My second question is regarding the bank's function. At the press conference, you said that you have many functions that you don't want from the bank and what you want is the transaction function. So basically, there is no bank that only has a transaction function. For example, the FX trading or the marketable securities trading or the foreign currency trading or lending towards the real estate development or condominium development. Usually, banks are conducting various functions. However, you are saying that you don't want all those functions, meaning that as long as they have a consumer platform for consumer transaction, that will suffice?

Well, regarding that, in reality, the must function is how I would like you to understand, meaning that, first of all, that type of function, in order to expand the current DOCOMO Finance business is what is necessary. That function is not necessary. But on the other hand, netbanking companies in various ways, is increasing their services and increasing their revenues. And as you have pointed out, Mr. Masuno, they will collect the deposit and how is that going to be invested and how is that turned into revenue, they have the flow as well. So as an opportunity for business growth, there are areas that seem attractive. However, as our strategy, will it be in line with our strategy or it will depend on the acquisition price. So regarding what I commented is just that the priority is a place in the area that we have shared with you. I hope you understand it that way.

Okay. You're saying that you will consider creating it on your own? Usually, you create an established and preparation company and you will commit to turn it into profit. So the planning and the planning preparation company, just establishing that will take about 2 or 3 years. And if that is -- that will be the final year of your medium-term management strategy. So creating this on your own, are you going to be able to do that in time to the end of this current medium-term management strategy?

Well, how this business is going to move forward, I will not be able to share the specifics. However, within creating businesses, there are various options. Therefore, how are we going to achieve the medium-term targets, and how to do so, what kind of choices or options do we have and whether that can be done in time or not, we will be considering various factors. And review various options as well. Thank you very much.

Thank you. Any other question, please? [Audio Gap] [Statements in English on this transcript were spoken by an interpreter present on the live call.]