SoftBank Corp. (9434) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you very much for waiting. We would like to start the briefing for the earnings results for the 9 months ended December 31, 2019. I would like to introduce to you the presenters. From the right, President and CEO of SoftBank KK, Miyauchi; Representative Director and CTO, Miyakawa; Executive Vice President and CFO, Fujihara. The briefing is streamed live on the Internet. Without further ado, I would like to invite Mr. Miyauchi to talk about the earnings results and the overview of the business. Mr. Miyauchi, please.

I am Miyauchi from SoftBank. Thank you very much for coming to this briefing session out of your busy schedules. I would like to talk about the earnings results for the third quarter. First of all, as you can see in the revenue, so from the JPY 2.7 trillion of last year, we were able to grow up 30% at JPY 3.618 trillion. So even with the retrospective comparison or post the holdings adjustment, it was up 5%. This means that we were able to steadily increase the revenue. Next is revenue by segment, and the segments are increasing. Last year, Yahoo was made into a subsidiary last year, and inclusive of that, we have Distribution business, Enterprise business, Consumer business, all of the segments have seen increase in the revenue. Next is operating income. Operating income last year was JPY 634.9 billion. And this year, it was JPY 975.1 billion, which means that it was up 25%, so there was a drastic increase. All of these segments have seen increase in the revenue. And also, at the same time, we were able to increase the operating income. If you go segment by segment, you'll see that there was an increase across all segments. Yahoo had announced their earnings results, and Mr. Kawabe announced that there was an increase in the revenue. And after October, there was a hike in the consumption tax and also the revision of the Telecommunications Business Act. But in all segments, we were able to increase the revenue and operating income, meaning that our strength is becoming even more enhanced. As for net income, it was up 10%. Compared to last year, there was a significant increase. On this page, you see consolidated results. Even with the comparison after the adjustment, we were able to increase our revenue by JPY 163.5 billion. In operating income, we were able to increase by JPY 65.6 billion year-on-year. And in net income, it was increased by JPY 13.3 billion year-on-year and it is all after adjustment. We are growing very steadily. In terms of the consolidated forecast for fiscal year 2019 full year, we would like to revise upward. For revenue, we would like to revise it to JPY 20 billion upward, and for operating income, JPY 10 billion revision upward. So for operating income, the forecast for operating income is JPY 900 billion. So we would be able to increase by 10%, so we are in double-digit growth. The smartphone subscriber is steadily increasing, and there is a growth in business solution and others. We are almost there for the start of the 5G business. And the solution business, including IoT, is improving. So those are the reasons behind the upward revision. As for net income, you see footnotes, and due to the business integration of Z Holdings in LINE. So if this was to be realized, the corporate tax that we need to pay is JPY 19.5 billion. So we booked this. So if we exclude those factors, net income would have increased by JPY 20 billion, but we decided to have the net income forecast stay as it is due to the reasons I have explained. So I would like to start out from the discussion about the telecoms business. As I have said, consumer business is growing steadily. As you can see on this graph, sales of goods and others, due to the consumption tax hike, it was a slight decrease. And also in September, there was a last-minute demand. Because of that, for sales of goods and others has slightly gone down. However, October, November, December, we are seeing the trend of recovery. And in January and February, especially in January, I am not able to say the numbers, but it is recovering. So I believe that the drop in sales of goods and others is temporary. The telecom service business has increased by 5%. So in mobile and broadband, we are seeing steady growth. This slide shows smartphone cumulative subscribers. So while we now have 23.48 million cumulative subscribers in 5 years, SoftBank Corporation was incorporated, and right after that, Y!mobile was established. And 2 years ago, we started LINE MOBILE. So in that order, these 3 brands came about into the market. And there are 3,000 stores. And out of that, 1,800 stores have dual brands, Y!mobile brand and SoftBank brand. There is a very good synergy between the brands. And also, we have been able to position the brands well, the reasonable price brand and the other high-capacity brand. All of the brands were able to grow. And in terms of the growth rate, in the first quarter, Q1 year-over-year, there was an increase of 1.74 million. And in Q2 briefing, I have said that there was an increase of 1.94 million. And in Q3, it is increased by 2.02 million. So this was a target number to increase the smartphone subscribers by 2 million each year, and we are able to accomplish that this year. So we would like to get to 30 million subscribers of smartphones in the future, so we are building up steadily. And in terms of the churn rate. SoftBank compared to KDDI and Docomo, we have seen higher churn rate. However, LTE network, the 4G network, is now penetrated nationwide. So there are some rural areas where we are ranked second, but in 99% of the areas where we have our 4G network, it took us a decade to get here. SoftBank was said to be unable to connect in many areas, but that was improved in the past 10 years, and we have been able to provide the brands which met the needs of our consumers. And because of that, the churn rate is record low. As for broadband, SoftBank Hikari and SoftBank Air, it was up 9%, steady growth here also. We started out with YBB. ADSL was ended, and we have struggled to grow, but the broadband business is now at a point where we can be proud of what we are doing. The gray area is still remaining, but it will transition to SoftBank Hikari, and that will contribute even further in terms of the profitability. As for 3G, it will be terminated in 2024. In nationwide basis, we have 4G network now, and starting from the late March 2020, we will start a 5G services. I think that we are at a time where we would be transitioning to the next generation. According to the research firm's data, next year, 5G subscriber device numbers will go beyond 200 million. And according to companies like Gartner, there are some who say that the handsets of 5G will exceed 400 million. I think that there would be a 5G explosion. So this is Hachimura, which is our advertisement ambassador. But he says, the world will change, are you ready? And I think the world will change significantly with 5G, and SoftBank will also put in a lot of efforts. So if you have more questions about 5G, you can maybe ask Mr. Miyakawa. But let me briefly talk about some of the things that we are doing for 5G. We're making preparations. I think initially, we will have a lot in the consumer space, so we've done a lot of different initiatives. So for example, basketball, not just festivals like Fuji Rock Festival. So we have piloted on different occasions. This AR experience is eye-opening. And Oculus, Facebook, they have all been piloting, but it's possible that there could be a big explosive experience there. When we did it with high school basketball, we were able to see, on a real-time basis, what the players did, what were the scores. It was able to do that on a real-time basis. Also gaming, this will change significantly. Maybe you do -- no longer need a dedicated platform for games. I mean they're amazing, too, but maybe you can use your smartphones, your iPads or tablets. And it's actually treated with this high-performance servers. So it's as though you have this ultra high-performance server right next to you. There's no latency and you'll still be able to play video games like this. So in that sense, we are preparing in various ways to prepare for the 5G commercialization. For carriers like us, and this was true before, when we went from 3G to 4G -- I mean, every time we make that step, there were some expert opinions that say we don't need to be that fast. But every time there's a new generation, it transformed the world. So in that sense, 5G is a big challenge, but we think it could explode things. This is something we did with 4G, but we did this as a preparation for 5G services. We did XR, it's a mixed reality. We mixed AR and VR and we offer this at the real venue. So people who are participating are real people, but for dancing are virtual, and we did this, and it was widely accepted. People loved it. And we did this for AKB48. I watched it myself, but there was some -- it was very lively, very vivid. So with 5G network, it will be used in wider applications as well. Even in a remote place, you'll be able to enjoy this live event experience like this, whether it be baseball games or it could be a theater. Even if you're not able to do that in a particular region or particular area, you will be able to do this on a live basis. So we will start from the late March. And initially, this will be a pinpoint network, but towards the end of the year, we will have a full lineup of 5G handsets as well. So as the first service that we will launch, we will announce that in the very near future. So I hope you will look forward to it and see that this is the sort of the services that we will be offering. Let us explain about Enterprise business. For fixed line, it's a slight decrease, but solutions business has been growing significantly, mobile business as well. We think that mobile have a big surge in growth. In this environment, the enterprises need to experience digital transportation. And I think Enterprise is just about to offer mobile as services. And the business solution, as you -- this includes AI, cloud, IoT, digital marketing, these are different categories, which is spreading and increasing, and we know that this will be the growth driver. Looking at the operating income of the Enterprise business, this is a 5% increase. But because of the temporary factor we had last year, if we exclude that, it's actually up by 18%. So as we said before, within a few years, operating profit may double, and I think we're making that steady progress. And what's big in that is business solutions. Cloud is growing. In 1 year, it has grown to 1.3x. Digital marketing has just started to catch up. It's still yet to grow. Last year, it -- compared to last year, it's 1.2x, but I think this will grow by twofold. In IoT, this is still small, but it grew by 4.2x and I think this has a great momentum. When it's linked with the 5G network, we believe that IoT will be the business segment that will grow mostly. Let me briefly explain a little bit about digital marketing. Structured data is quite popular. We don't advertise, but more than 300 companies have implemented already. However, data collection in the company is done in a silo. Companies have different data. They have marketing data, they have product development, they have sales data, they have all sorts of data, but they are all siloed. It's not on the customer data platform, on a single platform. If the enterprises want to grow, whether it be in marketing or in sales, then they must have their own customer data platform. And on this platform, they could have structured data, they have Yahoo data. If you combine all of them, you can have an efficient digital marketing. In that sense, companies must transform digitally, otherwise they will lose out. So our job is to support them. So in digital marketing, I think it will come all at once. That's because we're just about ready. We have an incubator here, but more than 30 companies, many of them are big caps, but they have -- now participating in this. For IoT solutions, we have many. And it's just too much volume to explain everything, but let me just give you some easy-to-understand examples. So for example, meter reading, this is a real-time monitoring of LP gas meters. I think this will help deliver shortage mitigation. We have the statistical data of people flow. This will monitor the congestion status, and it will relieve the city congestion. So if the data becomes digital, all of these initiatives will be possible. And what's most recently a big hit is the fluorescent light on the trains. It's a florescent light-integrated security camera service which we developed. And this will be rolled out on different trains. There's fighting, there's sexual crimes on the trains and they don't have to have an additional camera service. They can just put this fluorescent light-integrated security camera, it's implemented in Tokyo railways already. So digitization is progressing in all areas. This is our construction. In tunnel construction, we can use 5G network, we have Odekake 5G. So you bring our 5G network, and in the tunnel when you drill, there's a lot of risks. There could be odor, they could have toxicity (sic) [ toxic ] gas, there could be landslides. And by remotely operating like this, it's possible to get to safety. And this is the 5G. So we're working with the construction companies to do this. So in this way, digital transformation -- and we, as a carrier, main job is to provide network, but with the spread of 5G network, we will be able to provide solutions to social issues. So we will be giving solutions and we will be able to help companies solve those problems and contribute to the society. So this was telecommunications business. Let's look at Yahoo segment. Yahoo also announced earnings, so I'm sure you know this, but let me briefly explain. Yahoo has grown also by 7%. They have grown by revenue. Media, commerce, both of the business segments are doing well. As you can see from this data, I think maybe in the 2 briefings before, there's a question about what's the difference between a parent and a subsidiary or being the sister company. So since we become a parent, the profit has been growing. Maybe there's no causal effect, that's a different story, maybe. But with Yahoo, we -- the management and us meet on a weekly basis. And we're a public company, so we have a very good, solid governance, but we truly work together to identify synergy. And there are many structure reforms that SoftBank is implementing, which I will not elaborate today. But -- so example, digital worker, 4,000 projects using RPA. So we interact with Yahoo very closely like this. And we used to have upfront investment initially, but we're now beginning to see improvements in the operating income. In terms of the e-commerce. So there was an article that there are a lot of challenges, but actually, I cannot say that we are #1 yet, but we have room for growth. E-commerce transaction volume was up 15%. And also, the good shopping day result was very good because it was done hand-in-hand with PayPay Mall, so 1.4x. And in terms of the Yahoo Japan monthly logged in user IDs, that's up 6%. And towards October of next year, we will be working towards the business integration. And this is how the future may look like. The SoftBank and NAVER will have 50-50 joint venture and we will consolidate in that joint venture. And under that, Z Holdings will be present. And so we are making various preparations for doing this. And what we want to aim at is transformation to AI technology company. And everything from the media, commerce, fintech, how we can create synergy is our focus, the focus of our execution. And there -- I will not be able to say much about this due to various constraints. But if you look at the next page, there will be many things that we can do uniquely and we can create -- we want to create a future that others cannot repeat, communications, AI, IoT, media advertisement, commerce, payment, fintech, SMS. I have met executives of NAVER and they have a lot of good engineers. In South Korea, the most popular company there is Samsung and NAVER. So the talented university students want to go there. So we have IT engineers, and within Yahoo, there are many engineers. And in LINE, there are also engineers, and NAVER has talented engineers also. By working together, we can be technology-rich. So I hope that you have high expectations for us for the future. The third area of business is new businesses. I would like to briefly talk about that also. Smartphone payment service, PayPay. So when we started last year, there were many voices of concern towards us. And it's been just 1.5 years since we started this service, maybe 1 month -- 1 year and 3 months. I have been working for SoftBank for many years and this was the first time that a business had bloomed so fast. With just 1 year and 3 months, we now have 24 million registered users. We had a very big campaign, JPY 10 billion give-out campaign. So because it was such a big value, there were some issues. But after that, we have been able to grow very steadily even without drastic campaigns. So 3 convenience store chains enabled the use of PayPay. And the contribution from the convenience stores are becoming very high, so we have high expectations. In December, we have seen the rise of number of payments per month. So we are seeing the change in the behavior. Shopping now equals PayPay. So in order to realize that world, we need to have many more stores to enable the use of PayPay. We have about 1.85 million stores, which enable the service. And I think that we are the dominant #1 with the active users. So App Store and Google Play, we are the #1 downloaded app. We are about #3 in the world according to one survey. And we are seeing steady increase in the users of PayPay. One of the strengths of PayPay is that we have agile development. And we have one software, new software per week. This is not something that can be easily copied by other players. So the development speed is the PayPay strength. And also, when we think of an idea, we realize it in a user-centric way. So we listen to the merchants about the coupons and discounts, and we have the information provision services for each registered store. And also, we are expanding it to utility payments. And using PayPay, you would be able to utilize taxi-hailing service. So it's very cumbersome to pay within a taxi, so we are enabling the utilization of these kind of apps. So there would be more mini apps coming, and we would like to promote it. And we want to become the indispensable service for users. So finally, on a full-scale basis, Mr. Nakayama should be giving you the timing, but our financial service will begin. And this is the -- one of the most important challenges for us. Personal loan, business loan, postpaid, investment, insurance, one by one, we will be launching these services. For this -- for you to do a payment, maybe you can choose to do a post pay or it's like Alibaba's leftover money, but -- so maybe suddenly, there's enormous amount of money that you been collecting. So you want to deposit that, part of that. So in any case, we're ready to do a full-scale entry into the financial services. And recently, as I have been reading the news, everyone is implementing measures that are collaborative in their efforts. DiDi, for example, it is rapidly expanding. We have worked with 23 prefectures already, and we're still in the process of expanding. Taxi companies' profitability increases very rapidly when they use DiDi, so they're very happy with this service. Now we have 133 taxi partners around the nation now. Let me update you on the company DiDi. Their annual occupancy is 1 billion. That's -- customers, global customers who have registered to DiDi is 550 million. And they have perfect AI engine and they're able to match the taxi and the customers. And their precision -- accuracy is improving. So we're still in the first stage of collaborating with the taxi companies, but we believe that this will continue to expand, utilizing DiDi's technology. So the timing is here for us to grow even more rapidly. And all around the world, this is a hot topic for a long time, WeWork. Mr. Son will talk about the global WeWork. So let me talk about Japan. WeWork Japan is a very solidly growing company. I believe that some of you are also part of this WeWork service, but we have many big companies in Japan joining the membership. We have more than 22,000 in less than 2 years. In terms of locations, 26 locations in 6 cities, many in Tokyo. Recently, we added Shinjuku, Shibuya, Harumi. So for example, Shibuya Scramble Square, I think it was 4 floors or so, and of the higher level. And quickly, it was filled up. With the work style reform and open innovation, WeWork fits perfectly well with that environment. It's a shared office, which is doing well in Japan. Next is MONET, next-generation mobility service. Please ask Mr. Miyakawa for more details, but again, we see an outburst of it. In terms of number of collaborations, there's a strong demand from municipalities to develop a transportation infrastructure using MaaS or they want to develop services using MaaS. So we now collaborate with 31 municipalities in 5 prefectures, and there are many still are waiting. And also, this is an important point about consortium. We have formed approximately 5 companies who we have gained support from. So it's like Apple iPhone App Store is -- if you have many, many apps are available for use, then iPhone becomes easy to use. So on top of the platform of MaaS, we can add-on all these different services. And many companies are interested in providing service on this platform, and they go beyond different industries. Majority are auto companies. But in terms of developing platform, we think we can contribute to the society as well. Let me briefly talk about OYO Hotels. I think I saw in an Asahi newspaper an article about OYO. But actually, OYO is also growing very steadily. It was just in October that we finally had Japanese website. [ Sasson ], the President of OYO, he's an excellent management, but he's very aggressive. You can see that between May to August, he's really worked hard on it. And there was a little bit of miscommunication with the hotel owners. And we had great feedbacks. And because we had increased our sales and marketing efforts and we had this big target, and yet there were some challenges that we had to work on. But SoftBank KK has 25% stake in OYO Hotels, and we work together to build a steady, solid, perhaps you may call it conservative, but a way of doing business. And with that, we are just about ready to be profitable even next month. And customers are happy. So we will reinforce corporate governance. That's part of our responsibility. So we started working with them on a full scale since October. So we want to steadily grow, that's our aim. Time is running out, but here's SoftBank's recap. In terms of business expansion, we have PayPay. I believe this will be a core of our business and it will become a super app. And a lot of people, and even the newspapers, talk about the meaning, definition of super app, but I think it's a super app, PayPay is. And that will be our base, and we can add on WeWork, DiDi, MONET or J.Score, it's a fintech company. We can continue to expand in these businesses, and we can also have new entries. Some of them I have not talked about, but we can have into data, which is the digital marketing I described earlier. We can have OYO, we can have Mapbox, this is an online map service. For Enterprises, we don't have any joint ventures or collaborations yet, but many companies are approaching us. If they use Mapbox, they can customize easily. So we have Mapbox, and we have Japan Computer Vision Corp., which does facial recognition solutions. So these are the new entries. Meanwhile, it's not that we want to exit, but we have some initial investments like Packet. I think this is announced already, but it's a bare metal, cutting-edge technology company. But Eclipse wanted to buy it, so we can't help but sell it to them, in Cybereason, including the joint venture in Japan. Again, this is because it's doing well. We are selling some of our shares to Cybereason, so we will have gain on sales of about JPY 11.8 billion. Unlike SoftBank Group, we don't do pure investments, but anything that has linked with our business then, we will collaborate or invest, so we may have joint ventures with the Vision Fund-invested companies. And we, ourselves, when we do our business, if we think that a particular technology company is necessary for us, then we will invest and we will execute business in Japan. So those are the initiatives that we are looking at. This is a picture we show every time. So we're, first of all, in telecom business, solid in our growth, smartphones subscriber growth. We've also grown in broadband subscriber growth. And with 5G, we will have their offers of smartphone business. And then we have Yahoo and LINE. If they can integrate, then we can expand into new dimension of businesses. Then we can not only to provide the service to the Japanese customers, but perhaps outside of Japan as well. So that is all from me. Thank you very much for your kind attention. And, by the way, lastly, let me explain about the arrest of our former employee, which you know about. I apologize for the great concerns we have caused. As it is reported, and also, as we have announced already, this former employee had contact with a Russian intelligence personnel. And this person has been laid off already, but after the investigation, we have worked with the investigating authorities. And with regards to the customers' personal information and secrecy of telecommunication, this former employee was not in a position to be able to access any of those information. So these -- none of them have been compromised, so please feel -- do not worry about that, please. So we will build an utmost structure. We have companies like Cybereason, in terms of security business, but we want to have almost near-perfect security countermeasures internally as well, so that no hackers can hack us. But we want to know, on top of what we have been doing, build a mechanism that checks the behaviors of the employees. And now it's not about controlling them, but perhaps we will implement IT softwares that checks them. And also, we will train them as well. So I take this opportunity to apologize to all of you for the concerns we have caused. So thank you very much for your attention.

Thank you very much. We would like to move on to the Q&A session. Media, analysts and institutional investors can pose questions. Those of you with questions, please state your name and affiliations, and the mic runner will be coming to you. We would like to limit the questions to 2 per person because we would like to get as many questions as possible for as many people. I would like to designate the right block, the person in the front, to ask the first question.

Nikkei Industrial Newspaper, my name is [ Isoshima ]. I have 2 questions. The first question, 5G will be starting next month. 5G, the fee system, how would it look like? Docomo and KDDI had explained briefly in their debriefing for the earnings results. And if you could talk about the tariffs of 5G service as well as the areas where the first 5G service will be implemented, I would like to know. That's my first question. And my second question, well, sorry to bring up another -- again, the competitor. Docomo had launched the white paper on 6G, beyond 5G. SoftBank has been investing in AI company through SV, SoftBank Vision Fund, and I'm sure that you're preparing for the post-5G era. And I would like to hear from you, what is the world beyond 5G? What is the world of 6G? And what kind of role in which the SoftBank can play in that world?

In terms of the 5G, a rate structure, I think Mr. Shimba, as he was in charge of the Consumer business. I will be talking about this in details when the right time comes. As Mr. Yoshida and Mr. Takahashi have mentioned, the 5G era, as I have mentioned earlier, it will be a world without limits. We have Ultra GIGA MONSTER Plus plan, and the amount of the data which is being used is growing exponentially every month. And the 5G era will consume more volume of data than we are seeing now. So we have to think about the rates for unlimited plan or something that would meet the needs of the consumers. And I cannot say the exact rate, so I hope that you can wait for that, for that information. And to your second question about 6G, Docomo has made various announcements, but -- at Softbank. We also have advanced technology R&D team with University of Tokyo. We have made announcement, we are having various joint project. And Mr. Miyakawa could talk about 6G, which goes beyond 5G.

Thank you for the question. Before going to 6G, in 5G, there is a discussion about utilization of Japanese companies and also preferential tax treatments, cash tax incentives, discussions are being made. And the Japanese vendors are working very hard. So the security risk, supply chain risk, which are being discussed, will be conducive with discussion that we should have a closed loop of the Japanese vendors. At this moment, we don't have a Japanese vendor who would be able to provide the baseband, but RF manufacturers are very strong in Japan. So we are working together with universities as well as MIC, M-I-C, MIC, to have the RF verification experiment. And this experiment is going on steadily. So together with Japanese manufacturers, I think that we would be able to deep dive into 6G discussion. And I hope that we can catch up in the next 10 years where the Japanese players have lagged behind in 5G, so we will work very hard towards that.

So the gentleman on the second row.

[indiscernible] from Nikkei. I have 2 questions. First question. Last fall, it's about the impact of the revised telecom business. But if I look at Docomo and KDDI, the handset sales have fallen by 10% or so, but your handset sales have actually increased. Is this because of Y!mobile? So can you give us the specific reason, and also post fall, in terms of trend in this mobile phone industry. So can I talk -- have you talked about both your company and the industry? Secondly, about the impact of the coronavirus, supply chain may stop and there's a concern about that. So smartphones, base stations, many are using Chinese component materials. So what is the impact today? And what is your outlook?

So the impact of the telecom business that -- there was an impact, like I said at the beginning. It's hard to say if it's just the act itself, but from October 1, so the Telecom Business Act changed, there's a complete unbundling plan, and we have been doing unbundling from before. But -- and also, there was a consumption tax hike. So in September, there was this -- I don't know, harsh, I don't know the right word, but there was a big subsidy on them and so we sold an enormous amount, but I don't know about reactions. But October and November, the handset sales, like I said earlier, it did decrease. But we have 3 brands. Y!mobile did not fall as much -- doesn't fall as much. In that sense, I think, in general, there was a decrease in sales, people refrained from buying. But like our competitors, there's a portion which fell as well for us as well. But Y!mobile is becoming stronger and stronger, it exceeded 5 million. And I think we've been taking away customers from the competitors. And Y!mobile customers are some unique customers as well that we have increased. So if you look at it on an overall basis, I think that the marginal decrease was not as big for us. But our focus is on smartphones, and smartphones is growing nicely in terms of the additions. And your question -- second question, about Chinese components. So coronavirus, maybe the suspension of supply from China. At this point in time, in terms of technology, so both handsets and base stations, I think we have enough inventory built up to be able to deal with the situation, at least for the short term. But if this prolongs for 3 months, 6 months, then there may be some impact one way or another. I think it'd be the handsets. Perhaps that will be the case when there's that big March sales season, we could be impacted. I'm a little concerned about that. But we think we can probably get -- buy, but we don't know when the coronavirus will set off. So if it doesn't impact for long, so we need to deal with it. We'll come up with an idea.

Next question please. In the left block from the second row.

From Reuters, my name is Sam. Elliott Management is what I would like to ask about in SoftBank Group. They have 3% -- in the SoftBank Group, they have a 3% share and they are asking for the improvement in corporate governance as well as share buyback. So how do you receive this news? And that's my first question. And my second question is that, is in the SoftBank Corporation, in the Board of Directors meeting, so there is -- in the Board of Directors, there are -- there is a female. But do you think that you would be increasing the diversity and will you be improving the diversity? And also would you have more room for flexible investment?

So Elliott Management has -- in terms of the Elliott question, you would be able to ask that in the briefing of SBG, but I am the Board member of SBG as well. And the CEO of Elliott Management, I cannot remember his name, but he believes that the valuation of SoftBank is too low. And in that sense, I think that SBG has seen positive impact from the Elliott investment. That's all I can say at this moment. And the second question, you were asking about the SoftBank case, diversity is like increasing the number of female Board members. Well, we have Ms. Uemura, who is a very talented external executive member and -- Executive Director, and we have 4 external executive member. We have 4 external directors, and they are doing very well.

So if we ask the experts, there are many who believe that your corporate governance is weak. And in terms of the share buyback. I think that you have conducted that earlier about -- are you willing to do that again?

As I have said before, rather than eyeing on the share buyback, we will focus on providing high dividend, JPY 85. We would like to continue providing high dividend so that we can provide value -- valuable return to our shareholders. Inclusive of the share buyback, we would like to consider various options. But basically speaking, we want to grow, and at the same time, provide high dividend. So please understand our basic strategy. In terms of our corporate governance, we are working thoroughly on that. We will create a team to work on SBGs as well. We believe that working on the SBGs is our business opportunity. So I hope that you can look at our company in the long term. That's all.

Next question, second row from the front in the center block.

[indiscernible], freelance writer. I have a question about PayPay. You said that PayPay will become the core. What about the integration with the LINE? And LINE Pay exists as well for LINE. So what is the relationship going forward?

I wish I can talk about this, but I'm not in a position to talk about it today, you know our [indiscernible] regulation. We know that we can really realize a big synergy. But with regards to how, we are not able to comment on it today, I apologize. However, in terms of China, Tencent is doing WeChat Pay and Alipay, it's kind of like the 2 integrating. So I think you can imagine interesting initiatives that could be taken. If you have a good idea, let us know.

Next question, please. In the central block, the third row from the front.

From Bloomberg, my name is [ Yuga ]. There are 2 questions I would like to ask. The first question, regarding the 3%-ish share held by Elliott. Many stakeholders are very interested, so I would like to hear your response on this. So Mr. Miyauchi, as a Board member, when did you hear about Elliott buying 3% of SoftBank Group's shares. Going forward, with Elliott, what kind of dialogue will you be having? For example, this month, in February, do you have plans to have dialogue with Elliott? So you said that the -- Elliott believes that the share prices are undervalued, but there's a share -- share price is determined by the market. And what kind of -- so how do you consider the options posed by Elliott? I'm sure that Mr. Son will be talking about this next week, but this is of high public interest. So if you could talk about that, I would appreciate it.

Well, as I have said earlier, today's briefing is on SBKK. So I need to draw a clear line. So I am here in a position of President of SBKK. So I would like to refrain from stating my view on Elliott holding our -- SBG's shares. On the 12th of this month, there would be a briefing session on the earning results by SoftBank Group. Mr. Son will be answering your question, then. Sorry, I cannot answer your question.

So my second question is to you as the President of SBKK. So you mentioned about OYO earlier and that there were some misunderstandings with the hotels. So there are 190 hotels, which I have interviewed, and I have heard that there were many misunderstanding about not paying the -- at the minimum guarantee or low response, even the e-mails I sent and also the demand for reduction of the hotel rates. So there were many conflicts, according to what I have heard from the interviews that I have made. All of the owners have said that they have signed a contract with OYO because of the credibility of SoftBank. And Mr. Son and yourself have been saying that OYO is a trustworthy company, and it's just like WeWork. Because of your statements, the owners have trusted you and signed a contract, but the reality was different. So in terms of OYO -- with OYO Hotels, what is the -- the cancellation of the contract. And KK has 25% share in OYO, and -- would you continue that, or would you be considering withdrawing like Z Holdings did with OYO Life. So I would like to hear from you what your views are.

OYO Hotels, we believe, will grow in the future. So we don't plan to withdraw the 25% stake that we have. As you have said, it is true that the initial contract signed by the hotel owners had the various misunderstandings. So that happened right after the company has started. And because there was a drastic increase in the customers at the initial stage -- and well, you have said that all of the hotel owners have misunderstanding, and they were complaining about that. So out of the 200, about 40 had faced various issues. So there were OYO side issues and also hotel side issues as well. So it went both ways. At the -- towards the end of September to the beginning of October, when the full-scale Japanese site had been up and running, the contracts were renewed and the business was restarted. So in that sense, it was -- so it was the growing pains, so to speak. The initial issues that we have seen was like a growing pain. So we would like to be sincere to the OYO Hotel owners and also the customers. And we now have very good managers in charge of Japan. And we cannot do it old Indian way. So the Japanese manager who have come on board will work on the business development, and it would be Japanese managers who would be working on Japanese facilities as well. So if you could wait for 2 to 3 months, things will improve and we would be able to put an end to the negative factors that we have seen in the past.

So what is the cancellation rate?