SoftBank Corp. (9434) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you very much for waiting. We would like to begin the investor briefing for earnings results for the 9 months ended December 31, 2021 of SoftBank Corporation. First of all, we would like to introduce to you the participants from the SoftBank Corporation. Board Director, Executive Vice President and CFO, Fujihara; Vice President, Head of Finance and Accounting Division, Naito; Vice President, Head of Strategic Finance Division of the Finance Unit, Akiyama. Today's briefing is streamed live on the Internet. We hope to have your understanding. Without further ado, Fujihara will be providing you the briefing on earnings results for the 9 months ended December 31, 2021.

This is Fujihara. Thank you for your attendance to the -- this investor briefing. So the briefing was made from our President earlier, and I would like to give you further explanation. Let me begin. First of all, this is the executive summary. The highlights are written here. On a cumulative basis, on Q3, the revenue was up and income was down. But in the full year forecast, we have made the good progress for historical highs. Operating income, net income progress rate is 84.2%. So we are doing steadily. And in terms of the net addition of the mobile service, it is recovering. This is 1 characteristic for this quarter. Another point is PayPay. GMV has significantly grown. And due to the start of charging payment system fees, there was an increase in the revenue. PayPay is now at the turning point. So I would like to go deeper into that. We have obtained high ESG evaluations and issued our first ESG bond. I would also like to touch upon that during my presentation. Now let me deep dive. This is the summary for the numbers. If you look at the year-on-year figures, the revenue had grown approximately 10%, and we are aiming for JPY 5.5 trillion and the progress for the full year forecast is 75.9%, and we believe that we have upside potential for revenue. As for the other income, it is progressing steadily. And for operating income and net income, the progress rate towards the forecast is 84%. So we are on track to achieve the goal that we have set. Since IPO, we have -- we have been renewing our historical highs in the fourth consecutive year. So we would like to accomplish that this year as well. This is quarter-by-quarter figures. In the second quarter -- well, last year, in the second quarter, we had historical highs. So there -- with that, it is -- it was a negative JPY 20 billion year-on-year. However, in the third quarter where we have gotten back to negative JPY 1.6 billion. And in the fourth quarter, we had spent a lot of sales promotion cost, and also there were some impairment losses that we have booked. So in that sense, in the fourth quarter, we will have opportunities. So the progress of 84.2% is a steady progress. Next is the breakdown from the revenue. In terms of the revenue, excluding distribution, all segments have seen increase as I have mentioned earlier. In terms of the distribution, last year, there was a onetime special demand for GIGA School Program. And also in the servers, we have seen some negative impact from the chip shortage of the semiconductors. But others, we have seen increase in the revenue. The biggest contribution came from Yahoo! and LINE, JPY 280 billion, which is plus 32%. Out of that, JPY 220 billion has come from the LINE integration. In terms of the Enterprise, it is growing steadily. Consumer, compared to last year, the device is recovering. And I would like to go one by one for breakdown. And next, I would like to talk about EBITDA. Overall, it has gone slightly above the previous year. Yahoo! LINE is contributing significantly JPY 54 billion contribution, plus 23.4% year-on-year. Enterprise is contributing also in billions. So in terms of Consumer, it is negative JPY 58.5 billion. Net operating income by segment. So overall, it was minus 2.4% with JPY 204 billion, but if you look at Yahoo! LINE and Enterprise's double-digit growth. And with regards to Yahoo!, in terms of EBITDA, it's JPY 554 billion, but that's down by JPY 10 billion or so. But as you can see, the reason on the right-hand side, with an M&A accounting, we had a write-off of intangible -- amortization of intangible assets and stock-based compensation expenses, which is JPY 18.4 billion in impact. But even then, we had only minus 2.4% decrease year-on-year. In Consumer, this is minus 9.8%. That's down minus JPY 56.4 billion. So looking at Consumer segment, so this is a big impact from mobile service price reduction. So overall, it's decreasing income, but let me break down the revenue first and foremost. On the left-hand side, so overall, it was JPY 64.1 billion. Sales of goods was JPY 64.2 billion positive. So this -- majority of the positive comes from sales of goods and others, and services is down. That's how it's offset. Now JPY 64.2 billion, first end half -- in Q1 and Q2, there's been positive because on a year-on-year comparison, we had slower sales last year. So this is a recovery. So in first half, there was a big growth in recovery. That's where the improvement from sales of goods and others comes in. And if you look at Q3, because iPhone was actually better last year, in Q3, it was slightly down. But on a cumulative basis it's plus JPY 64.2 billion. With regards to services, so you can see significant increase in electricity and increase in broadband, but mobile is only minus JPY 54.8 billion. So this is down in reductions but almost equivalent level as income. And the new price plan impact is minus JPY 49 billion. So majority was new price reductions. So we have been trying to increase in subscribers as well. So this has been net off. So if you look at -- I will explain a little bit more in detail when we talk about subscribers and ARPU. And on the right-hand side, you can see segment income against revenue. You can see the expenses. So first of all, JPY 64.2 billion sales of goods and others, cost was minus JPY 39.5 billion. And electricity, this is increase of JPY 47.5 billion. But as you can see on the cost here, you have cost of services, mostly it's electricity. So that is where the cost is booked for electricity. And then if you look at the expenses, please look at the overall basis. But -- it's expenses, except for cost of services is minus JPY 37.3 billion. I think we received this question before and the question was, "How would the expenses trend going forward?" So compared to first half, we had increasing expenses year-on-year basis because sales recover, but this will calm down. That's what I think I said. So it was 20%, [ 20% and 4% ], 4.7%. So -- I'm sorry, minus 20%, minus 12% and minus 4.7%. That's trended on a quarterly basis. So you can see that expenses are coming down. And your greatest interest probably is in Consumer segment. Like I said -- as Mr. Miyakawa said, the Consumer and also mobile service price, how would this issue -- how would this decline stop falling? So if you talk about it just in price itself, we had upgrades and the majority of the people will change their price plan when they do upgrades. So if you look at it from that perspective, I think it actually takes about 3 years for the impact. So this impact, we assume, will continue until fiscal year 2023. That's a very objective point of view. And in the question earlier, Mr. Miyakawa said that we want to hit bottom by FY 2022. So that's the actual situation, and that's an intention of our will to challenge on hitting the bottom by FY 2022. Now let's look at Enterprise segment. This is an area where we're focusing on because there's great room for growth, it has grown by plus JPY 21.2 billion. Solutions is plus JPY 16.7 billion. That's plus 12.1% increase. So this is the overall driver. If you look at the breakdown by income segment, you have expenses and then revenue. And if you can see in expenses, there were some reversals there. So there's a positive. So that's how we have been able to reduce our expenses lately. So in terms of this Enterprise segment, overall, it was plus JPY 20.7 billion. But if you look at solutions, especially recurring revenue, the greatest theme is to grow this business here and it was JPY 20.7 billion. So you can see that this is a driving force. So in recurring revenue because its percentage is growing, I would say today, 75% is recurring revenue. So I think the point -- the key in growing Enterprise business is really growing this recurring revenue business. As we said before, in terms of expenses, we have digital marketing. So we have Yahoo! and LINE, those are products in itself, and we have Treasure Data. We -- SBG and SBKK investment, and our collaboration is also our weapon as well. So we have good collaboration. We have good product and services. And I think this has helped us to make good proposals to the corporate enterprise customers. And we have several reason. This is a company where SBG and SBKK are investing in. And these are also strength. In addition to that, we have cloud and new business domains. And that's the characteristic of the growth of this enterprise business. So this is Yahoo! and LINE business. So we have JPY 286.3 billion increase year-on-year. LINE contribution is JPY 226.9 billion. You can see that it's media that's really driving the growth in revenue. We see market recovery and our strength is increasing as well. So the media, which is really core of the core, and this is where Yahoo! wants to focus on, and this is why they're gaining their strength. And also, they're also growing steadily the commerce business as well. And on the right-hand side, you can see segment income. Z Holdings has already announced yesterday that if you break it down, roughly, if you look at business growth, this is plus JPY 37.6 billion. And we have onetime sales of YJFX is plus [ JPY 15.1 billion ]. And we have PPA and [ DSO ], this is from M&A, which is minus JPY 18.4 billion. So we have the 3 elements here. But at the beginning, we thought that this minus JPY 18.4 billion would drag the performance, but because LINE has been growing and it has contributed JPY 19.1 billion. So the fact that LINE has offset the decline in PPA, the minus JPY 18.4 billion is a great contribution. And I think it was April 2019, when we were just talking about the integration of LINE and Yahoo!, at that time LINE was loss-making, but now LINE is profitable. And we have been able to also absorb that increase in expenses of JPY 14.8 billion. So we hope that this will continue to grow with the synergy effect. So next is distribution. So as you can see, unfortunately, that we saw a decrease in both revenue and profit. We have not been able to recover on the onetime effect, but it's year-on-year, it's minus JPY 1.3 billion. So we want to recover this, and we're on a full year basis, we're looking at the increase in profit. And on the right-hand side, you can see other companies, we have SB Payment Service, this has much room for growth. It's growing by plus 23% year-on-year in profit. SB Technology, this is plus 48%. So you see many other companies are growing quite significantly. So hopefully, one of these days, we'll be able to introduce some of them. Next is net income. This year, we are aiming to go above JPY 500 billion and the progress is, as you can see here, so you can see it's very steady. So operating income is slightly down and financial income and losses plus JPY 18.6 billion. On SoftBank side, we work [indiscernible] several others, which we had impairment losses, but this is a rebound from that. And also interest cost is decreasing as well. So that has contributed. Z Holding, we had Demae-can impairment loss which is negative here. And with regards to equity method, PayPay is included here, but if you look at SoftBank, PayPay impact itself is very minimal. Z Holdings, we had Demae-can business and also LINE overseas investment. And we had a question yesterday as well, but on a consolidated basis, it's reflected here as well. But Z Holdings' impact, 1/3 will remain and 1/3 is actually offset on a noncontrolling interest. So on an overall basis, this is how we did. And on the very right-hand side at the bottom, it says that on the Z Holding overall basis, we had 44.6%, but this has now come down to 32.6% in terms of the income economic stake. So the impact on the business is about minus JPY 8 billion. Next, I would like to talk about CapEx. We had a target of JPY 400 billion. And the 5G-related construction is going steadily. We believe that the CapEx in the full year may go a little over JPY 400 billion. We would like to make proper investment for our business. So in the fourth quarter, usually, we conduct a significant amount of investment. But starting from the first quarter, we have been able to make steady investment. It's at JPY 279.9 billion. And so the amount for the IFRS 16 related is JPY 97.6 billion. And excluding that, we are in the normal phase. Next is free cash flow. As for the first quarter, we have made the detailed announcement, so I have put that once again. And in the third quarter, the investment cash flow had increased. And for investment to Treasure Data was JPY 25.4 billion. And we paid -- we are paying JPY 400 billion in dividend. So the -- so we believe that the endpoint will be around JPY 440 billion. Compared to the previous years, we have accumulated investment for growth, so it was JPY 440 billion. But we believe that it would contribute to the financial health. In terms of the balance sheet, it's very big at JPY 12.6 trillion. If we look at the shareholders' equity, we have paid a JPY 400 billion in dividend, and it is plus JPY 28.9 billion. If we look at the net assets, it's plus JPY 65.7 billion. We have acquired Yahoo!'s trademarks and the asset has increased accordingly, and the net asset ratio is 22.1% compared to the previous year, it was a decrease by 0.3%. Next is net interest-bearing debt and debt leverage ratio. Net interest-bearing debt for this quarter, we are paying JPY 200 billion in dividend. But the deterioration was offset by some improvement. So in terms of the net interest-bearing debt, that is the situation. And as for the net leverage ratio, it's 2.6x. So compared to the previous quarter because of the dividend payment, it has deteriorated slightly. Next is the KPI for the business. Compared to the previous year, the competitive environment is becoming more severe. But now we are seeing recovery. There was a net increase of JPY 1.48 million, which is about a 6% growth year-on-year. And in terms of the churn rate compared to the previous year, regrettably, there was a deterioration. The first 2 -- the third quarter, we have seen a trend of recovery. In terms of the net additions quarter-by-quarter is on this slide. President Miyakawa talked about this, but we are seeing recovery as the quarter went on. I think that our tailwind for us was the reduction in the COVID infections. But under the current competitive environment, we have been able to differentiate ourselves. And in the fourth quarter, we have high expectations. Next is ARPU. I think that there would be a lot of questions regarding this. Compared to the previous quarter, there was a decrease by JPY 250 -- excuse me, JPY 250 year-on-year decrease. Out of the JPY 250, the communication charge impact was JPY 200. JPY 100, JPY 140 and JPY 200, so we have been showing you the impact quarter -- on a quarterly basis. We believe that on an annual basis, the impact would be around JPY 210. We talked about that in the previous year. And our expectation remains the same. If we look on the annual basis, there would be a impact of a negative JPY 210, JPY 210 and JPY 250. I think that you would like to ask what's in between that. In addition to the communication charge, there is an acceleration of the brand change, and there is an increased ratio from Y!mobile and a change in the mix and also the Smartphone Debut Plan that is impacting the reduction in the ARPU. So because of that, it is negative JPY 250 year-on-year. Next is broadband and electricity. So broadband was plus JPY 38,000, which was plus 5.6% increase year-on-year. Electricity, this is really in a growing stage. This is plus [ JPY 560,000 ], so that's 34.9%. So if you subscribe to electricity, it really has a good strong retention effect. So we want to make sure that we continue to sell both. Next is to Yahoo! and LINE. So in terms of growth, it was plus JPY 228.4 billion year-on-year. That's approximately 12%. And this is advertising revenues. This is a great growth of plus 117.2% year-on-year, LINE impact is [ JPY 139.9 billion ]. Z Holding has given a detailed disclosure on their site, you could just confirm this number here. And PayPay, as Mr. Miyakawa mentioned earlier, this is our core business, and we have great expectations and we want to pursue opportunities for consolidation. Number of cumulative users registered is 9.64 million plus year-on-year. This is -- the number of users growth is nearly 28% increase year-on-year. And in order to continue to increase the registered users, we need to spend some acquisition cost, but please do look at the number of users and the number of merchants is plus 24%. So this is a source of our competitiveness, this JPY 3.55 million. Next is number of payments. It's 2.63 billion times. So in order to become a super app, it's important that a number of payments increased people to use as much more as possible. But Nakayama, President of PayPay, says that this is the most important KPI. But this is a great growth of plus 84.7% year-on-year. And in terms of business, GMV is an important KPI. This is plus 72% year-on-year. It's JPY 3.9 trillion. We're spending sales promotion in order to increase the number of users, but also we want to increase on GMV. And that's a big challenge for us as well. So I mentioned about plus 27% in number of users growth and GMV is 72% increase year-on-year. So you can see the level of growth in this business. And I think the main area here is revenue increase. And since ending the free of charge and now we're starting the merchants, but we continue to grow, and it's actually plus 168.8% year-on-year. So with gross margin that this brings about, the point redemption or the fees for settlements and payments and also fixed cost, all of these can be paid off. So primary balance is now in place. So how much do we want to spend in terms of sales promotion? And also, how much do we want to grow? So in addition to number of users, we can add new services like financial services, and so with all of these inclusive, we want PayPay to continue to grow. And SoftBank Payment Service, this is also in growth stage. We can see it has grown by JPY 3.2 trillion, JPY 3.8 trillion in terms of GMV. So growth is accelerating. So that is all for the business. Next, finally, is ESG developments. So we, for the first time, issued ESG bond and raised JPY 30 billion. Thanks to everyone's support, [ NHK ] has undertaken us and reported. So we want to continue to meet their expectations. This will be used -- the process will be used to invest in HAPS business. And we also have received different awards, especially this Nikkei award really evaluated our ability to contribute to the society through our business and also the contributions of the employees. And we want to continue to be active in the prime market, the Tokyo Stock Exchange. So that is the business update, and I would like to take questions from this point on. So thank you very much.

[Operator Instructions] First of all, from SMBC Nikko Securities, Mr. Kikuchi.

This is Kikuchi. Can you hear me?

Yes, we can hear you.

So there was an increase in the revenue and profit of the holdings. PayPay was doing well according to your explanation. And the SBKK is suffering the most difficulty. So ARPU is not being controlled. But the -- it seems that ARPU is going down because of the deterioration in the mix and the CapEx is going above the plan. And so is SBKK not eyeing on having a profitability? You believe that you can spend a lot of cost to the growing entity like PayPay? Or are you trying to fiercely control the cost and as --but the result is what we see in front of us. So I would like to know from a qualitative perspective. So if you are controlling the cost, where are you seeing the results of that cost control? In addition, Mr. Miyakawa was talking about the recovery of the consumer. But in terms of this area, it is expected that the deterioration of performance will continue in the coming 2 terms. So could you give us your take on what's going to happen?

So currently, we are working on initiatives like 5G. In terms of the facilities, we are trying to build a 5G network, and we are focusing in that area. In terms of the CapEx, it's too early to say about the future, but we are trying to conduct upfront investment and we are trying to control in the -- control of the costs in the longer term. So we would like to control -- to be able to control the cost overall. And inclusive of the enterprise, we need to build a foundation. So -- and this is a societal theme. So we would like to work on that as it's needed. In terms of the cost, we are working on cost reduction measures. We are shifting towards nontelecommunication areas, and we are trying out various new businesses. And we don't want to decelerate this activity. So because of that, it seems that the cost accumulation is becoming bigger. So we are putting a lot of human resources into the new businesses and spending cost on the new businesses. So it seems that the cost is going up. So on a consolidated basis, we would like to prepare ourselves to -- for improvement. And we want to eye on the growth of our company. But as you have pointed out, there are pressures for the coming 3 years. So there are areas where we need to be more severe about the expenditure of the cost. So another point is that we want to shift the 40% of our personnel to the nontelecommunication areas, as Mr. Miyauchi has mentioned, and we are now enhancing that transition and there's the systemization work style reform, we have been doing that in the area of the area of the [ WNBR ], have been working on efficiency measures. As for sales promotion cost, last year, in the first quarter, we did not spend much. And because of that, compared to last year, it seems that the sales promotion cost has increased, but we are working on the cost control. But we need to show the results. So we want to eye on having good bottom line results. And I would like to make a comment on what Mr. Miyakawa has said. There is, of course, pressure on us. So we would like to work on the improvement -- of the further improvement of the Enterprise business so that we can offset the cost that we have invested in. And we will be looking for a prioritization of the business.

I would like to ask my second question. So I asked a very difficult question to you. But as you have explained, and it was -- that was explained in the -- Mr. Miyakawa's presentation. You talked about the current business and not so much about the new businesses, what's going to happen in the future in the next fiscal year? If you could mention about the specific things that has the potential for growth, including the specific numbers, I would appreciate it.

We are still working on many things, and we are allocating resources to our group companies. In terms of synergy, we have been working to enhance various activities. There are about 330 group companies. And I believe that by working together with those group companies, we would be able to bear good fruits from the synergy from those companies. In terms of the initiatives, as Mr. Miyakawa has mentioned, SME -- SMB initiatives are where we are working on. And I am hoping that we would be able to disclose something concrete in the near future. So we have a lot of large enterprise accounts. And now we are trying to expand. But I don't think that we have been able to work so much on the SMEs and also in terms of the consumer in providing the services to them, our initiatives are quite limited. So I think that there is a lot of room for growth. And ASKUL in this area has hundreds of accounts and also LINE has tools that can be provided to the SMEs. And I think that this is one opportunity that we can have at hand. So at this point, I would not be able to talk about it quantitatively. But these are the areas where we would like to focus on in order to add on the opportunity to the existing businesses.

Next is Tsuruo-san from Citigroup Securities.

Thank you for this opportunity to ask the question. It's quite related to Mr. Kikuchi's question, but it's an important point. So in order to achieve JPY 1 trillion in earnings for next fiscal year, what is the area that will contribute the most? So Consumer, you said last -- next year is bottom, so you continue to lose profit here. And Z Holdings is 5 years, JPY 5 billion in strategic investment and -- so if you want to focus on gross then this is an area that doesn't really contribute much in terms of profit. And then you have PayPay and Mr. Miyakawa was suggesting that it will be consolidated sometime next year. But next year, there's a possibility that it will continue to incur losses. So it seems as though there's a lot of factors for loss and profit and of course, JPY 1 trillion is just a slight increase in profit, but I think it will require a lot of efforts from Enterprise business. So if you could give me a little more breakdown, color on this.

Okay. So at the beginning of next fiscal year, I should be able to share more details here. At this point in time, Z Holdings, when they disclosed the numbers yesterday, did not really mention it here. So there's no doubt that we will grow Enterprise and Consumer, you are right, it will hit bottom. And so Z Holdings' opportunities, right now, we can't quantify it right now or at least not express it in terms of specific numbers. But in terms of other businesses, the company called SoftBank, the number that we have disclosed, published we are persistent about delivering those numbers. So JPY 1 trillion is a net number that we will absolutely achieve. So I hope you will understand. So please do not forget -- please remember that we did not forget this target.

Next is a question on 5G. So you said it has come to 85% in terms of coverage. How would that contribute to net additions, of course, maybe increasing subscribers? So you haven't really talked about in terms of device sales. So as much as possible, please share how do you look at this. So coverage is maybe better than peers. And maybe it is -- is it really contributing to acquisition, net adds?

This is really yet to take off. But 5G is -- we are still ahead. So we need to leverage that. And in broadband, we are now -- I think we -- it's an area where we can increase -- the area where we can use 5G, I think it will increase the opportunity. So in terms of mobile, I don't think we have been able to really show our strength here. So that's a challenge going forward. So including Enterprise, opportunity for 5G is there, and we want to be very aggressive about capturing the opportunity.

In order to gain that benefit, enjoy that benefit, you need to wait until stand-alone? Or is there room for gaining benefit even on a nonstand-alone basis?

I think in terms of market-wise, I think yes. But in terms of how the users feel about the service, I guess it really depends on how it's rolled out. Of course, maybe not as much in terms of expectations.

Next, from Daiwa Securities, Mr. Ando.

This is Ando. Can you hear me?

Yes, we can hear you.

I have 2 questions. The first question, it's related to ARPU. Fujihara-san, you have mentioned about JPY 210 decrease. In the fourth quarter I thought that the ARPU may be going down even further. Starting from the second quarter, what kind of elements led to this decrease and your prospect? Could you elaborate once again.

In the second quarter, the brand switch has calmed down. On the other hand, in terms of the change in the mobile service price, there was a constant penetration of that. And because of that, we are seeing the results in front of us. In terms of the Smartphone Debut Plan, it works negatively towards ARPU. Versus the previous year in the first half, the Smartphone Debut Plan was strong. But last year, last year the Smartphone Debut Plan was also strong. So that impact is decreasing. And in terms of the -- so in terms of the other programs of the -- the discounts, the -- because it's decreasing, we are able to invest in the other areas. In terms of the student discount, so it offsets the ARPU. And so there are small things that had been accumulated to derive this result. But the biggest one of the big factors is that increase in the [ mix ] of Y!mobile.

The second point I would like to ask you is related to acquisition. In the second half, I think that you have been focusing in the area of Y!mobile where it's lower priced. And you want to increase the subscriber acquisition and you would be competing in the area where churn rate is high and you see opportunities there. So in the next fiscal year, what kind of market would you be starting from? Or do you have any ideas about that?

So the management of the competing environment in the new pricing is now being penetrated, and I think -- so you have emphasized on Y!mobile, but as Mr. Miyakawa has said, SoftBank brand, of course, there is a switch to the Y!mobile but the migration into SoftBank is also increasing. So we have to manage both well. The people who have migrated to Y!mobile, when they want to use more data, they would go to the SoftBank brand more. So we need to focus on the increase of that area. The PayPay -- also PayPay, LINE, they are -- they have affinity with the smartphone service, and we need to focus on what kind of services that we would be able to provide for our customers from their convenience perspective, inclusive of UI.

So I would like to confirm, next fiscal year will start out in the same format we have seen in this fiscal year?

Right. I think that -- inclusive of Q4, I think that we are pretty -- in a good position. So we would like to continue this momentum.

[Operator Instructions] Masuno from Nomura Securities.

This is Masuno from Nomura Securities. Can you hear me? So first question, about 5G ARPU strategy. Let's see, so your peers, they do maybe 30 gigs and they give maybe 6 months discount and they try to penetrate 5G. So after discount period is ended, then they will be able to gain, so that's positive. But I think it seems as though you're driving users more towards discount on the device. So if you have unlimited plan with 5G -- so rather than to focus on unlimited use of 5G, but you want to drive people for devices, discount from devices. So perhaps you can explain a little bit more on that, your strategy.

So SoftBank has unlimited plan. And of course, these are the customers who use data heavily. So we're not really going one or the other, but we're doing YouTube campaign. This is one of our sales promotion initiatives. So I think we have a strong mindset for selling large capacity. So in addition to that, we are adding device sales. So that's our strategy. So it's on top of it.

And with regards to ARPU, if it's device, so how is 5G trending in your company? Do you see greater percentage of 5G? Or you have more sales from Y!mobile? If that's the case, then how would this plan drive shift from Y!mobile to SoftBank or 5G upgrades? When would you be able to see that sort of move?

So data capacity, I think with 5G, there's greater use of data. So we need to really realize this. Now shift from Y!mobile, I think it will take a little more time, but that's a longer-term challenge for us. But we need to sell unlimited data use with SoftBank brand. This is the policy that we have from before, strategy we have from before which remains unchanged. So Y!mobile is strong. So the customers we acquired from Y!mobile, how do we foster them and develop -- have them shift to SoftBank brands? That's really the challenge going forward.

Next question is about churn rates. In the earlier presentation, you said that with multiple services, the loyalty increase in churn rate falls. So you have the positive impact from an individual company, but you have the port ins and port outs really occurring at all companies. So if you look at the environment, do you think your churn rate will fall? Or what do you think?

Of course, we want to reduce the churn rate. But we are not planning that in, not -- at least excessive decline is not in our plan. This sort of level of decline, maybe the churn rate is the given. I guess that's a baseline. But by layering services and really focusing on that, of course, we'll be able to improve the churn rate. So that's an effort we want to make sure we continue to endeavor on.

If that's the case, so you have the industry because overall churn rate, increasing. But if you bundle using different group services, maybe you'll be able to decrease your churn rate in the future? Is that your scenario?

Yes. So if you can see that on a quarterly basis, it's actually decreasing. And I think that's a fact that we're able to compete well in this environment. But compared to the past churn rate, it's still at a high level. So we need to continue to pursue strategies to improve our churn rate. But it's not just rates, but it's also about fees, the environment is really changing. So we can't really go back to the same level of churn rate that we used to realize in the past. So we will continue to look at higher level of churn rate, but we will challenge on trying to improve that. That is all for me.

[Operator Instructions] From Nomura Securities, Mr. Masuno.

Sorry, I just asked my question, but there are no other person who would like to ask. So I would like to ask one more question. In terms of sale promotion in the fourth quarter, I understand that accounting-wise and even you would see the decrease. But next year on, of course, I understand that it would be dependent on how competitive the environment is. But for next fiscal year, you would be taking the neutral stance, not going up or down? Or would you be challenging yourself to decrease these sales promotion? What is the directionality for this in the next fiscal year?

In terms of sales promotion, we are trying to narrow it down. In the third quarter, we are seeing improvement in the net addition, but we are working on cost reduction very fiercely. And we would be working on that in the fourth quarter as well. We have to, of course, look at the competitive environment. But overall, we would be looking a stringent look at how we use the cost.

So with this, we would like to end the Q&A session. And with this, we would like to end SoftBank Corporation earnings results for the 9 months ended December 31, 2021 investor briefing. [Statements in English on this transcript were spoken by an interpreter present on the live call.]