SoftBank Corp. (9434) Earnings Call Transcript & Summary

The meeting is now on time. President, please take the chair.

Good morning. I am Junichi Miyakawa, President and CEO. Thank you very much for taking time out of your busy schedule to attend this General Meeting of Shareholders. I am very pleased to welcome so many shareholders to the meeting this year at the venue. To those of you who are attending online, thank you for your participation. Pursuant to Article 13 of the Articles of Incorporation and the Board of Directors, I will preside as Chairman of this meeting. The 37th Ordinary General Meeting of Shareholders is now in session.

Please note that Ms. Reiko Hishiyama, Director, is absent today for unavoidable reasons. The purpose of this general meeting of shareholders is as described on Page 2 of the Notice of Convocation. In addition, we'd like to report that the number of voting rights held by the shareholders present at the meeting today constitutes a quorum necessary for the deliberation of this agenda. The Chairman will explain the method of proceeding with this General Meeting of Shareholders. I'd like to explain the procedure to be followed First, we will report on matters to be reported, explain the contents of matters to be resolved and explain our growth strategy, followed by a question-and-answer session on matters to be reported and matters to be resolved.

After the Q&A session, we will only vote on the matters to be resolved. The method for Q&A and exercising voting rights are different for the participants online and at the venue. So I will explain accordingly. Question and motions from shareholders attending via the Internet have already been accepted through the dedicated website but the deadline is 5 minutes after the start of the Q&A session. Shareholders wishing to submit a question or motion are asked to type and submit their question or motion in 200 characters or less. Each shareholder may ask only one question, and each motion will be considered only once for the same type of motion. All procedural motions will be voted on together before any questions are answered by the shareholders present. If there is a motion to be [ amended ] proposal, it will be considered together with the company's original proposal and the original proposal will be voted on first when the vote is taken. With regards to exercising vote, online attendees must enter the information through the dedicated website. Please note that you can already start exercising your voting rights via a dedicated website, but once you have done so, you will not be able to modify your exercise. Please click the exercise button after you have completed your selection of for or against for all proposals displayed on the dedicated site. Please note that all votes must be submitted together in a single transaction. And for those attending at the venue, question from visiting shareholders will be accepted after the Q&A session for shareholders attending via the Internet. Due to the number of questions we received we will limit questions to 1 person. If there is a motion to amend agenda, it will be discussed together with the company's original proposal and when voting, the original proposal will be voted on first. For exercising voting rights, for those shareholders present, the voting rights will be confirmed by [ applause ]. That is all for the explanation of the methods of proceeding. We'd like to vote on whether this method of proceeding is acceptable. If you are shareholder attending via Internet and are in favor of the proposal, please click on the [ approvals button ] on the dedicated website. While the votes of the shareholders attending via the Internet are being counted, we would like to ask the shareholders present at the meeting to vote. If you are in favor of this method of proceeding, please applaud. Thank you very much. We will now begin the tally. Please wait a moment. We are in the process of confirming. Thank you very much for your patience. Since the majority of the vote has been cast, we will proceed in this manner. I will now report on items to be reported. The matters to be reported are as shown on the screen. The contents are as shown on Pages 34 to 76 of the notice of convocation and the matters omitted from the documents to be delivered, which are available on the company's website. We have also prepared a video explaining the details. Please watch. [Presentation]

Those were the report items. Next, I will present today's resolution matters and explain their contents. The first item on the agenda is partial amendments to the Articles of Incorporation. The details of this agenda item are as described on Pages 8 through 20 of the notice of the [ 63rd ] Ordinary General Meeting of Shareholders. The next item on the agenda is the election of 11 directors. The details of this proposition are as described on the Pages 21 through 28 of the notice of this meeting. The next proposition #3 is to elect 3 corporate auditors. The details of this proposition are as described on Pages 29 through 31 of notice of convocation. The Board of corporate auditors has given its consent to this proposition. Finally, the fourth proposition is to elect one substitute corporate auditor. The details of this proposition are as described on Page 32 (sic) [ 33 ] of the notice of convocation. The Board of corporate auditors has given us consent to this proposition. This concludes the explanation of the proposition. I would like to explain our growth strategy for the future. At the recent earnings results presentation, we announced a 3-year medium-term management plan. We will continue to emphasize both medium- and long-term growth and shareholder returns. As for growth, we pursue record high net income and maintain a high level of shareholder returns. The business environment surrounding our company is changing at a rapid pace due to such factors as the price reduction, restricted sales activities while preventing infection with COVID, soaring fuel costs triggered by Russia's invasion of Ukraine and the shortage of semiconductors. Even in this business environment, we've been working diligently to achieve growth. First, in net income. In fiscal year 2025, we will pursue to achieve record high net income of JPY 535 billion. In terms of adjusted free cash flow, which is the source of dividends, we will continue to generate a high level of free cash flow of around JPY 600 billion. Finally, with regard to shareholder returns, we anticipate that dividend per share for the current fiscal year to remain at JPY 86. We have not decided our dividend policy for the next fiscal year and beyond at this time, but we fully understand the expectations of our shareholders. We will strive to maintain a high level of returns to shareholders while maintaining a balance with growth. Next, I'd like to explain our initiatives for further growth. We mentioned our vision for fiscal year 2030 in our recent earnings results presentation. We pursue to become a next-generation social infrastructure that will be needed by society in the future. We have been providing communication-centered infrastructure that connects people to people and people to the Internet. In the future, AI will undoubtedly become the center of the times. However, we believe that the current communication infrastructure cannot support a next-generation society coexisting with AI. In response to this, we are implementing various plans based on the need to fundamentally rebuild the current infrastructure. The catalyst for AI was the emergence of generative AI such as chatGPT. If you ask a question in vague terms, it can answer naturally. This became a hot topic. And in just two months after its release, 100 million users started using it, making AI a more accessible and familiar presence for humans. AI can also do creative things. For example, just by typing, create a Japanese spring-like song, AI can create a song for you in no time. If you ask it to draw the Mona Lisa in a modern style, it will draw a picture like this in less than a minute. Further, when you ask them to write a program, make a movie or write a novel, AI is able to complete it in no time at all. Also, a new AI that utilizes generative AI has emerged. This is a method of driving new answers by having two AIs talk to each other. Suppose, for example, one AI is a sales representative and the other AI is an application developer. The different roles of the two AIs can repeatedly engage in a chain of dialogues to drive answers autonomously that could not be found by a single AI. We believe that society will develop further when autonomous AIs cooperate with each other. AI will optimize traffic infrastructure to realize a society without a traffic accident. At home, AI equipped robots will help people with household chores, which will free up their time and make their daily lives more convenient and comfortable in order to support such a society, it will be necessary to process the enormous amount of data that will be generated. This graph shows the projected computing power required to process this data, currently, 6 exaflops, it is estimated that by 2030, more than 10x the current computing power will be required. And by 2050, as much as 2,000x more. The explosive growth of generative AI in recent years suggests the possibility of a further increase from these projections, flops as a unit of computer processing power and indicates how many operations can be performed per second. If we apply it to Fugaku, Japan's world-class supercomputer, the current 6 exaflops is equivalent to 14 systems of Fugaku. In 2050, it is calculated at about 30,000 systems of Fugaku will be required and the electricity required to run these systems is equivalent to 4,500 units of thermal power generation which cannot be covered without increasing Japan's overall power generation capacity by 7.5x. Under this circumstance, our goal is to create a next-generation social infrastructure. The current structure of the data center, data processing is concentrated in two locations: Tokyo and Osaka. If data processing continues to increase, the risk of power outages in urban areas will further increase by decentralizing data to the regions, power consumption will also be distributed to the regions, and we will fundamentally rebuild infrastructure to ensure the social activities will not come to a halt. We've decided to locate a large computing power data center, namely Core brain at 4 places, Hokkaido, Tokyo, Osaka and Kyushu. Further, as for decentralizing data processing, we will build regional brain so-called decentralized AI data center, since regional areas have more advanced green energy development, there should be an advantage in procuring stable electricity. This decentralized AI data center will be built into 3 tiers. In addition to Core brain and Regional brain, small data center, called MEC, will be set closest to smart phones. Such data center will have the capacity for parallel processing as if it were a single data center. This structure has been adopted by the research theme under the Ministry of Economy, Trade and Industry research on super distributed computing infrastructure and development is progressing smoothly. Within these 3 tiers, the role of the Core brain is to install supercomputers, generative AI infrastructure and quantum computers to perform large-scale computing. The role of the Regional brain and MEC is to perform real-time processing, such as robots, drones or autonomous vehicles. As we have recently announced our correlation with Nvidia, [ and ARM ], we will introduce Nvidia's state-of-the-art chip to some of our regional brands and mix. This will enable the realization of AI RAN. AI RAN is a mobile network equipped with AI. For some years. NVIDIA, ARM and SoftBank, three of us have been working together to demonstrate this technology, and now we are finally ready to announce it. The mobile network enables communication by sending radio waves from a mobile base station. The design of the area is determined by the type of radio wave the strength of the power used and the height and angle of the antenna. On the other hand, when there is an extreme concentration of use, all the users connected in that base station area may have difficulty using it, which is called packet loss. AI RAN, in which each base station is equipped with an AI, is to optimize the network by having base stations talk to each other. We have prepared a video to make it easier to understand about AI RAN. AI RAN as the technology to realize the next-generation mobile network utilizing AI being developed by SoftBank. This is one example of how AI learns various information and optimizes network accordingly. This is a real world computer-generated 3D map, digital twin of Takeshiba area in Minato ward Tokyo. Various management can be done on this 3D map, which also manages the location of mobile base stations. In addition to being able to upgrade mobile base stations with AI and extensive computing power, AI RAN is like a single large base station by aggregating the radio waves and power that tend to be biased in each base station. This allows for maximum effective use of radio waves and minimize power consumption. This is a commercial building with the theater during the time when performances are over, for example, the flow of people can increase dramatically, to make sure you're always connected comfortably no matter how crowded it gets. The AI optimizes itself by reasoning from information and events learned in the past as well as real-time conditions. Then by coordinating and cooperating with other surrounding base stations according to the timing of the events and the signal is concentrated in congested areas to ensure comfortable communications at all times, be informing a technology that enables high-speed, high-capacity communications by concentrating radio waves on terminal, such as a smart phone. It's currently difficult to use to track a car or other vehicles in motion. However, with AI RAN can be achieved by base stations cooperating with each other and performing advanced calculations. Moreover, mobile networks, which were previously managed in two dimensions, can now be managed in 3 dimensions. In the coming years, various AI equip devices will abound by linking and coordinating that AI -- with the AI in our network, we will optimize society as a whole and create an affluent society. SoftBank will continue to promote the development of cutting-edge technologies such as AI RAN and lead social implementation to provide next-generation social infrastructure to support future society. So as been explained, I've shared with you today that our telecommunications industry is being transformed by AI in this way. This is just the beginning. All industries are being transformed and redefined by AI. The dawning of AI transformation, which goes beyond DX, has finally come. SoftBank will strive to realize the infrastructure for the next-generation society that supports the co-existing of AI. The advent of a society coexisting with AI has made us realized once again the depth of this corporate philosophy. Information Revolution; happiness for everyone, we will continue to steadily grow our business under the corporate philosophy. We sincerely appreciate the continued support of our shareholders. We will now move on to the question-and-answer session. The moderator will explain, again, how to proceed with a question-and-answer session. First, we will answer questions that have been entered through the dedicated website in advance. The questions entered through the dedicated website will be read out by the moderator. The deadline for shareholders attending via the Internet to enter questions via a dedicated website will be 5 minutes from now. After answering questions entered through the dedicated website, we will receive questions orally from shareholders who are present at the meeting. Please raise your color board for questions from the audience. A staff member will hand you a microphone.

[Operators Instructions] First, the question from the online shareholder. The first question is, how is Beyond Carrier strategy progressing? Please provide answer the Chairman.

It's been 2 years since I became CEO. The revenue for FY 2020 was JPY 5.2 trillion or the actual results for the last fiscal year was JPY 5.9 trillion, and the revenue continues to grow steadily. Over the past 2 years, have been driving the Beyond Carrier strategy that was passed on to me from my predecessor Ken Miyauchi. Over the past years, the percentage of nonconsumer telecom revenue has increased from 72% to 78% indicating a steady diversification of revenue sources, in particular, in the financial segment, which was newly established last year, PayPay is performing well. And Annual transaction exceeded JPY 10 trillion. In addition, digital transformation that [ Imai ] [indiscernible] has been driving, corporate solution sales to help such DX continue to grow at double-digit rates. With the addition of Yahoo! and LINE, the Beyond Carrier strategy is making steadily progress.

The next question, why can't you increase the dividend? Please provide an answer.

Well, the question is cannot we increase it? To answer to that question, first, we would like to explain and answer whether the current high dividend can be maintained. The current dividend is JPY 400 billion out of an annual free cash flow generation of about JPY 600 billion. First of all, by continuing this free cash flow, firmly, we will continue to provide stable dividends in the future. The increase in dividends will require an increase in profits, which will be the source of dividend, and we have announced a new long-term vision that extends through 2030, so we will do our best so that we can take the option of increasing dividends through future growth. Thank you for your understanding.

Next question is, what is the bond type class share?

Corporate bond type class share, which may sound unusual, but as the name suggests, they are class shares with the features of corporate bonds. You may be familiar with subordinate debt and maybe it may be easier for understand if we describe it as in stock version of subordinary debt that you are well familiar with. This product will be listed on the Tokyo Stock Exchange prime, and we have no voting rights. Therefore, the value per share will not be diluted. This is a financial method that takes existing shareholders into consideration. And this is the first attempt of its kind in Japan. It may be a little bit complicating for you, but we would really appreciate your support and understanding.

The next question, please share the status of the initiatives on chatGPT and other generative AI?

I've just given the presentation on the theme of AI Coexistent Society. Moving forward, we believe that generative AI will increasingly permeate our daily lives. So from your question, I understood that it was about, how our company will deal with generative AI? In light of the recent evolution and growth potential, we believe that our company should be proactive in this area. As for our specific efforts, first of all, we are in the process of encouraging all employees to thoroughly use AI in their work so that all employees can become an effective asset. Since last summer, we've already been using generative AI in some of our call centers to improve operational efficiency. Based on this experience, we've established a team to build an in-house generative AI jointly with Z Holdings and have begun preparations for its development. We are also making use of major generative AI such as OpenAI, Microsoft's Azure and Google's Bard, so currently, we are pursuing to become the company that best uses generative AI in Japan. Thank you.

Next question is for Z Holdings growth. How will you work as the current -- excuse me, as the parent company.

Z Holdings has 85 million users on Yahoo plus 95 million users online. In PayPay, which we jointly operate with as a Treasurer of our company with 58 million users. We recognize that they are essential partners for our company's future growth. The reorganization of Z Holding centered on Yahoo! Japan and Line is scheduled for October. We believe that integration of IDs and the consolidation of duplicated projects will make progress. As the parent company, we will fully support this transformation. Thank you for your understanding.

The next question, what is the progress of the digitalization of small- and medium-sized enterprises.

This April, we established a new division that focuses on small- and medium-sized enterprises. We are strengthening this team. We do have the current customer base, but with the support by [ ASCO ] which owns 5 million customers, we have started proactively our initiatives. Supporting the digitalization of the SME market, which accounts for 99% of Japan's enterprises, we believe that this will promote the digitalization of Japan, and we will continue to make further efforts. Thank you so much.

Next, what kind of business opportunities do you see for smart buildings that you say you focus on?

Usually, value of buildings peak at the time of completion of construction and decline over time. We are working on a concept called autonomous building, in which buildings are equipped with AI and operate autonomously them subs. And by utilizing the data, we are establishing a new business model that can increase the value of the building. AI equipped buildings work together with another AI equipped buildings. And that should lead to building a whole city and area. Places like New Chichibunomiya, Rugby Stadium and Nagasaki Stadium, buildings and the surrounding facilities coordinate each other to help building and improving value of the City and area. We have already received more than 100 other requests of such projects. We have high expectations that this will be a growth driver for our corporate business in the future, which is led by [ Imai ] [indiscernible].

The next question, what are your thoughts on PayPay's IPO?

Yes, we -- it is true that we are pursuing for PayPay's IPO, but nothing has been decided yet. We would like to consider the listing of PayPay as a viable option to realize the value of PayPay within our group. That is the all I can address for now. Thank you so much for your understanding.

Next, it seems that incentives for acquiring customers are reaching their limits. Please tell us if the new customers you have acquired are contributing to your revenues. Also, please tell us if you are considering any reward program for existing customers with long-term contracts?

The cost of acquiring customers is balanced between expected revenues. New customers are, of course, lead to increase in revenues. We believe it is important to satisfy our existing customers and to make sure they continue to use our products for a long time. So in addition to the long-term continuation benefits, we offer several benefits such as Super PayPay coupon and free Yahoo! Premium exclusively to those users. We will continue to provide more and more services that will make you feel happy to be a SoftBank user. Thank you for tour understanding.

The next question, what is the reason for appointing a substitute auditor?

Well, today, this venue is not full but we do have a large number of shareholders. So therefore, we prepared for the contingency of a lack of outside auditors from the number of outside auditors required by law. In order to avoid the inconvenience of holding an extraordinary general meeting of shareholders, we would like to appoint an alternate auditor. The position will be filled only in the event of a vacancy. So the number of auditors will remain unchanged from the current number of 4. Thank you.

Next question. PayPay will stop accepting credit cards other than PayPay card after August. What are the prospects for profit improvement?

Since the announcement, we have received requests to continue other credit cards than PayPay card. We have just begun to consider the option of postponing or suspending the program after August. We hope that PayPay will make an official announcement once it is determined. Thank you for your understanding.

We would like to take the next question as the last one from the question that we had received in advance. The next question is that, of the 11 directors, two are women, which is probably too few. What's the view on this?

We recognize the importance of diversity on the Board of Directors. And we have been considering candidates for on an ongoing basis. We would very much like to increase the number of female directors. Thank you so much.

We will now answer the questions we received today from shareholders who attend the meeting via the dedicated website. Questions will be read out by the moderator.

The question is, what do you think about the parent subsidiary co-listing?

As the society coexisted with AI is about to arrive. I feel even more strongly these days about the benefits of SBG being the parent company. As an investment company, SBG has invested in many AI companies over the years and has gathered a wide range of information from around the world. Mr. Son a member of our Board of the Directors has given us a lot of useful advises based on his deep knowledge of the future trends in AI. In addition, when SBG's portfolio companies expand into Japan, as a business partner, they find it easy to approach to SoftBank. We believe we are in advantageous position. This is both a growth opportunity for us and an increase in value for SBG's portfolio companies. SBG and our company are both listed companies. If there are specific transactions between the two companies, we make sure that we make business decisions carefully so as not to undermine the interest of minority shareholders.

The next question, what is the status of 5G network deployment?

As of April this year, the number of 5G base stations has exceeded 65,000, which is way ahead compared to the other carriers and the population coverage rate has exceeded 92%. Thanks to this efforts, we are the carrier with the most stable 5G quality and external evaluation by a third party. So we will continue to improve our service until we reach 99.8% population coverage, the same as 4G. Thank you.

Next question is, what is the impact of the electricity price increase and what measures are being taken?

We are a telecommunications company. Therefore, electricity is directly related to our business and affects our cost of sales. Electricity bill, which was about JPY 50 billion, a year before COVID, is expected to exceed JPY 70 billion this year as it did last year, over JPY 20 billion in increase. In the past fiscal year, we responded to the rising cost of electricity by cutting costs. We intend to continue cost reductions in the current fiscal year as well. We recently announced a long-term contract to source renewable energy. This will make it possible to procure renewable energy from 2026 onwards at a lower unit price than before COVID. We will continue to focus on development of renewable energy technologies while aiming to shift the business structure that is thus susceptible to the rising cost of electricity over the medium to long term.

The next question, what is the average interest rate on loans? While interest rates continued to rise overseas, what do you think the impact will be if interest rates were to rise in Japan?

The average interest rate on our borrowings is approximately 1%. Compared to before, in anticipation of rising interest rates overseas, we have been fixing and lengthening debt for some time. At the end of the last fiscal year, 85% of our debt was at long-term fixed interest rates. Therefore, we are well positioned to resist impact of rising interest rates.

Next question is, what do you think about the current stock price?

As a shareholder myself, I am always looking for ways to raise the share price. We view continuous profit growth as important for improving our stock price. In order to achieve this, we believe it is necessary to manage our business from a long-term perspective. In our last earnings call, we announced our vision up until the year 2030. We have been working backwards from the 10-year vision during my first 2 years in my office, and we will continue to make steady progress during the 3 years of our medium-term plan. For example, we imagine that if current profits double in a few years, the share price will nearly double as well. We will make every effort to achieve this goal, and I'll be happy if you, as a shareholder, could look forward to SoftBank in 2030 with us. Thank you for your continued support.

Now, what is the mobile shop deployment policy moving forward?

First, our mobile shops nationwide, there are 2,800 locations. The role of those shops is to create a connection with customers directly, which we take very strong importance on. So from the young to the elder, so we communicate in real time. This is the only channel we can interact with customers. We regard our shops really important. So Shimba has been struggling and working really hard on this.

I am Shimba, in charge of Consumer segment. So as CEO mentioned, Y! mobile shops, SoftBank shops, nationwide are the very important supporting service spot to interact with customers directly. So as shown in the video, more than 1 million times of learning session being held, which were well evaluated by the customers and 1.6 million increase of net -- net increase. And so these shops have played important roles, Yahoo! and LINE and PayPay. So our shops are not only providing basic support, but to provide other benefits and services and support, Which is a very important location for us to expand our business. On the other hand, DX, digital transformation, AI transformation, including ChatGPT being leveraged to improve operational efficiency to provide and offer better services for our customers. So we would like to have closer communications and to enhance our services.

Next question is what do you think about the low percentage of your own capital?

We want to improve our own capital ratio. And we have CFO to address the question.

About our stock own capital ratio, we have JPY 2.2 trillion in absolute amount, which is plenty. 15.2% was last year's result and improvement was made since the previous year. We have been improving the percentage of our own stock to the total capital.

The next question about your share prices policy, so what other measurements you are thinking of?

I have also answered just before, but let me add a few words. Looking ahead of our future 5 years and 10 years since I took the office, I made a business plan for 10 years, which I have not being in a position to show you all the plans yet. However, we are steadily pursuing to those achieving targets and plans. So for that, our revenues, operating income and if we could double it and then price of shares could double. So we are calculating what if triple or 4x, then for that, what we should do, how we can make it triple and we are proud of ourselves that we had thoroughly made a plan to achieve that. However, under these circumstances, and -- it will be a bit difficult to attempt all in a short term. Therefore, we made it into a 10-year plan. So we would like to take those measures accordingly. And we would like to look at the same direction together with you.

Next question is, when do you think merger of LINE and Yahoo!?

We don't have any specific plan about the merger of LINEMO and Yahoo! Mobile. LINEMO is exclusive for online to save cost and benefits are affected on the price of LINEMO because you don't have to go physically to stores. And LINE MOBILE, we ask you to come to the retail shop for further explanation by our staff before signing contract. So they are different -- similar but different in terms of brand value. Currently, we don't have any specific plan for putting them together. But going forward, generative AI, ChatGPT should be able to provide same or similar level of service that can be provided by real staff, then we can think about merging those brands. So we are open. But in the next 1, 2 years, at the moment, we don't have any specific plan to putting them together Yahoo! Mobile and LINEMO.

Next question, about 85% of the total shareholders, what is the management policy about this?

As total shareholders return 85% to be maintained, we are not thinking about to fix it because the JPY 86 per share right now, this dividend is the level that we would like to maintain as an absolute level. So as for this total shareholders' ratio, after the medium-term and long-term business plan presentation, so we announced to pursue the target of 85% this fiscal year. And so on a daily basis, we are getting new business opportunities. So we would like to take a good balance between the business growth and dividend. Considering shareholders' expectations, we would like to maintain the absolute rate and the level of dividend per share, but we are not also thinking about making a large investment at this moment. So we would like to make sure that both shareholders and the society and our company will become affluent together. So this is our target. So this 85% is not that we would like to stick to. You may feel against if I say that I'm not going to stick with 85%. However, I think this is the way our business should stay healthy. So in a long-term perspective, if we are to make a further leap on our business growth, then we would like to also return a higher dividend. So I hope you could wait for every year, our announcement.

Next question is about your efforts on so-called healthy business operation.

Well, I think that well being is rather buzz word. In fact, we are working on that front. In fact, we have a dedicated office on well-being business operation. Every month, I have all-hands meeting. And before the meeting starts, we do a short yoga class for employees. Not only that, we have a lot of club activities. So from different angles, we are working to make sure that our employees are always enjoying well-being.

And next question, when do you expect to turn our financial business in black?

At this moment, we are not in a position to be able to tell you exactly when due to some restrictions because there we have PayPay and SoftBank Payment Service, which is a large payment transaction service provider. So as for the parent company, we cannot announce in details about each company. However, PayPay has been growing as we have expected as payment service. The transaction volume is about JPY 6.7 trillion volume. So as I announced -- so operating income is already exceeding JPY 10 billion. So the financial segment, which we have established -- so as a total, I think we should be able to announce in the near future that we are profitable. So this concludes my answer.

Next question or request is give us a few words for Mr. Son. Mr. Son, please. There was a question about co-listing of parent and subsidiary companies.

SoftBank to SoftBank Group and SoftBank Group to SoftBank, how can make sure that things work positively for both sides, win-win? That should hold a key. At the moment, SoftBank Group had over 500 AI-related companies in the portfolio. Six, seven years ago, I said that AI era should come sooner rather than later. So we have been hunting for AI-related companies around the world for investment. We talked a lot about becoming investment companies and talking a lot about strategy of companies -- of AI companies, and we put Arm as a center to build a group of AI-related companies to generate synergies. For SoftBank Group, SoftBank is about 15% of the total assets. In other words, 85% of SBG's assets are AI-related companies overseas mostly. And we have about 10% to 40% of ownership of each company. Usually, investors have 3% to 5% as a passive investor, they are just interested in money, but SoftBank Group is not an usual investor. Our investment is not necessarily for return money, but for information revolution. We believe the vision of explosive growth of AI, and we want to build a group of companies for that. Unlike traditional investor, we are vision capitalist, even bigger than venture capitalists. We are actively engaged with the business management to make sure that synergy is born. Most advanced AI-related companies like Arm are in line with our direction of vision. ChatGPT, as you know, gets popular and popular and many people feel AI as real. In fact, I'm chatting with ChatGPT every day. So I am a heavy user of ChatGPT. It's amazing. As you may read press, founder of OpenAI has been chatting with me almost every day. And I believe that huge revolution will take place. And when the wave of that revolution expands around the world, you need to bring it into Japan. Unfortunately, from a technology perspective, nothing is something that Japan is leading. And most things technology-wise are coming from other countries. And SoftBank, Z Holdings should be beneficiary of technology coming from overseas. So again, SBG and SoftBank can create positive shareholder value. I have made -- and we have made not successful investment in AI, and there were some embarrassment and failures, but of those failures in the past, we have discovered great opportunities and buds to blossom in the future. So I am busy, and I am excited. And sorry, I talked too much. But again, your continued support for SoftBank is appreciated.

Well, I think everyone has seen his face after a long time, must be very pleased. Well, next question. The digital technology skills have been -- should be held by some of your directors. What do you think about that?

Yes. Exactly. I agree. So moving forward, digital technology is going to lead our industry. So we have been considering as centered of our business. So those directors here and also those who actually exercise, so Vice President levels -- so those who have authorities and among those, there are digital technology specialists. So from July, a new IT -- a large and new organization will be established with IT expertise and will be also managed by the Vice President as well. So we have already started setting up a new IT-related strong team. So it is the right direction for us to have more and more IT related and digital technologists.

Next, what do you think about utilizing AI for nursing area?

Well, not only nursing, but also medical treatment areas. We are working on AI, for example, HELPO is one of our services provided. For nursing care, maybe robots can support staff, people in nursing care and not only physically supporting the staff, but also intelligently support the people who are doing nursing care. And also sensors to be mounted on a bed or managing nursing staff schedule and providing support for a nighttime shift operation of nursing care staff. So when it comes to nursing care and medical and health care in general, we want to develop our business opportunities in those areas going forward.

The next question, AI mobile system nationwide and regional areas and you could operate the same way?

I think this is related to AI RAN question. So I will go along with that. So the infrastructure designing in urban area and the regional area is different a little bit. So in urban area, on top of the buildings, there is a base station and inside the buildings, the waves is controlled. So -- also optical fiber setting is more complicated and -- but it's easier to operate, especially for those congested areas. This is to optimize network. However, in regional areas, the distance between base stations is more than 10 kilometers. So within 10-kilometer distance and if they are to support each other, it's a bit too far. So the further network designing between the current network stations, there should be 1 more with AI brain. That kind of network needs to be established to be able to receive the benefits of a new technology related to AI. So this is what we are pursuing to build a new infrastructure.

Next question is, what's your thought on power generation? Would you like to do something as a company?

We have some thoughts. Solar power generation that has been started by SBG is something that we are looking at. Thermal power generation or wind power generation, we have been studying those areas. We, as a SoftBank KK, do not have capabilities to do power generation, unfortunately, at the moment. But since we consume a lot of power, we want to create renewable energy by ourselves for us to use by ourself. That would be great. So what we did was to source renewable energy and in '26 and onwards, we can start enjoying the power to be generated and we want to utilize the power for our consumption, thanks to such long-term contract of renewable energy. So energy consuming company, if they can generate power and consume the power by themselves, then power shortage in Japan can be addressed. For example, 100 listed companies, if they can do together, generate power and consume power by themselves, we can probably help addressing such a challenge. And going forward, there should be a lot of ways to generate power. There are a lot of surprising ideas and technology all around the world. If and when there is a chance and opportunity, whether generating power on our own or sourcing power by using a group company like SoftBank Denki, to enjoy better price. So we study a lot of stuff to find something that we can start by ourselves.

The next question, do you have any plan to generate your own generative AI?

Yes, we do, we do have a plan. As of now, the world top OpenAI, so just before Mr. Son said that he is a good friend of the founder of OpenAI, Sam Altman. So I'm also using ChatGPT every day. It's great. So the recent -- most recent ChatGPT 4.0 is superior to my own ability. 3.5 is maybe same as my ability when I was in school. But -- so we own the level of 3.0. Since last summer, our call center has been utilizing it. And so that generative learning requires some investment. So we -- because we had to also consider cost cutting and then it was a bit slowed and a 3.0 and now it's 4.0 [indiscernible]. So from July this year, we are going to start a new large scale of learning. Of course, we are not thinking about catching up OpenAI at this moment. However, at our call centers, the first response does not -- should not be done -- does not have to be done by a professor level stuff. So the generated engine can reply to the first call, so this is what we are working on right now. This is not about depreciation, but this will be -- considering the cost, it will be inexpensive. So we and SoftBank and Z Holdings and a lot of expertise in this area from LINE and we've already created a team with them. So this is just a part of our AI-related initiatives. So as I said, as for SoftBank Corporation, we would like to be the company which best uses AI, which I've already shared this direction with our employees. So not only our internal GPT, but also market available GPTs to find and optimize our use.

Next question, how do you see coordination of AI and 6G going forward?

I talked about AI RAN earlier, and this is part of future strategy. When AI comes together with radio access network, what kind of advancement can be? Imagine, that was I talked about earlier. And NTN, or non-terrestrial network, is something that we are looking at, which is to provide telecommunication services from the air, like using satellites or HAPS, that is providing telecom infrastructure from stratosphere and may be drawn at the lower attitude. So with 6G, telecom infrastructure evolves from 2D to 3D. I don't want to use technical jargons, but in terms of 6G, AI needs to be a controller to provide telecommunication service not only in 2D term, but also 3D terms in terms of software and hardware. So everything needs to be equipped with AI. For 6G, going forward, I'm sure that a lot of competitors are working hard and SoftBank is not an exception. And when it comes to new technology development, we will continue to actively working on that.

Now at the end, how do you think -- what do you think about the differentiation from the other competitors?

Well, depending on who you are talking about as a competitor here. However, in the Consumer segment, Docomo, au and Rakuten in Japan market, fixed telecommunications share or mobile communications share, from that point of view, during the COVID, our net increase compared to the other carriers has been doing really well. Why so? Because our physical stores have been stronger and stronger, while the others -- competitors were minimizing. So on holidays, not only the shops but outside of the shops, we also held some classes. And now such efforts has beared fruit. So as for Enterprise segment, digital transformation we have been working on. So the competitors would be those DX providers. So SoftBank, we are in an advantageous position to receive information from different angles. For example, like GPT and we internally analyze what we should do to utilize this, and we need to provide tools first and utilizing data our customer companies using GPT, if they want to start something new, and we would provide a new tool. And our customer company, when they want to promote their sales, and they could utilize Yahoo! and LINE, and we would make a unique proposal which is outstanding from others. I'm proud that we have a number of unique offerings which we believe to maintain 2-digit growth. So this is our strength.

There are a lot of questions. So now we'd like to take questions from shareholders at the venue. [Operator Instructions] So shareholder with the blue board on the Row C, please.

My number is 438. You talked about AI and ChatGPT, which are advancing in the society. For example, if you ask why Hanshin Tigers is progressing well this year, and answer is teamwork under the manager of Kanemoto. In fact, Kanemoto was the manager 2 years ago, but not the current manager. And when I typed in SoftBank, the answer was completely wrong. Again, my point is, at an early stage, there are some misinformation or wrong information. And based upon such wrong information, some people may create some [indiscernible] or something. So I think that you are questioning about the accuracy of generative AI and what do we think about that.

I think with regards to GPT, we have been looking at development of GPT. And now it's been evolving into 4.0, 5.0. And most GPT users at the moment are using GPT 3.0 piece and data running or learned by GPT 3.0 was the data as of a few years ago.

Let me answer more correctly. I am Son. GPT, including GPT 4.0, was based on data trend until September of 2021. Training and inference are the functions of GPT. When it comes to training, first, you learn data, varieties of data all over the world, and it requires huge computing power and it costs a lot. So it doesn't take place frequently. The last time data was learned was up until September 2021. After the training was done, the memory or information after the training is going into next process called inferencing. So based upon the learned information, learned data, the computer will start inferencing and try to present in a very natural way as much as possible. So that kind of intelligent engine is in AI. However, the latest information that they have was as of September 2021, but that's onetime phenomenon because the computing system will be built upon and enhanced further going forward. And then, based upon much more new information, better inference should be done. In other words, if you inference based upon the information learned by September 2021, maybe you can pass a medical exam at the 10 percentage level of the top medical universities. And you can surpass certain level of intelligence. But when it comes to searching, better to use Yahoo! or Google search engine for more correct information, GPT is to do inference based upon the knowledge acquired. So you try to remember as much as possible before taking exam and do take the exam. Other people may have -- may be wiser or knowledge. So which is better, having more memory or having more knowledge? Going forward, people who have a lot of memory, to use it for inference, may play a more important role, that's generative AI, which is for inference as opposed to just searching for information. So when it comes to making use of knowledge, AI can be beyond the human.

Thank you, Mr. Son. That I'm sure answered your question.

Any other questions from the venue? The Row A with blue board.

0805. So as seen in video, related to AI, what is the CapEx related to AI? Please share some information on that.

Thank you for your question. AI related, so as I explained about AI RAN and another one is data center decentralization and the third CapEx is to create the engine for generative AI. There are 3 related to AI for CapEx. So as for network, it will be utilized within the budget that we planned. So -- which will be used on the ordinary servers. So this network deployment will be at a lower cost. So JPY 330 billion of CapEx level, this will be the one used for network deployment. 2026 onwards, including the construction period, it will be around 10 years. And a large data center on video, which we called a core brain, Hokkaido -- Kyushu [indiscernible] These 2, the Kyushu, we have already started. And Hokkaido, we will start construction this year. So in the next 3 years, it will be just below JPY 10 billion CapEx, which is rather small. So this is a large -- rather large-scale data center, but it is not used for internal purpose, but this is a part of the Japanese government project. So therefore, it is not that big CapEx. So about generative AI-related CapEx. So computing -- so the computing power is about double of Fugaku. So the total CapEx will be around JPY 10 billion as a whole. So which can be consumed within the planned CapEx. As for the new technology, the advanced investment is needed more proactively, that part is also required. And also another stage is to wait for it to mature. So telecommunications centered and Z Holdings -- that's the part of SoftBank and Z Holdings, in the next year or 2, which can be profitable within the profitable point of view, and that is another investment. So there are 2 ways of investment. However, in the world, the new advanced technologies like AI which is growing so rapidly. And for that, SoftBank Group plays a role to lead with aggressive investment. We do not care about the immediate loss. We are going to take the entire industry in the future. So for that kind of advanced investment, the investment company should be playing the role. So even more aggressively, we, SoftBank Group, with Arm centered around 500 companies -- so we -- as a whole, we are working on AI and this area is growing on a daily basis, and the investment is around JPY 1 trillion level. Well, money is provided by the parent company, and we actually do the practical operation. So this is the right way of operating and employing our own roles. So -- however, if we see any opportunities, we would like to make sure to take that opportunity. And as for now, in the next 3 years of midterm and long-term visions and our growth target and dividend maintenance, and we would like to make sure to pursue these two.

Any other questions from the shareholders at the venue? And shareholder with red color board on Row C, please?

Number 0248. I have a question about conglomerate discount. As a group, maybe value might be less if you expand too much in our businesses. Do you think you face such conglomerate discount? Trading companies are enjoying their time, thanks to investment by Warren Buffett. What do you think about conglomerate discount?

Thank you very much for your question. It's been a headache for us for some time. But having said that, we have gone through a lot of times to build this structure of the company. We are open to rebuilding our structure. And if there are better approaches, we are open to any option. So we continue to studying option -- a lot of options about best structure of our company. Anything you may want to add, CFO?

Well, some with the parts and a lot of stuff. But there are a lot of synergy opportunities. By having different priorities of businesses, and we want to rather focus on how to create synergies. Thank you for your question.

Well, the time has passed. We would like to take questions from 2 more shareholders from the venue. The Row D with blue board.

0807. Similar to the 2 questions before, the next generation social infrastructure to be built and AI around. So I think the direction is right. And the next 3-year CapEx at JPY 330 billion to be maintained, you mentioned. So compared to the other carriers, I think this CapEx is lower. So towards 2030 for the next generation social infrastructure, do you think it's feasible?

Thank you for your question. Yes, infrastructure includes construction and also up to operation level. So it takes time. If we are to drastically or fundamentally build, we need a lot of tools and technologies, and software designing is the hardest time that we are going through. But this is under our 10-year plan. So we are thoroughly working on the first 2 years, we talked about. So we talked about quantum computers. So even back then, we were wondering if that would be feasible, but we also had the expertise and then made staff studied really hard and around Fugaku, a supercomputer operation, and we were worried in the beginning, but we also deployed our staff so that they could study from scratch. So that kind of time investment was required. So in order for us to actually come to the right direction, we were -- we have been committed and -- in the beginning. So the next 3 years, we are also committed to endeavor. So this time line is what we had expected. Of course, we want to keep any extra money as possible, but I hope you could understand how we are working on.

Now the last question, I would like to take from shareholders at the venue. A shareholder with a blue board back there, please, on the Row C.

My number is 1205. What do you think about the stock price? Do you think it's appropriate? What's your target stock price, if you have? You mentioned a little bit earlier, which made sense, but more precise. Honestly, what do you think about the current level of your stock price?

Thank you for your question. It's around JPY 1,500, I believe, which I'm not happy about, to be honest. We want to bring it to the next level. For that, we have been working hard. In the past, I was not really interested in share price, but now I am relatively a big shareholder. I have been looking at share price every day. And in fact, while I drink in evening, I taste better when the stock price is high. In terms of net income, which is around JPY 500 billion, we need to grow further to double the net income, which should naturally lead to higher stock price we are committed. And I made it open to our employees. And going forward, we continue to be fully committed to make it happen, better share price. So your continued support will be fully, fully appreciated. Thank you very much for your great question.

So with that, we would like to conclude the Q&A from the venue and move on to the voting on the resolutions.

So the shareholders in the venue, if you are in favor of this proceeding, please applaud. Thank you so much. Now we would like to move on to the voting on the resolutions. And the moderator will explain.

Shareholders attending online are requested to click the Exercise button after completing the selection of approval or disapproval for all the proposals displayed on the dedicated website. Please note that the transmission has to be made in a single collective transaction. While the votes of shareholders attending online are being counted, we would like to ask shareholders in attendance to vote on the proposal. Thank you.

And those -- and we would like to also vote from the venue. We will now call for vote by the shareholders present. The first item on agenda is partial amendment to the Articles of Incorporation. Shareholders in favor of the original proposal on the agenda, please applaud. Thank you very much. Next is the second proposal, election of 11 directors. Shareholders in favor of this proposal, please applaud. Thank you very much. The next item on the agenda is election of 3 corporate auditors. Shareholders in favor of this proposition, please applaud. Thank you very much. Finally, election of 1 substitute corporate auditor. Shareholders in favor of this proposal at the venue, please applaud. Now please wait a moment while we confirm the results of the vote. I am pleased to report that the results of the votes, including those of the shareholders online, have been confirmed. First of all, with regards to proposal 1, together with the exercise to vote rights in advance, we received approval of more than 2/3. Also, propositions #2, #3 and #4 received majority of the voting rights exercised prior to the meeting. Thus, all the proposals have been approved and passed as proposed. With this, all agenda of this meeting have been concluded. The 37th General Meeting of Shareholders is now adjourned. Lastly, I'd like to introduce Mr. Kojima, newly appointed corporate auditor.

My name is Kojima. Dear shareholders, looking forward to working for you.

Next, Mr. Yamada, Corporate Auditor; and Mr. Kawabe, Director, who were to renounce their positions at the conclusion of this General Meeting of Shareholders, would like to give you a few words.

My name is Yamada. Thank you very much for your kind support in my tenure. Thank you.

Kawabe speaking. At the conclusion of this meeting, I am no more director, but I will focus on the role of Chairman in Z Holdings so that we can contribute to the value of SoftBank. And thank you very much for your kind support over the last 5 years. I really appreciate that.

So we introduced newly appointed auditor and retiring auditor and director. Again, thank you very much for your kind participation of this AGM.

Thank you. This concludes the 37th General Meeting of Shareholders of SoftBank Corporation. Thank you so much for your attendance today. [Statements in English on this transcript were spoken by an interpreter present on the live call.]