9432.T FY2024 Q3 Earnings Call Transcript
Date: 2025-02-07
Source: Financial Modeling Prep

Takuro Hanaki: Thank you very much for participating today, despite your busy schedules. We would like to now start the briefing session on NTT's Fiscal Year 2024 Third Quarter Financial Results. I am Hanaki from the IR office and will be serving as the MC today. First, we would like to introduce today's attending members. Hiroi, Representative Member of The Board, Senior Executive Vice President; Nakamura, Executive Officer, Head of Finance and Accounting; Hattori, Executive Officer, Head of Corporate Strategy and Planning. The audio of today's briefing is streamed live. We are planning to have on-demand streaming on our website at a later date, so we seek your understanding. As for today's materials, please refer to presentation materials on our IR website. On the first page of the materials, points to be noted are listed, so we kindly ask you to please go through them. First of all, today, Senior Executive VP Hiroi will explain the overview of our financial results, followed by questions from all of you. Without further ado, Mr. Hiroi, please.
Takashi Hiroi: Thank you. My name is Hiroi. Thank you for joining us despite your busy schedule. We appreciate your attendance today. I would like to explain the financial results for the third quarter of fiscal year 2024. Let's begin with the consolidated results. Please turn to Page 4. Operating revenue increased, while operating profit and profit decreased. Operating revenue set a record for the third quarter. Operating revenue increased by JPY332.9 billion, reached JPY10,049.7 billion, due to increase in domestic and global revenue at anticipated growth. This was due to increase in revenue from Smart Life Business at Docomo. Now, of this increase, the impact of foreign exchange rate was approximately JPY125 billion. So this is record high level as the operating revenue for the third quarter. Let me now turn to operating profit. Operating profit decreased by JPY87 billion, and reached JPY1,399.2 billion, despite increase in profit at anticipated growth and increase in Smart Life Business. This is due to decrease in communication service revenues in mobile and fixed line segments, as well as measures to strengthen Docomo's customer base, as well as the impact of slowing down non-core assets, which was implemented in the previous year. Now with regard to net increase in optical fiber services, this has increased year-on-year due to efforts to enhance marketing, and as a result, mobile network portability or MNP is showing strong results in the recent month. Now achieving the annual plan for the profit may seem somewhat challenging, but we will make the utmost effort toward the goal through the efforts of individual respective operating companies within the Group. As for profit, this was JPY850.7 billion, down JPY160.4 billion year-on-year due to declining operating profit, and also rebound from gains on the stock sales from the previous year. EBITDA was JPY2,552.5 billion, down JPY19.2 billion year-on-year due to decline in operating profit. Now, let me turn to Page 5 and talk about contributing factors by segment. Let me first start with Integrated ICT business. This segment posted year-on-year growth, despite decline in mobile communication service revenue, mainly due to growth in finance and payment in the Smart Life business. Now, although profit increased in the Smart Life business segment, overall profit declined due to measures to strengthen customer base in the communication service department. Achieving target might be challenging, but we will make the utmost effort toward recovery by taking all possible measures to reduce cost, and also improve the overall quality and sales to customer base. Let me now talk about the Regional Communication Business segment. In this segment, both revenue and profit decreased due to decrease in network revenue, and also rebound from the impact of slowing down non-core assets implemented in the previous year. But net increase in optical fiber service posted increase year-on-year due to stronger sales of 10 gigabit plan, and also all unit plans for the condominium market. Both operating revenue and operating profit are generally in line with our expectations. And we will actively review our cost structure, including the selection and concentration of businesses, and the reform of operations in order to achieve medium-term growth. Let me now turn to Global Solution business segment. In addition to increased sales in the public, financial and corporate sectors in Japan, sales increased year-on-year due to the impact of foreign exchange rates. So this part was very strong. Operating profit increased year-on-year due to higher operating profit here in Japan, as well as its higher operating income, operating profit in the data center business overseas. As for the Others segment, here in the Other business segment, sales and profit increased year-on-year due to the expansion of data center engineering and NTT Urban solutions. Also, NTT facilities did very well as well. So this is increased year-on-year in terms of sales and profit. Although operating profit increased year driven increasing revenue, profit remained unchanged from the previous year because of the loss from the sales of properties. I would like to move on to topics, so please refer to page slide number 7. I will first explain our initiatives towards regional revitalization and urban development. In connection with the Expo 2025, we are scheduled to open hotels, parks, and cultural facilities in the Osaka area, Patina Osaka, Naniwa Palace Ruins Park [ph] and the commercial facility within the park, NANONIWA will open this spring. Furthermore, stadiums and arenas are scheduled to begin operations in various locations. Slide 8, please. I will explain about holding the NTT Data Leadership event in India. To mark the start of IOWN APN connections and connections to the MIST submarine cable between India, Singapore and Malaysia at the Mumbai data center, we will be holding an NTT Data Leadership event in Mumbai in March. In addition, we will expand our data centers in India and further strengthen our data center business, which has the number one market share in India. Next, please go to Slide 9. Mobile World Congress, the exhibition of us there. Every year, we are doing this. At the Mobile World Congress in Barcelona in March we plan to exhibit the NTT Group's base business strategy, network operation solutions using a Generative AI, and more. In addition, as part of the IOWN Global Forum, we are planning to hold sessions and exhibitions of solutions. So if there are people who will be going to India, please come and visit our booth as well. Slide 10 is something that we are showing you every time. This is the progress under the medium-term management strategy. Therefore, we would like you to take a look at this at your leisure time. This concludes my presentation.
A - Takuro Hanaki : Thank you very much, Minister Hirai. We now like to go on to the Q&A session. If you've got your questions, we'll take questions for those of you who have registered in advance and who are connected to the web conference system at this moment. [Operator Instructions] Then we now like to take your questions. First, we'd like to start with Mr. Masuno from Nomura Securities. Please unmute your microphone and then go on with your question.
Daisaku Masuno : Yes, thank you. I have two questions. My first question, this relates to the Integrated ICT business, in particular the consumer communication segment. With regard to ARPU, also with regard to service revenue. Group ARPU revenue was somewhat more negative. But then, it was within the expectation, but then the profit is actually much lower than our expectation. So I think the level of deficit correction. So we find the situation in the nine month period, and now March is going to be a very competitive situation. Now, there's a gap of still tens of billions of yen at this juncture. Is it a possibility that at the end of the year, the gap could be much wider than tens of billions of yen? So as you make a run-up toward this March, are you not going to change your marketing position and marketing approach? If that is the case, I suppose you have to increase your marketing expense. Yes, you're doing very well in terms of net increase, and also M&P, and terms of service, but I think you're not able to make recovery to your revenue. What are your thoughts about the current situation?
Takashi Hiroi: Yes, thank you. Yes, Hiroi, I would like to respond to your question. Thank you for your question. When you take a look at the financial results. Yes, we take note of your point. That is true. As far as our plan is concerned, the plan was somewhat high. And so, but compared with the high plan, the actual situation was somewhat weak with regard to expenses and cost. It is true that in terms of expenses -- and I did cover this in my presentation earlier, we've been reinforcing ourselves in marketing. So that being the case, the expenses are expanding. So that is going to put pressure on the profit naturally. Now, as we have consistently mentioned since the past, as far as we're concerned, over the medium term, it's important that we secure the profit naturally. It's important that we also maintain our market share. That will help us to create a good source for revenue down the road. So we're trying to reinforce our efforts so that we'll be able to enhance our customer base. Yes, over the short term, yes, there is a strategic impact on the profit over the short term. That is true. But as far as we're concerned, we'd like to take a look at the situation from the medium term view. With regard to investment and cost, I think we'll be able to recoup this over the medium term through our efforts. This is a point that we guarantee a strong customer base. So gaining a strong customer base is something that we'll try to implement.
Daisaku Masuno : Okay, thank you. We're now in February, and March will be a very competitive situation, a major sales season. You're now going to change your approach towards the sales coming March and the competitive season? Well, I think Mr. Shimada has also talked about this. We've mentioned that we're going to secure the market share. We've talked about that repeatedly as we head toward the year-end. What about the intensity of our efforts?
Takashi Hiroi: I think we have to watch how the competition reacts as well. But we'll set a target. We want to reinforce our customer base. We want to gain a strong customer base, and we'd like to secure things that are necessary to achieve this plan. Now, how much in reality, I think we have to consider that as the time comes. But we're not going to just casually use whatever measures that are available. As I mentioned in the presentation earlier, we'll also be focused on cost reduction. We're really making efforts in terms of cost reduction at this moment. So we want to make sure that the impact of increased sales and marketing can be absorbed in other areas. And we'll also carry out cost reduction simultaneously as well. That is our thinking. Thank you. That is all.
Takuro Hanaki : Thank you. Next question.
Daisaku Masuno : My second question also relates to the enterprise section of the Integrated ICT business. In the enterprise business as well, I have my own views about the profitability. My sense is that the profitability of the enterprise section is now somewhat weaker. Yes, there might be the impact of migration to PSTN, but I think at the end of the day, revenue itself seems to be somewhat weakening in the enterprise sector. You had increased revenue in the second quarter, but then you turned to negative revenue growth in the third quarter. So there's profitability elements that are aside PSTN migration that is affecting your revenue. I'm hoping that there could be other elements that could help you to boost your revenue down the line. What are your prospects about the possibility of improving your revenue in this sector going forward? How do you intend to change that? How do you think you can change the course?
Takashi Hiroi: I appreciate your prospects. Thank you so much, sir. Yes, thank you for your question. Yes, with regard to Integrated ICT business, in particular Docomo's enterprise business, yes, I think the situation is exactly as you pointed out in your question, Masuno san. Yes, they are finding it difficult. They're finding it difficult. The challenges in particular are with the SME market. The growth of the SME market is somewhat lackluster. It's not weak. It's not strong. And so they're not able to increase revenue and profit from that particular sector at this moment. So when we integrated Docomo and the locations we've been working on in this particular sector, in particular in terms of mid-sized companies, we're really focused on this right now. So we're focused on mid-sized companies in regional cities. The social marketing in this area is somewhat weakening. In terms of Docomo's network business as well, we're seeing some erosion. That is true. So it's important that we fortify our network business at the same time, offering solutions that match SME market. I think we need to reinforce our capacity in these two areas. That is the challenge we face. So right now Docomo is very actively tackling this challenge at this moment. And with regards to large companies, we have the positive impact of the combination between NTT, Docomo Communications, and [indiscernible]. And they're having some growth. However, the pace of the growth has become somewhat slower, and you're right in pointing that out. There's a strong growth in the market itself because of the requirement for DX and digitalization. This is the point that we captured that. Also, at this moment, the AI market is really expanding very fast. And it is a growing market, so we need to reinforce our capacities in the AI market as well. We need to accelerate our growth overall. Thank you.
Daisaku Masuno : Thank you. That's my last follow-up question. If I could ask one last follow-up question. So with regards to regional communication business, so social transformation is really working, and we can take comfort with the next fiscal year. As with regards to data, they're doing very well in terms of driving profit. And so real estate and energy, they're doing very well as well. So what remains is Integrated ICT business. So with regards to Integrated ICT business, what about the process for next fiscal year? Can you really generate positive profit in the next fiscal year in this segment? If you could answer that question. This is the only worrying section or comment.
Takashi Hiroi: Yes. In terms of the plan for the next fiscal year, we have to consider how we're going to deal with that, bearing in mind the current challenges that we face. We're in the midst of deliberation on this matter as we speak. So if you could give us a little time before we can really fully respond to your question, I would appreciate your patience.
Daisaku Masuno : I appreciate the fact that you provided sufficient information. Thank you. That is all. Thank you.
Takuro Hanaki : Thank you very much. We would like to take the next question. SMBC and Nikko Securities, Mr. Kikuchi, please unmute, then go ahead with your question.
Satoru Kikuchi : This is Kikuchi speaking. I have two questions. The first is regarding, well, in the fourth quarter, I believe that there's no real estate sales like you have done last year. Is there going to be a major cost reduction or is there going to be an operational initiative that is going to generate further profit? If there's something that you're thinking of, I would like to know. The result this time and next fiscal year, as Mr. Masuno asked, is it really going to be all right is my concern. In a regular company, structural reform plans will need to be announced. Is the way that your company is in right now is what I think. So cost reductions or making efficiency for the cost, are you having any initiatives in mind? You have done quite a bit till now, so is that going to be a bit difficult to do? That's my first question.
Takashi Hiroi: This is Hiroi speaking. What you have pointed out, you have correctly pointed it out. With NTT Docomo and NTT Communications together, the fundamental cost reform is currently planned and various initiatives have been implemented. However, something that can meet your expectations, something that will show an effect in the fourth quarter and something that will mitigate the declining profit situation right now, in that scale, it is difficult to do. However, of course, at the Docomo side, they will be consolidating the distribution outlets or sites and their various transactions with subsidiary companies or they're outsourcing the operations. How it's done, they will review it. And with the network quality issue, they have various initiatives implemented and they are reinforcing the network and area tuning and they're working on increasing the base stations as well. But on the other hand, they are working on improving the efficiency of the network operation as a project. They are working on it. Therefore, the structural reform that you have mentioned, Mr. Kikuchi, we are working on them. And you did mention if it was a regular company, which is quite a harsh word. But as the other regular companies are doing, we are looking at the cost structure and implementing initiatives so that we can go back to the growth or improvement trajectory. So I would like you to understand that point.
Satoru Kikuchi : Thank you very much. My second question. Non-consolidated next fiscal year, you have the dividend income which is at the center from your subsidiary companies. So this quarter's Integrated ICT business segment or Docomo situation, the non-consolidated income, is it going to go down? So then the shareholder returns and various financial items such as repaying the debt, I'm sure you have those plans. I just believe that on a non-consolidated basis, it's quite a tough situation. I'm sure that you will be coming up with the plans for next fiscal year. But from next term onwards, how should we look at your shareholder returns?
Takashi Hiroi: Well, of course, if the profit goes down, if the subsidiary company's profit goes down, it is a 100% dividend payment. So the dividend from them will go down as well. However, when we think of our current cash flow and the main items in there, we believe that the decline is within the range that we can control and manage. What I mean by that is that basically, regarding shareholder return, it will be conducted in line with the conventional policies for next fiscal year and onwards as well. And as for dividend payment, it will be steadily increasing is what we are thinking. And share buyback, basically, in a flexible manner, we will be conducting it as well. Therefore, the share buyback in the level of what we have been conducting in the last several years, we believe we can control the cash flow that we will be able to conduct all that.
Satoru Kikuchi : Just a while ago, what you did, securitization, maybe on a non-consolidated basis, I don't know how you're going to do it, but the securitization or to increase the cash flow, the method of increasing cash flow further, is there any measure that you're thinking of?
Takashi Hiroi: Well, specifically looking at the situation, from the perspective of working capital, as conventionally been explaining to you, Docomo's finance business, expanding it is going to have a major impact. And in addition to that, Docomo's receivables of securitization, we are always thinking about this. So volume-wise, it will be expanded. And also, the technique that we can apply for securitization is evolving. So we are studying this point as well. Therefore, we believe that we can expand the scope of the securitization efforts next year. And once it becomes a solid, I would like to share this with you at an appropriate timing. So in various methods, to shorten the conversion cycle and others, we would look at the overall consolidated situation and we're going to do everything we can and it is considered to do it next fiscal year. So once everything is ready to be shared with you, I will. Thank you very much.
Takuro Hanaki : Thank you. Go on to the next question, please. From Daiwa Securities, Tokunaga-san. Please unmute your microphone and then go on with your question, sir. Please go ahead.
Kazuki Tokunaga : Thank you. Can you hear me, sir?
Takuro Hanaki : Yes, we hear you. But can you speak in a louder voice? Thank you.
Kazuki Tokunaga : Tokunaga from Daiwa Securities. I have two questions. The first question is with regard to how you see the third quarter results. I think compared with your end target, things are very challenging for you. Is it simply because Docomo is now undermining the annual guidance? Can I take it that other companies outside Docomo are doing well? Also, when you compare the period, I think in the third quarter and the previous year, you had positive impact for the processor sales of various assets. That is not the case this year. So can you talk about the impact of this?
Takashi Hiroi: Yes, thank you for your question. Yes, Tokunaga-san, as you pointed out in your question, I think your characterization of the situation is quite accurate. So let me start with the data. Yes, they're maintaining their very strong momentum. As for NTT East and West, although their guidance is declining profit, but they're now within the expectation. And I think we disclosed various initiatives at the end of the IR day. And they're making progress in line with those expectations and guidances. With regard to Docomo, well, they had very bearish outlook for -- bullish outlook for the ARPU. But then the market situation was somewhat challenging. And from the standpoint of securing customer base, they've had to strengthen marketing measures. And the cost has increased. So that indicates that particular sector, it is negative against the initial expectation that is true. Now toward the end of your question, you talked about the third quarter correctional impact from the sales of assets from the previous year. Well, the impact on the fourth quarter was quite strong in the previous year. But the third quarter wasn't really that affected by the sales of assets. So I think that's how you should understand the situation.
Kazuki Tokunaga : Okay, that's very clear. Thank you for your response. That's very clear now. My second question is about the uptake. This is with regard to the progress of the mid-term plan. In the third quarter, EBITDA is now on negative trend. Also, at the press conference, there was talk about possible buying up of banking, as opposed to CapEx, and acquisition. There's been a lot of news about this in the quarter results. So what are your thoughts about expanding investment to secure and to expand revenue? What about your progress? So at what time can we see full-fledged outcomes from your efforts? Thank you. That's my question.
Takashi Hiroi: Okay, thank you for your question. I think this was also covered during the press conference earlier. And we understand that there now has been some movements in the stock market as a result of what James mentioned during the press conference. As far as we're concerned, we want to expand investment into growth areas in the context of the midterm plan. As far as acquisitions are concerned, there are other parties involved. So this is not something that we can totally control. As far as growth-related investment is concerned, we've been able to expand investment in this area in a very positive way. And with regard to acquisitions, for example, in the past two years, Docomo has been expanding their acquisition as well. In the area of data, in particular, because of the strong demand for digitalization among the customers and also because of the need to expand their IT and because of the demand to expand data centers, again, we see a very positive expansion of business opportunities in these areas. So in terms of the general picture, yes, we are in a very positive situation. But you commented about the EBITDA. The pace of return is somewhat slower than we had expected. So as we move toward 2027, this is an area where we need to accelerate, naturally. So that is challenging. That is the challenging part. Yes, thank you.
Kazuki Tokunaga : I have a follow-up question. What about EBITDA? Is the drop in EBITDA due to an increase in marketing costs at Docomo? What about the others? Are there other market segments in other businesses that we are actually concerned about?
Takashi Hiroi: Well, generally speaking, as was mentioned earlier, as far as Docomo is concerned, in the communication business at Docomo, we're trying to reinforce our capacity there. So that is having an impact on the growth of overall EBITDA. It's slowing down the overall growth of EBITDA. That is true. Also, I have to mention NTT East and West. Compared with the time when we came up with the midterm plan, the situation at NTT East and West is actually behind what we had initially expected. So I think when it comes to telecommunication business, in both fixed and mobile segments, the market situation has become much more intense and the market situation has become much more harsher. Also, competition has become much more intense because of the inflation and business environment has become much more challenging. So these are the reasons why we're somewhat behind. Thank you.
Kazuki Tokunaga : Thank you. That's very clear. Thank you. That's all for my questions. Thank you very much, sir.
Takuro Hanaki : Thank you very much. Are there any other questions. [Operator Instructions]. Daiwa Securities, Mr. Tokunaga, please go ahead.
Kazuki Tokunaga : Sorry for the second round. Just one thing. This fiscal year, to aim to achieve your targets, you said that you will conduct cost reductions. But there's a cost reduction -- room for cost reduction at which operating company has how much of room for cost reduction?
Takashi Hiroi: Well, cost reduction measures, the improvement of efficiencies measures, and each operating company, they are working on the measures in line with their profit plan. Whether it's progressing well or not, that's one way of looking at things. So if we look at it from the perspective that is it in line with the plan, Docomo is slightly off the plan, and at NTT Docomo, the ARPU is weakening, and they are reinforcing the sales and marketing activities. If we exclude these factors and securing the profit, they are, have and are going to further work on cost reductions. So they're working on the improvement of efficiency. However, as I have been explaining, this fiscal year, there are points that they are reinforcing, and to do so, they are using more cost, and that to be all absorbed through the cost reduction for this quarter and next quarter, it is going to be slightly difficult. However, I asked -- I answered Masuno san's first question in terms of the other initiatives.
Kazuki Tokunaga : Okay, understood. So further cost reductions at NTT East and West, it's already in line with the plan, so you may aim for the upside for that, but Docomo, it seems that it will be difficult to achieve the target.
Takashi Hiroi: Yes. Well, each operating company is working on, as forecasted, with all of the companies while covering or filling the gap of Docomo, of course is also done. Cost reduction or the revenue ending up having an upside are the cases as well. So in that way, more than the assumption within the companies that have an upside within the Group, we will have them implement measures that will further accelerate that upside so that towards the achievement of the overall profit target, all the Group companies are working on it.
Kazuki Tokunaga : Understood. Thank you very much.
Takuro Hanaki : Thank you. Let's go on to the next question, Citigroup Securities. Mr. Tsuruo, please unmute your microphone and then go ahead with your question. Mr. Tsuruo, please.
Mitsunobu Tsuruo : Thank you. I have many questions about Docomo, so I'll ask questions about Docomo, so I'll ask about operations outside Docomo. I'd like to ask about the Fiber ARPU at NTT East and West. They're actually doing well than your general plan. So can you tell me what is this backdrop? Is it inflation? What efforts are you taking in order to absorb the impact of inflation? How do you see the prospects for the fiber? If you can just go through it, I would appreciate it. It's not just fiber, I suppose, but we've got the copper cables as well. I think the pricing is just as good. You can talk about the copper pricing as well. I would appreciate your thoughts on that as well. Thank you very much.
Takashi Hiroi: Thank you. You're asking about ARPU, right, okay. Well, with regard to ARPU, well, we have Hikari Cross as a product. But in principle, with regard to ARPU, we use the centrifuge as the conventional fiber services. So that being the case, it's not that the upside is much larger than we had expected. So can you share with us the context of what you're asking? Of course, I would appreciate it. Thank you.
Mitsunobu Tsuruo: Okay. Sorry, maybe my understanding wasn't sufficient. For example the FLET'S basic charge seems to be somewhat higher than your annual guidance. It's higher than the average. That's why I thought that ARPU was higher.
Takashi Hiroi: Okay. Thank you for that explanation. I appreciate it. Well, suppose on a quarterly basis there could be some gaps from quarter to quarter. That is true. But with regard to FLET'S, it's more or less separate service. So service revenue from these, if we need to reinforce that, then we need to increase the subscribers. If we want to increase revenues in the segment, we have to simply expand the subscriber base. So that is considered the ultimate goal of this particular sector. So right now at NTT East and West, they're now targeting all unit sales at condominiums that they are also expanding their sales and marketing in that area, so they are also greater sales on wholesale basis, especially to mobile service operators as well. So they're trying to expand the sales of FLET'S optical services. This fiscal year we have seen positive results out of those efforts. So the subscribers for fiber has been expanding in a very positive manner during this fiscal year. So we have very bright prospects in this sector.
Mitsunobu Tsuruo: With regard to ARPU, we have maintained strategic exchanges. So maybe simply it's interpreted as a very -- in terms of the yen in the case of calculation, okay. How to say the most -- to ask about your efforts to realize some optimal pricing for fixed line service down the road.
Takashi Hiroi: You're talking about optimal pricing for fixed line service?
Mitsunobu Tsuruo: Sorry. I was talking about inflation. I was talking about the impact of inflation measures because that seems to be at pressure. Can you reflect the inflation impact on your pricing down the road?
Takashi Hiroi: Okay. I understand. Yes, there is the impact of inflation naturally. As far as pricing is concerned, we hope we'll be able to reflect that. We need to discuss whether we can pass on the increase in inflation, but then we have to consider the competition in the marketplace of course. As mentioned we also have mentioned about the cost increase as well. Also we are a public entity or public utility business if you will, public entity business, so that indicates because we are in the major type of business, can pricing increase really be acceptable to the market place? That's what we need to be mindful of as well. For a very long time the inflation trend continued but now we're seeing a change in the inflation, and the inflation is picking up at a very fast place. So we review of the pricing as a result. I think we need to consider this matter in various terms. We need to really consider this matter. Thank you.
Mitsunobu Tsuruo: Thank you. That's all.
Takashi Hiroi: Thank you.
Takuro Hanaki : Thank you very much. We would like to take the next question, Nomura Security, Mr. Masuno. Please unmute and ask your question.
Daisaku Masuno : Sorry. Thank you for the second round. I have two questions. The first question is related to the revenue and cost. The AI related initiatives in your companies, what I would like to confirm. NTT Data has various initiatives related to AI and has stated the target for revenue, et cetera. But in Docomo's enterprise business, well, there was a mentioning of Suzumi but I did not know -- understand the money amount basis. But what kind of initiatives and money amount is there? And for the cost structural reforms, I think utilizing AI, you can expect the best in terms of cost reduction. So other than NTT Data, including NTT East and West, how you will be increasing the revenue through AI and how you're going to improve efficiency and cost. Can you once elaborate?
Takashi Hiroi: Utilizing AI, well, from the perspective of selling it to the customers that will increase the revenue perspective? Well, we are working as a whole group on this point. As you mentioned, Mr. Masuno, what is the revenue or sales amount of it? We have started the marketing activities and started to reinforce it. And we have about more than 1,000 inquiries. And when it comes to the actual receiving orders the number is going to be less than that. However NTT Communications enterprise revenue is going to be reflecting that, as it gets realized. However, it is also a fact that it has not grown into a volume that we can share with you. However, if we can have a little more time we will be able to share more details though with you, is what I think. And also in the internal business operations are utilizing the AI and through that reducing costs, well, regarding this point in various ways, as I have mentioned at the start, at Docomo regarding the network operation or logistics operations are being reexamined. And also I did mention this that AI [ph] East and West, the infrastructure application receiving, opening enough line in a consistent basis, that they will be utilizing AI to improve efficiency. So that they will be able to increase the sales and maintain the profit. Regarding the individual initiatives, how much of an impact will they have? I cannot share that with you in specific terms here but within the re-examining the operation the AI and software is indispensable for each company. So they are implementing it.
Daisaku Masuno : Thank you very much. My second question is regarding the bank's function. At the press conference you said that you have many functions that you don't want from the bank and what you want is the transaction function. So basically, there's no bank that only has a transaction function. For example, the FX trading, or the marketable securities trading, or the foreign currency trading, or lending towards a real estate development, or condominium development. Usually, banks are conducting various functions. However, you are saying that you don't want all those functions, meaning that as long as they have a consumer platform for consumer transaction that will suffice?
Takashi Hiroi: Well, regarding that, in reality, the must function is how I would like you to understand, meaning that first of all, that type of a function, in order to expand the current document finance business is what is necessary. That function is not necessary. But on the other hand, net banking companies in various ways is increasing their services and increasing their revenues. And as you have pointed out, Mr. Masuno, they will collect a deposit, and how is that going to be invested, and how is that turned into revenue? They have the flow as well. So, as an opportunity for business growth, there are areas that seem attractive. However, as our strategy, will it be in line with our strategy, or it will depend on the acquisition price? So, regarding what I commented, it's just that the priority is a place in the area that we have shared with you. I hope you understand in that way. Thank you.
Daisaku Masuno : Okay. You're saying that you will consider creating it on your own, but usually you'll create an establishment preparation company, and you will commit to turn it into profit. So the planning and the planning preparation company, just establishing that will take about two or three years. And if that is so, that'll be the final year of your medium-term management strategy. So, creating this on your own, are you going to be able to do that in time to the end of this current medium-term management strategy?
Takashi Hiroi: Well, how this business is going to move forward, I will not be able to share the specifics. However, within creating businesses, there are various options. Therefore, how are we going to achieve the medium-term targets? And to do so, what kind of choices or options do we have? And whether that can be done in time or not, we will be considering various factors and review various options as well. Thank you very much.
Takuro Hanaki : Thank you. Any other questions? [Operator Instructions]. If not, then we'd like to conclude this session at this juncture.