KDDI Corp
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KDDI Corp
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Thank you for waiting. We'd like to start the meeting on KDDI Corporation's financial results for the first quarter of the fiscal year ending March 2022. We appreciate your participation via Internet despite your busy schedules. I'm Hongou with the IR department. Pleasure to have you all.
To prevent the spread of COVID-19 infection, this meeting is held live on the Internet with simultaneous interpretation of English and Japanese. Please be advised that the meeting will be made available later on our IR website for on-demand distribution.
Let me introduce today's participants. Muramoto, Executive Vice President, Representative Executive Director, Corporate Sector; Shoji, Executive Vice President, Representative Director, Executive Director, Personal Business and Global Consumer Business Sector; Mori, Senior Managing Executive Officer, Executive Director, Solution Business Sector; Yoshimura, Managing Executive Officer, Executive Director, Technology Sector; Saishoji, Executive Officer, General Manager, Corporate Management Division.
We have posted 3 items on the business results, presentation, [indiscernible] and detailed materials. And one item disclosed for the Tokyo Stock Exchange in total 4 items on our website. Please refer to the disclaimer in each material concerning the content of the deck, our performance mentioned in today's questions-and-answer session and to target subscriptions and others.
First, Muramoto, Executive Vice President, will share with you the business results followed by the Q&A session. Mr. Muramoto, please.
Thank you very much for taking time out of your busy schedules to view KDDI's earnings briefing. I will explain KDDI's financial results for the first quarter of fiscal year ending March 2022.
First, I would like to provide the highlights of the consolidated financial results for the first quarter. During the first quarter, we made steady progress toward achieving our full year forecast. We will continue to strive to achieve our full year forecast through expansion of our business in growth fields and others. Next, I will discuss the operating income in the first quarter of the year ending March 2022, including factors behind the increase in our operating income by JPY 8.5 billion year-on-year.
Starting from the left of the slide, as was forecast at the beginning of the year, multi-brand communications ARPU revenue dropped year-on-year by JPY 11.7 billion. On the other hand, a JPY 7.5 billion rise in income from the growth fields, including the Life Design Domain and Business Services segment contributed positively to the operating income overall. Business Services segment actually saw a decline of JPY 1.5 billion in operating income year-on-year on its own.
But if we exclude the impact of temporary profits posted in the previous fiscal year, the segment effectively grew, and it's continuing to grow smoothly, in line with the full year forecast.
Based on what I have just delivered, let me once again discuss the main points of our financial forecast. We need to firmly address the important issues in our telecommunications business, which is to provide returns to our customers and to promote 5G. We will work hard toward realizing what we have committed to.
In terms of our business performance, broadband revenue resulting from making returns to our customers through reviewing the charge plan and our business, offset by the positive impact of growing data usage. All in all, the net decrease in the revenue from telecommunication charges is expected to be around JPY 60 billion to JPY 70 billion. We will continue to push for further expansion in the growth fields, cost reduction and structural reform efforts, including discontinuing [ Catrice ] from a medium-term viewpoint with the aim of achieving sustainable growth.
From this slide, I will explain about our initiatives for achieving sustainable growth. In view of the environment for our telecommunications business that I have just described, fiscal year ending March 2022 is going to be a very crucial year in terms of attaining the current medium-term management plan and building the foundation for sustainable growth going forward.
KDDI's growth strategy is to position our existing conventional businesses, including our multi-brand strategy and 5G at the center, while cutting costs continuously and to expand in the growth fields. As is described at the bottom of the slide in the diagram, at the route of achieving sustainable growth is the need to enhance customer engagements. And this is our top priority.
To enhance customer engagement, we will strengthen contacts with our customers and make sure to continue to add value and improve our offerings. For our retail customers, we will grasp how they are using the au economic zone and offer convenient and easy to use comfortable services. For our corporate customers, we will work with our clients to search for the issues that they may be facing onsite in their business operations and propose DX solutions to help them transform their business models. As a result, our customers, hopefully, will keep on choosing us, and we will be able to build relationships based on strong trust with our customers, which, in turn, will enable us to achieve sustainable growth of our business.
This fiscal year, to launch the activities I have just outlined, on a company-wide basis, we augmented our organizational structure. The personal business sector is to promote the integration of telecommunications and life design through strategic marketing. So our marketing division was set up. In the Solutions business sector, with the aspiration to strengthen our brand design capabilities that contribute to our customers' success business design division was established to create fresh innovations across the whole of the organization, business exploration and development division was launched. Under this new organizational structure, we will redouble our efforts to listen to the voices of our customers earnestly and to offer value-added propositions.
Now I will explain the initiatives to enhance customer engagements for which -- for each of our strategies. First, on our multi-brand strategy. We will aim at bringing UQ Mobile close to our customers' lives as a brand. As is on the left, we have launched discount plan with Denki or electricity service packaged with mobile telecom service, which will allow our customers to enjoy discounts, regardless of whether they're alone or with their families.
au economics and services that are very popular with our customers, au customers will be extended to UQ Mobile customers as well. Shown on the right is how we're going to provide full support and information to our UQ Mobile customers. In all of our au shops and au style outlets with broadened smart phone lineups.
Next is on the 5G network. As is on the left-hand side of the slide in June, all the 30 railway stations of JR East's Yamanote line and all the 19 stations of JR West's Osaka loop line, KDDI launched a 5G service. Further with the aim of offering 5G coverage to all the railway stations, we declare that we want to convert all the stations into 5G-capable stations by the end of FY '21.
Our plan for FY '22, our plan is to install 5G services on to the station platforms and inside the station buildings as well as along the main trunk lines of 21 routes in Kanto and 5 routes in Kansa region.
Next is an exciting 5G experience. We will continue to advance our initiatives with our partners so that people can enjoy cutting-edge technology and what the 3 5G area has to offer. Next is on smart phone contracts. As shown on the right, the total cumulative number of 5G units sold at the end of June exceeded 3.4 million. In just 3 months, it was up by 1 million units moving upward steadily.
Next is on the life design domain. The core services of our life design domain, which we track as KPIs continue to grow smoothly. Financial business is the growth driver of the life design domain. As illustrated on the left, transaction volumes of settlements and loans are exhibiting robust growth. The results in the first quarter of this fiscal year were up by 1.3x the year before achieving JPY 2.5 trillion. au Jibun Bank mortgage loan disbursements reached JPY 1.5 trillion in June, a very substantial increase. au mobile preferential discounts that was launched as well as other partnering initiatives have been successful, rising by 1.5x in the last 9 months with accelerating speed of increase.
Next, on the expansion of au Economic Zone. The center shows customer contact, which is au PAY smart phone settlements where the membership exceeded 33 million. To provide new added values, food delivery and health care services have been launched, further expanding services in the scope of au Economic Zone. The left is about promoting wider point circulation au PAY campaigns, including one allowing users to earn more pointer points, which started in July. We are also boosting collaboration with many applications and financial services.
The right shows our capital business alliance with Menu concluded in June to make food delivery more common. We aim to expand au Economic Zone by newly offering experiential services, including eating and drinking. The next is regarding health care services. Since June, functions of au wellness, a total health care application have been expanded. We strive to offer total health care support from daily health management to medical experience, anticipating the expansion to medication guidance as well.
Next is on Business Services segment. Regarding the operating revenues of the Business Services segment, the next core business that drive growth enjoyed a significant increase of 18% year-on-year. Each of corporate DX, business DX and business infrastructure services have been steadily expanding operations.
Let me summarize the strength of the Business Services segment, which is a backdrop of our business growth. From the left, in addition to extensive IoT results and experience, we can offer comprehensively various values outside telecommunications, such as cloud and data analytics. That's shown in the center. And our strength, resizing business co-creation with customers on the global basis as depicted in the right. Looking at the 5G era as customers promote DX, people want the world to be connected. And we have necessary and rich capabilities.
Next, on KDDI IoT world architecture, which supports DX of customers, global DX IoT by optimal combination of localization and global standardization, the scope of support is not limited to connected cards shown at the center. Rather, the range is broadening to the left DX of customers overseas bases and to the right, providing a platform for a wide range of industries.
To realize the provision of the platform, we started offering global IoT access in June, shown on the right. By integrating global carrier relations, KDDI's strength with IoT technologies such as SORACOM SIM management, the strength lies in affordable rates and coverage in vast areas in the world. Our track record in supporting customers' DX and IoT environment has been increasing as well.
Next is about the new collaboration for mobility society to achieve high-precision positioning with a margin for error of a few centimeters, we concluded a business partnership contract with Swift in June. As shown on the left, runs autonomous vehicles and various other developments in the mobility sector is expected. By actively utilizing this service, we aim to create new markets and businesses. Moving to the right, we intend to launch the commercial service in the spring of 2022.
Next, I'd like to focus on KDDI sustainable action. Let me introduce to you our initiative to conserve the global environment. As shown on the left, we revised KDDI Green Plan to achieve 0 CO2 emissions equivalent by 2050, we will reduce 50% emissions by 2030 compared to fiscal year 2019. Moving to the right, au Denki works with a subsidiary [ Enaris ] and launches a new eco plan. It's equivalent to use 100% renewable energy. In addition, 2% of the electricity bill is donated for environmental conservation activities.
Regarding our efforts to reduce CO2 emissions. We promote initiatives to reduce power consumption of base stations and data centers, which have a significant share of our power use. The left shows that we agreed to conduct Japan's first demonstration of AI-controlled power consumption reduction up to 50% with Nokia. Moving to the right, we have developed a demonstration experiment with Mitsubishi Heavy Industries and NEC Networks and System Integration Corp to realize a small data center utilizing immersion cooling system accommodated in a container. Looking at the 5G area, we aim to strengthen initiatives with our partners.
Lastly, to date summary. Regarding financial results. In the first quarter, operating revenue and profits increased by offsetting the effects of lower telecommunications revenues mainly through growth fields, steady progress towards achieving the current medium-term management plan and full year forecast towards sustainable growth. We aim to provide services that customers can feel closer to such as the declaration of au rail lines, 5G conversion and the enhancement of the overall strength of UQ mobile in multi-branded strategy.
Promote strengthening customer contact points and providing new added values in life design domain, and we support customers DX on a global basis in Business Services segment and promote KDDI Group initiatives for decarbonization. We continue aiming to enhance engagement with customers. Thank you so much for your kind attention.
[Operator Instructions] First question, Mr. Masuno of Nomura Securities.
Masuno from Nomura Securities. My first question is as follows: mobile telecom revenue, I have a question. In terms of the multi-brand strategy, there was a reduction of JPY 17 billion in revenue. So this seems in line with the JPY 70 billion expected decline for the year. ARPU is within a certain scope, but group ID is declining. So what's your view on that? On the other hand, if we look at mobile telecom revenue, it's JPY 10 billion overall. So it's doing very well. What is the background? So first about the question that I asked earlier, please.
From my side, multi-brand strategy revenue, mobile telecom revenue, I would like to explain the relationship between the 2. As you rightly pointed out, multi-brand strategy, telecom revenue is down in revenue. Mobile telecom revenue mainly has the roaming service revenue. So on a net basis, it's up, it's increased. And to address your first question. Declined by JPY 11.7 billion. And the number of IDs has gone down and how does it relate to ARPU you asked? Shoji san, may I turn it over to you?
Yes. Shoji speaking. Allow me to respond to the question. With respect to ARPU, as you pointed out, what has happened mainly since last year, I think the metal zone has become the main part of our business. So UQ Mobile, povo customers are migrating toward those brands, and that is underway. So because of that, revenue is down in terms of ARPU, ARPU revenue is down. That is the main factor behind it.
But then, of course, 5G usage is increasing. And au's unlimited plan usage is also up. And at this moment, there are customers who prefer lower prices because of their migration to lower-priced brands, our revenue is down, but this is more or less expected by us. On the other hand, with respect to IDs, the number of IDs in the first quarter, it was weak to be frank with you.
Since the last fourth quarter, into this first quarter, in the last quarter, in the fourth quarter last year, Rakuten came out with a new price plan, and they continue their free of charge campaign until early April. And all sorts of carriers provided online services, online plans and competition increased, and it was difficult. It was tough. But for the first quarter overall, 0.8%-plus churns turnover.
But after April, month after month, there's been improvement, although not in the slides, in the month of June, the churn or the turnover was 0.6%. So there's been marked improvement since April. So for the full year, in our sales plan as well. Well, given the current pace of churns, we believe that we can manage this. And so we would like to continue to press it down, bring it down. So for the full year, we shall be able to attain the full year forecast. That's all.
My second question other than the revenue, JPY 70 billion of cost reduction for the full year, I think that was part of your plan. What is the progress so far? And life design and others are growing. Looking at the full year plan, there must be increases and decreases, depending on the domain or the areas. So please give us a breakdown.
So we'll respond to the cost reduction part of your question. As I said, we made an announcement of our performance the last time, marketing cost, which is the large factor, and it had a big impact on marketing costs when we integrated with UQ Mobile. And we have been addressing the need to increase network efficiencies.
And so we're on our plan in terms of the progress, our progress is on plan. And so the cost reduction that will continue to achieve this fiscal year. With discontinuation of 3G service, cost is up. So I think we need to focus on that. And it may not show in the form of increased income, but operationally we are making progress. And I do hope that that would be understood. With respect to the income from life design domain, shall I turn it over to you?
Well, allow me to respond. As was in the presentation slides, life design domain, JPY 9 billion of income increase was seen. Well, there must be increases and decreases. You asked in your question, but I may be sounding boastful, but actually, almost all the areas, all the segments increased actually. So value-added services, including Smart Pass, it was very good. Smart Pass, Smart Premium as well and settlements business was also performing very well with respect to the financial business, as was presented, Jibun Bank and credit card business, they were all doing very well.
And in terms of electricity power, there is seasonality attached. So Q-on-Q, of course, in the months of April, May and June, electricity usage is low, but year-on-year, it's growing. So electricity service was very good. So for the life design domain, overall, it was very good.
[Operator Instructions] Next question. UBS Securities, Takahashi.
UBS Securities, Takahashi. Can you hear me?
Yes, we can hear you.
I have 2 questions. First question about churn rate. As you explained, I would like to ask you to be -- to elaborate on that. Regarding churn rate, the last first quarter, because of the COVID, I think it was abnormal. By 1 year before and 2 years ago in the -- comparing that to the first quarter, I think there was a slight increase -- slight increase. But as I look at the substance smart phone users, I think it's increasing. But 3G users perhaps seems to be that there was an outflow that going forward, I think you mentioned you'll be taking some measures to improve the churn rate. Specifically, what kind of measures are you planning to carry out?
Shoji will answer your question.
Shoji speaking. First of all, about the churn rate. Generally speaking, as I already mentioned, I already addressed that. Smart phones or feature phones, about those matters, we don't disclose that information. I hope you will understand. In that sense, generally speaking, from the previous quarter to this April, partly because of Rakuten's campaign, generally speaking, it was a difficult situation.
And then, of course, campaign ended from various companies, the numbers are becoming more or less stable. And from June, UQ campaign for electricity Denki set discount. And it has been very popular and enjoying a steady increase. UQ is becoming such a main player in terms of such prices, certain data usage band, that becomes kind of a mainstream, and we would like to continue addressing these areas.
At the same time, if you look at UQ, people could buy only at the UQ spots. But starting from the last fiscal year at au shops, people can buy UQ. And there has been expansion of that service. And mostly, most of the -- at most of the au shops, people can buy UQ services. Throughout Japan, at au shops and UQ spots, multi-brand strategy, it's something we would like to explain carefully to the customers, and we would like to have strengthened sales operations. In September, in the autumn, various services or iPhone, new models will be introduced, so we would like to really boost our sales activities.
About the churn rate, 0.6%, I think it has come down to 0.6% or so. The strengthening of the UQ sales, the effects are being felt, am I correct?
Right. There are now the campaigns from other companies now entered. In addition, the UQ's new service has been received very warmly by the people. I think that's a major factor. And also, if you look at au itself, the unlimited use and Netflix with Amazon Prime, such services or products, again, have been popular. And there have been new subscribers of au, I think so there have been some synergistic effects.
My second question, the factors of the increase or decrease of income about the Business Services segment, in the -- there was kind of a onetime income in the last term. Would you -- could you please elaborate on that?
It's about the Business Services. Mori will handle your question.
Regarding this, overseas, we do data center businesses, real estate transaction occurred. And last year, that occurred, data center business. To expand the data center business, we have been looking for better locations. And so there was this kind of onetime sales.
What's the scale?
Several billions.
Several billions.
[Operator Instructions] So here are the next questions by Kikuchi san of SMBC Nikko Securities.
Kikuchi speaking. I have 2 questions. My question number one, multi-brand value-added ARPU and ARPU revenue increase. I would like to ask for clarification of factors behind that. Year-on-year, it's a positive increase. On a quarter-on-quarter basis, there's a decrease. And that's because of the impact from the electricity business. Other than the electricity business, I would like to know what the other factors are.
Smart Pass Premium was doing very well, you said. The number of members is not up all that much, but the number of premium members is increasing. So in terms of the breakdown, well, electricity has earned this much, other businesses have earned this much. If you could give us a breakdown. If breakdown is difficult on a qualitative basis, this business is growing this much, and next year, this will be the area that will be leading our performance and so forth. If you could share your forecast with us.
So may I respond to that? Well, value-added ARPU. We cannot disclose individual numbers. I hope that's understood. But on a year-on-year basis, what is growing most is settlements business, financial settlements business. And what is growing quite substantially is Smart Pass. Smart Pass is growing quite substantially. And Netflix related bundled content is also doing quite well. Repair service, handset repair service is also growing quite considerably.
When smart phones are sold in large numbers, we'll have the subscribers participate in the service program. And so in the first quarter, repair service for smart phones grew. So if there's any addition?
Shoji speaking, as Muramoto just said, year-on-year, electricity Denki is also growing actually. On a quarter-to-quarter basis, we compare between January through March and April through June. So electricity is down because of seasonality. But why is it down in terms of the base fee? That's because of electricity.
My second question. Group IDs and churn rate, I'm concerned about that. So I may sound persistent, but allow me to ask a follow-up question. So group ID numbers are down, but not too much. But given that the churn rate is up, au is down slightly. You have offset that with UQ Mobile, apparently, that seems to be what's happening. But what is the breakdown of group IDs, MVNO and au, the breakdown between the 2, how has the composition changed? And how did that lead to the churn rate? And how is it rebounding?
You were disclosing that before. So what is concerning is UQ -- well in terms of UQ why mobile is pretty aggressive, and it seems that you're trying to follow Y!mobile, and you're not necessarily succeeding. So how are you going to control the balance between au and UQ Mobile going forward? If you have a policy that you can share -- well, sorry for asking several questions. So what is the composition? How is it changing? And what is the target composition? What is going to be the balance between au and UQ Mobile several years from now?
Yes. There were lots of questions included. It's hard to ask all of them, but just to share the facts with you first. As we've been saying today, the mid-zone is where the competition is harshest. So au is down, and customers are migrating toward UQ Mobile. That cannot be stopped, and that is a fact. On the other hand, UQ Mobile is performing very well. The number of subscribers exceeded 3 million.
So it's doing very well. So what's going to be the balance between au and UQ Mobile going forward? It's hard to say. But to give you the conclusion first, we have to grow UQ Mobile, povo. And we have to grow au as well, and we will aim at growing all of them. That is frankly what we're going to do. And another point, what you said upfront, having said group IDs are not down all that much, but then the decrease is on the order of 80,000 to 90,000. And in UQ Mobile and povo, IDs are down. But actually this year is the last year of 3G service. So because of that, cancellations have been happening to a certain extent. So there are customers who no longer require 3G and thus canceling their contracts. And nothing can be done about that. So we'll try to increase UQ Mobile and povo, while trying to maintain au. I'm sorry for using qualitative terms to explain, but I hope I answered your question.
[Operator Instruction] Next question please. Daiwa Securities, Ando san.
Ando speaking, can you hear me?
Yes.
I have 2 questions as well. First, in the presentation material, Page 2, operating income. There is a kind of a stairway type of graph showing the increasing factor. The last JPY 12.6 billion, others, that is the major contributor. Regarding the breakdown of others, if you could just give me the major ones? And as the very general estimates for each, what was the increasing -- decreasing factor and resulting in plus JPY 12.6 billion, please?
Others, JPY 12.6 billion, what's the breakdown? So many things are actually covered here. I'm sorry about the confusing figures. There are many things. Regarding the positive factors. I hope you will forgive me for not giving you numbers in the order of the ranking to give you the big ones, roaming revenues. That's a major one, roaming revenues.
Regarding these others, subsea cable repair cost, the reversal of the provision and regarding the points, again the reversal of the provision. Those are also covered under the others. Of course, there are other negative factors as well, but net-net fees, this is the result. I hope I answered your question.
So as kind of a close, for instance, in terms of roaming, mobile telecommunications revenues, multi-brand, communications are regarding the difference between the 2? Should they explore the general picture? Am I correct? And also the subsea cables reversal of the provision segment, others, I think that's also bulky one. Should I look into that?
Yes, you guessed it right. Please refer to the detailed materials.
My second question. Shoji san has been answering so many questions. The number of IDs has been on the decrease. I think that's the most perhaps a depressing part or regrettable part. My question about the churn rate, fluidity. EBIT goes down steadily regarding the number of IDs. Naturally, do you think it's going to recover naturally or were just like you think you set the discounts only when you promote such things, only then the number of ID is going to improve? What's the situation? Give me some nuances.
Thank you for your questions. Let me see. As you know, in this industry, it's a very competitive market. If you rest even for a while, you lose customers. It's a tough industry. I mean you keep fighting. Based on that condition, let me share with you the following. As I repeatedly said, in the middle volume, we have to fight the UQ electricity set discount. This needs to be promoted even more.
Previously, most of -- at most of the au shops, the people can now buy UQ products and services. I mentioned that already. But having said that, again, in a short period of time, we did all these things. Depending on the shop, people are not really familiar with the operation. And by conducting training or those people are working very hard, selling both UQ and au, we have life design products and services. Especially we have added this UQ, which is a real -- the major one.
Once the operations become improved, I think we can increase the numbers concerning UQ, as I said before. At the same time, multi-brand strategy is something that we explain carefully to customers. We also will have the au unlimited use Netflix plan, and we are going to promoting them as well. So this is really down to earth operating activities, sales activities, and it really boils down to that.
[Operator Instruction] So here are the next questions asked by Tanaka san, Mitsubishi UFJ Morgan Stanley Securities.
Yes. Tanaka speaking. Can you hear me?
Yes, we can.
Well, then I have 2 questions I wish to ask. Question number one, earlier when Takahashi san asked his question about Business Services segment, last year there was a one-off factor leading to increased income because of real estate dealings. Billions of yen, you said, but how much exactly is it? If I can get a better idea as to how much it was?
We'll just say several billions of yen, again, it's not on the high end, close to JPY 10 billion. It's not.
Well, going forward, in terms of disclosure, well, what I would like to see is Page 6 on the Tanshin report, first report. Business report a decrease factor says that income from handset sales is down. And so it sounds like a completely different story from the impression that I get. So decrease in gross income from handset sales, how much impact did that have?
So you said that there was this one-off factor of real estate transactions. So that was big. But actually a decrease in income from handset sales had a pretty big impact. But then you are growing the corporate sector. If you can describe it that way, it would be easier for us to follow.
Well, the largest factor is, as we mentioned earlier, the proceeds from the sale of real estate property. As is described here, the impact from decreased gross income from handset sales, that does have an impact. That did have an impact. But at the beginning of the year, last fiscal year and this fiscal year, what we're selling in terms of handsets mainly is different. So new models of phones.
The sales prices are down for the new models of phones. And therefore, it has had an impact on income. But in terms of mobile business, we are growing the number of IDs more so than last fiscal year, and that will be returned to us as network revenue later. As we have explained this time, the so-called next core areas that we are focusing on, and in those areas, there has been marked increase in income. So by driving this business firmly, we would like to achieve growth in the future. That would be all.
My second question is as follows. The Personal Services segment, on that segment, mobile revenue and multi-brand ARPU revenue, the difference between the 2 was explained earlier. Roaming revenue is increased in a marked way it seems. Other than that, MVNO, J:COM, BIGLOBE, which is an entity within your group, so online-only brands, there are many of them, including yours. So at this moment, what is the competitiveness of these brands? And going forward, they may shrink, I would think, but what is your view on these other brands that you have within the group? So the intent behind the question is J:COM, BIGLOBE, MVNO competitiveness.
What's the future outlook? Is that what you're asking?
Yes.
Then I'll hand it over to Shoji san.
Well, first, to give you the outline, the overview, BIGLOBE and J:COM, both are increasing actually. In terms of revenue as well as the number of IDS, they are growing quite successfully. But the percentage of their business in the total business is not very large, but they're not shrinking at all. They're growing actually. J:COM -- J:COM is unique. They have this unique market of cable TV subscribers. And I'm sure they have a lot of those customers.
And so they are making steady growth. And BIGLOBE on the other hand, well, MNO prices are down, BIGLOBE is not having an easy time, but they are launching new price plans. So something different from MNOs -- something different from MNO's online plans, they're being aggressive, offering something that is different. And so customers that we cannot reach, they are trying to reach. So I hope this can be looked at more positively.
We are running out of time. So next question will be the last question. [Operator Instructions] Next question, SBI Securities, Shinji Moriyuki san.
SBI Securities, Moriyuki, can you hear me?
Yes, we can.
About the factor analysis of the results, and I also have a second question. Profit year-on-year is on the increase. Is that really about revenues? Or in terms of income, is it also on the increase by about the energy? I think the procurement was changed, and so it would -- deteriorated in the last year in the second half, then there was a decrease and losses, but on full year, but it improved about the energy business. I would like you to give me some more information about the business services. You said that was a onetime proceeds by selling the real estate. But in the last year, did it happen only in the first quarter? Or did it also happen in other timing, not just in the first quarter?
First, about electricity. Allow me to address that question. Right. That was a very incisive question. You are right, as you assumed. In terms of revenues, the number of users increased significantly and revenues, yes, it increased year-on-year. But about the income as was pointed out already, last year, [ JPX ] prices soared at exchange. Of course, METI, the ministry is trying to improve JPX to the exchange. So I hope and I think this is going to stabilize. Having said that, we need to lower the volatility. So the bilateral parcels, the ratio needs to be increased. And in terms of profit is going to be actually pushed. So in terms of income, I don't really think that it has increased that much. So much for the electricity.
Conversely speaking, regarding electricity, the first quarter last year, it was so brisk in terms of income. The crude oil was cheap. Procurement cost was pretty cheap. So regarding income, it was actually better than the plan almost. So Y-o-Y, year-on-year, if you just look at that decrease of income. In terms of size or scale, how much?
In terms of the size, because it was a decreased income. Right. I think life -- related services could have been better without that.
How much?
So-so. So-so. Mori san, is that okay?
The proceeds from the sales only occurred in the first quarter about the real estate. Compared with that, it's less significant, but data center-related business, you need to obtain that property first and then you need to work on the facilities and equipment. In last year when we bought them, then there was the revenue from the rent increased, but now it's data centers and for the -- we don't have that kind of rent-related revenues this year. So in terms of real estate, it only happened in the first quarter as far as the significant ones are concerned.
The second question about UQ. In July, the middle -- since beginning of July throughout au shops nationwide, it's now being available. But the UQ sales, so it's increasing linearly. If it's the linear increase, downgrading, is that really actually on the rapid increase, but at the same time, churn rate is also going to -- I think it should improve. So after July, to the extent possible, could you please give me some plus of information regarding the trends?
Allow me to address that question. Linear increase or not? Setting aside the numbers, the number of shops, you can see that more shops can handle them. Yes, it's linearly increasing. But shops that can deal in those is almost maxed more than 2,000 shops. They can now sell UQ products and services. So there has been such an increase.
But having said that, does that mean that more shops that we make it available for the UQ businesses, is it going to be limited -- unlimited, but these are au shops listening to customers. All those customers who come to au shops, what kind of customer they are?
I know. I often go them. Most -- many cases, we start with talking about the prices. At the moment, this is what I pay, and this is a plan that I use, and this is how much I used, but which plan would be most appropriate. Many customers want to give us -- want us to give them advice. So it's not the right thing to just to invite all -- encourage all of them to use UQ. So this has to be kind of a tailor-made service. So undoubtedly, the gate has been broadened. So more and more opportunities to sell UQ's products and services. But does that mean that we just turn all the traffic visitors to mobile users? That's not the case.
Yes, it's linearly increasing, but at a certain appropriate balance. I didn't really say that extreme cases. But as options, you have the option. So I think people will be downgrading from au to UQ. So -- and that the rate of the pace can accelerate. In the presentation, as Muramoto already shared with you, this year, with the price decrease JPY 60 billion to JPY 70 billion. That was the revenue decrease in the first quarter, the impact of JPY 11.7 billion. So roughly speaking, these are the numbers are almost similar to what we expected initially. That's how I -- how we see this.
At this moment, our time is up. So at this moment, we would like to conclude KDDI's first quarter results announcement for the year ending March 2022. Thank you very much for your attendance.