KDDI Corp
TSE:9433
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KDDI Corp
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We are sorry to have kept you waiting. We would like to thank you for coming despite your busy schedules to this event, and we would like to express our apologies for the fact that the starting time was changed. Now I'd like to go into the explanation of the financial results for the third quarter of the fiscal year ending March 2018.
My name is Horii of the Investor Relations department. We have a simultaneous interpretation from Japanese into English, and there will be a live distribution on the Internet, and we'll also have on-demand distribution afterwards.
Now we would like to introduce the participants. First, at the center towards the left, we have our President, Mr. Tanaka. Best of regards. Next, we have Executive Vice President and Executive Director of Corporate Sector, Mr. Morozumi. Best of regards. We have Managing Executive Officer, Director and Deputy General Manager of Corporate Sector, Mr. Muramoto. Next, we have Administrative Officer and General Manager of Corporate Management Division, Mr. Honda.
Towards the right at the center, we have the Executive Vice President and Executive Director of the Value-added Business Sector and Corporate Strategy Planning Division, Mr. Takahashi. Next, we have Mr. Ishikawa, Executive Vice President and Executive Director of Consumer Business. Next, we have Senior Managing Executive Officer, Director, Mr. Uchida, in charge of Technology Sector as Executive Director. We have Mr. Shoji, Managing Executive Officer, Director and Executive Director of the Solution Business and Global Business Sector. And next, we have Mr. Mori, Managing Executive Officer, Director and General Manager of the IoT Business Development Division.
And we have a total of 5 materials that have been presented, including the financial results as well as the disclosure items to TSE. This is also available on the IR website, and in regard to the questions, we hope that you will be able to refer to the content of the disclaimer in each of the materials.
First of all, we will have an explanation of the financial results from our President, Mr. Tanaka, and then we will go into a Q&A session.
Now we would like to request President Tanaka to take over.
Thank you very much for coming despite your busy schedules. I would like to also apologize for the fact that we were delayed by 30 minutes in starting this.
I would now like to explain about our financial results for the third quarter of the fiscal year ending March 2018. First of all, regarding the highlights of the performance up to the third quarter. With a steady progression to meeting the fiscal year’s objectives, operating revenue was JPY 3,760,100,000,000, a progress rate of 76% against the full year objective. Operating income was JPY 813, 800,000,000 million, 85.7% progress rate. EBITDA was JPY 1,243,900,000,000, a progress rate of 81.3%.
Next page. Regarding the operating income, the factors for change on a year-over-year basis for fiscal 2018. You can see on the left-hand side the previous fiscal year results and the right-hand side, this fiscal year result with an increase of JPY 38 billion.
Starting from the left side, an explanation will be given on why this is the case. The main reasons were that mobile communication revenues increased by JPY 6.7 billion, value-added ARPA revenues increased by JPY 15.3 billion and business segment increased by JPY 7.8 billion. Meanwhile, the increase in others of JPY 8.3 billion includes strategic costs of about JPY 27 billion for growth measures from next fiscal year onwards.
Next, new price plan is shown on Page 3. On the left, you can see the chart of the 5-stage fixed-rate according to the amount of data utilization that is automatically applied in the au Pitatto Plan and the high-volume data of the au Flat Plan that have been popular with our customers, and we have exceeded 5 million subscribers as of January 21 as described here. So 1 in 4 subscribers of smartphones have decided to go with the new rate plan.
On the right, there is a comparison of the selectivity between July last year, when this data plan began, with January of this year. As you can see, the percentage of the high-volume au Flat Plan has increased and is contributing to increased au ARPA.
Next page shows the start of the Pittato Student Discount from December last year. This targets customers 25 years old and under as well as their family members, and the rate is a further JPY 500 lower than the au Pittato Plan. By utilizing this, smartphones can be used at a monthly charge of just JPY 1,480.
Next, Page 5 shows the au churn rate, which everybody is focused upon. A gradual trend of improvement has been seen since the new plan was introduced in the second quarter, and it was 0.78% in the third quarter so that as seen in the dotted line, which shows the last fiscal year's results, on a year-over-year basis, it remains flat. Furthermore, if the churn rate is looked at on a monthly basis, we can see that December churn rate was lower than the previous fiscal year. So I think that this plan is quite effective.
Next, in regard to mobile IDs. On the left, due to the improvement of the au churn rate, the decline of au subscribers are becoming more stable. Furthermore, with the steady growth in the number of MVNO subscriptions, mobile IDs showed a solid growth to 26,240,000 at the end of December. On the right, the growth rate on a year-over-year basis shows that it was a positive 2.2% as opposed to the negative growth rate last year.
Next, page 7 shows au ARPA and mobile communication revenues. On the left, au ARPA on an au subscriber basis shows the steady growth in data utilization for smartphones and Multi-Device, so that the temporary decrease in revenues due to the introduction of the new plan and the campaign could be observed -- could be absorbed. On a year-over-year basis, it was a positive 0.5% growth. On the right, mobile communication revenues shows that the increased revenues of MVNO exceeded the decrease in au ARPA revenues, so that on a year-over-year basis it was a positive 0.5% increase.
From here on, in the next page, shows the Life Design business. Au Economic Zone merchandise value on a year-over-year basis on the third quarter was about 1.5x higher at JPY 500 billion. On the right, value-added ARPA for the third quarter on a year-over-year basis was higher by 15.7% at JPY 590. In both cases, there was a major growth in the year-over-year basis.
Page 9 shows the education business. In order to accelerate the medium- and long-term growth for the Life Design business, we need to expand into areas that have strong affinity with the communication business. As a new area in our Life Design business, AEON Holdings has joined the KDDI Group as of the 22nd of January, and we will expand into the education business.
Education business. Like the communication business, the education business has very strong customer loyalty, and it is possible to expand into targeting early childhood and elementary school age children, which we had only weak touch points with in our communication business, especially since English language education will become a compulsory subject from grade 3 of elementary school from 2020 and that speaking and writing English will be emphasized in the National Center Test for University Admissions and so forth. We can anticipate that the market will expand.
On Page 2, it's about creating synergies in the education business. AEON Group's strengths lies in the combination of development of education materials, eager to learn students and the high-quality teachers. With respect to synergy creation and in order to strengthen this tie-up furthermore, KDDI leverages on our strengths, namely: IT (sic) [ ICT ] device, online education, CRM, and IT Analytics base. And it’s through cross marketing on a consumer basis, and the distribution of online contents, and the support tailored to students, the progress and ability we aim at creating the environment where the effect of learning is maximized. And with AEON Group at the core, education business would bring us a new growth opportunity.
On Page 11, it's about au Smart Pass Premium launched last January. The number of members is increasing very steadily, exceeding the 3 million mark. The number of members, including au Smart Pass, has reached 15.42 million. Currently, we are running the campaign of good deal monthly fee for student customers. Data recovery support, Wi-Fi security are among the abundant security services for students. And through this effort, we aim at increasing the usage of young generations.
Page 12, about au WALLET. Please look at the left-hand side. The number of valid cards reached 22.4 million, among which credit cards, which is the driver to increase GMV accounted for 3.1 million, exceeding 3 million mark. On the right-hand side, we have the renewal of Gold Card Privilege information. Point rewards based on au monthly usage amount and coupon, which can be used to purchase smartphone and other more attractive benefits are being offered.
Next page, Page 13, shopping mall Wowma! In November, for better recognition, we ran TV commercials, and also, we started collaboration with TV shows and fashion events to increase users. Also with respect to post-point rewards during sales campaigns, campaign timings and targets are optimized to increase usage rate and to increase merchandise value.
Next page, Page 14, IoT solutions. The strengths of KDDI IoT services is to provide a one-stop optimal combination of all layers. As shown in the bottom layer of the slide, there are various kinds of sensor devices. The mid-layer shows various networks to satisfy customer needs. On the top layer, we have various enablers for data utilization and the cloud as well. Leveraging the group's know-how, we plan to support IoT development by grasping the customer insight firmly, we provide IoT solutions, which can solve various issues of any industry.
Page 15, toward the creation of new business. Please look at the left-hand side. The LPWA, which is the IoT's platform network, we started our services in January, launching KDDI IoT Communication Service LPWA, LTE-M type. Locations of the devices, which have not been covered due to insufficient power source or profitability issues, are to be in the business scope, increasing business potential. On the right-hand side, through joint development of new platform with TOYOKEIKI, we aim at creating new value-added services on and beyond the communication layer as well as LPWA for gas meters.
Page 16, Home IoT. Please look at the left-hand side. With au HOME, we are expanding services for various home appliances [ or probation ] and link with smart speaker, which is a trend service with concept of secure, convenient and fun. On the right-hand side, withHOME, we started services in January offering au HOME service as platform to partner companies. Through collaboration with partner companies, now we can provide services to non-au customers as well. Also, about 50 companies from various industries are on board with us. We aim at development and dissemination of used cases of Home IoT.
Page 17, measures for the 5G Era. We are promoting demonstration testing with partner companies for automatic driving technology. On the left-hand side, it shows that last December, for the first time in Japan, the remote control of unmanned automatic driving vehicle on public road was successfully executed. In view of future automatic bus and taxi operation, we are accumulating knowledge for the monitoring of driving status and real-time judgment and control when risks arise.
In addition to -- please look at the right-hand side. In addition to accurate mapping of roads and structures, it's necessary to use dynamic maps with dynamic information, such as weather, accidents and congestion are combined to develop such map. We started development tests on collecting information from the car and the dynamic-map technology to the car.
Page 18, the summary. First of all, the consolidated results that we are making steady progress for the achievement of full year results. For the other shareholder return, based on the other current share prices progress in business results and free cash flow, we have resolved to buy back our shares.
Secondly, business strategy. We promote a new price plans in domestic telecom business, and the au churn rate is improving. Secondly, we also promote measures for expansion of au Economic Zone. Thirdly, we promote IoT business and measures for 5G as next growth area.
We are going to continue to work to achieve our mid-term goals. And with that, I'd like to conclude my presentation of the third quarter financial results. Thank you very much for listening.
Thanks. We would like to enter a Q&A session.
And if you have any questions, we'd appreciate if you could first identify your name and affiliation. If you have multiple questions, please ask your second question after you have covered the first question. Now please raise your hands if you have any questions. And there's a person in the center row, at the very front.
My name is Masuno of Nomura Securities. And there was an announcement made today about the fact that the President will be replaced in April 1, but there was only the financial results mentioned. And I would like to ask about what you feel will be the revolution of KDDI -- evolution of KDDI from here onwards.
It was abrupt, and so you may have been quite surprised at the news. But there were some thoughts in mind as we made this presentation. It was in December of 2010 that I became the President, and so therefore, I have been serving as the President for 7 years and 2 months, and the shift to the smartphone and the 3M Strategy and so on were carried out. And in regard to how we look at the market currently, in recent times, we have seen Rakuten's announcement about the entry into this market, and there has also been the news about the acquisition, there has been a lot of news items. And in regard to what this all represents, looking at the news about Rakuten, it seems like the communication industry will see a new entrant, and so competition may seem to become more tougher but for myself. There's a recent buzzword about 5G or IoT or big data or AI, and these technologies have advanced tremendously. So that the industry as a whole is now about to face an age of transformation. In other words, what I mean is that a new world and a new society and a new industry is about to emerge, and the existing players currently are trying to transform themselves as we move forward. So in the communication industry, we should not just look at this small world, but we should look at this as a major change for the communication industry itself. And there are necessary assets, such as communication, finance and then commerce. And in the Life Design business, we are combining communication, so that we can become a Life Design company. And we are moving forward with our medium-term plans to make this transformation. And when it comes to the next fiscal year, it will be the last year of the current medium-term plan. And we were looking at the CEC of 7% and the operating income of JPY 1 trillion. And as we head towards FY 2019 up until FY 2021, we will spend the next year drafting the next medium-term plan. And as we face this new era, what will determine all of this will be dependent on the President, and we felt that it would be better for a new President to be in place. It was felt that a new leader should push things forward. And what's going to happen for the next fiscal year? Well, there were some questions rumored to take place but -- Mr. Morozumi is beside me right now, and as we head towards the medium-term plan, we will continue with the current structure. So once the plans are made -- I remember saying that the strong management capabilities will allow us to attain our goals, but at any rate, maybe everybody is not so much focused upon the current medium-term plans. So as we head towards the next fiscal year, we are making our plans and our strategies. And we believe that priorities should emphasize those elements, and this led to the announcement today. And so this will probably be the last IR explanation that I will be making, and I would like to request for your best regards in supporting the next President.
One more point, in regard to the transformation of the business structure, you mentioned that there is a possibility of loosely federated elements or there could be functional consolidation to continue as a single company. And there's J:COM or Shop Channel where there is a 50% shareholding, and there are various patterns. But for the business format itself, in regard to the current structure, what is your outlook?
The current 3 years has been for establishing the infrastructure for the next period. And there have been some M&A efforts that may seem discrete. But in the next era, the communication and Life Design businesses will converge. And so there was those financial investments with that in mind. As for the way conversions will take place, I think that the next President will come up with the plans for this. But we are headed towards a new era. And we have been looking at new companies, and it seems like a track race competition. If we just look at the communication industry, it may seem like a martial arts competition taking place in a rink. But we are heading towards a new era, and so we are trying to complement with new capabilities. And we have continued with M&A efforts because of this. In the press conference, I mentioned this, but there's a variety of different capabilities that needs to be acquired, and it's like a role-playing game. You need to try and gain the components that you need to have an end-to-end strategy in place, so that we can strive for growth in the next 3 year period. And with that in mind, I have decided on the current decision to step down.
Any other questions? Please raise your hand when you have questions.
Mitsubishi UFJ Morgan Stanley, and my name is Tanaka. Maybe it's too early to ask this question but the other from the Executive Vice President Mr. Takahashi, could you make some comments at this moment? So President Tanaka talked about the convergence of IoT and other elements. And we have been discussing IoT and others for quite some time. And for the next 3 years, at this moment, there are lots of things that we can look forward to. But once you start to work on them, it could happen that the numbers and figures do not come out or achieved as we expect, for example, IoT solutions if you look at Page 14 of the material. Everyday, we listen to the very interesting news day in, day out. But when it comes to the profitable data structure, the structure of the business, I myself don't understand quite well yet. So could you please talk more about some more specifics including the volume and some?
Maybe it's too early for me to make any comments here because I expect Mr. Tanaka to continue to work hard for February and March, but of course, I understand that you expect me to start to make some comments going forward. But it's a very hard time to assume the position of the President. The 5G, big data, IoT, all of these are but words. So being surrounded by them, I think we are entering into a stage with new challenges, and for those challenges, we would like to develop strategies. And as Mr. Tanaka said, the convergence of the -- or fusion of the communications entity of the Life Design, what does he mean? Well, I would say the following: Life Design is for the other change. But the other from communications to Life Design, some people internally -- actually, many people internally thought that our company will make a strong shift from communications to Life Design. But there are all kinds of the other businesses, different businesses and how the other business model can change with the element of communications. And the people are starting to recognize that. And now we are seeing some shift from floor to stock elements of the business. Today, I would like to refrain myself from talking about any specific strategy, but for IoT for the layer of communications, we might not get the other considerable -- the revenue, but the other business model based on the younger power, we would like to develop the next mid-term plan, so that we can enter such new other businesses with the communication business being at the core. And on top of that, we have the Life Design business.
One more thing, as to strategic -- the other investment, strategic costs, could you please give me the update?
So it is JPY 27 billion, and we aim at JPY 50 billion. We set JPY 50 billion at the beginning of the year. And we are kind of already behind the other expected pace, but we are seeing some achievements, for example, for stronger retention or for transformation of shops or for Life Design business. These are the objectives of this other strategic cost and specifically, the churn rate is coming down, and it will go down further more. That's our expectations, so our efforts are paying off. And the shop renewal is a must for Life Design. So we are making that progress there although a bit behind our expectation. So please give us some time, some more time to show you more specific results. And please bear with me.
Are there any other questions? Please raise your hand if you have any other questions. There's a person in the second row.
My name is Kozera of Tachibana Securities. And Mr. Tanaka, thank you very much for your efforts. There's one point that I'd like to ask about. I'd like to ask about the reduced production of iPhone X and what do you perceive will be the impact here. And also for the next fiscal year for communication business, if the MVNO subscribers are going to continue like this, will it continue to grow? And what about au subscribers? Will that increase? What is your current outlook there?
Specifically, I would like to have Mr. Ishikawa explain about the iPhone X and about next fiscal year.
As for iPhone X's impact, in regard to the reduced production volumes, I've read news about the production being reduced by 50%, and I was astonished. But currently, the sales is quite -- going well. How should I say it? As for the breakdown between the iPhone 8 and X, the prices are different on total. On a year-over-year basis, things are moving forward steadily. In the Japanese market, we don't see any extreme outcomes. As for MVNO and what will take place in the next fiscal year, if we look at a linear progression of current trends, it's not going to continue to show an extreme growth. We're seeing stabilization, and there will be a certain level of increase of MVNO subscribers that will take place. But there was mention about the churn rates and with new products launched, I think that we have been able to keep down the shift to MVNO with new price plans. It sounds like a very obvious answer to make, but that is how we perceive the situation.
What about au? What do you think will happen there?
Oh, it's the other side of the same coin. When it comes to au, for au operations, there are various details, and we do see some decrease. But we have been able to suppress the degree of decrease taking place, and we believe that we can further suppress that decrease next fiscal year. And including the group MVNO, we believe that we can increase the number of total IDs.
Any other questions? Please raise your hand when you have a question.
My name is Tsusaka from Morgan Stanley, MMG Securities. The other growth in the industry is slowing, so the other industry is getting matured. But the other cash flow is getting larger in the industry, so the M&A opportunities in the order of hundreds of billions of yen. Mr. Tanaka said that the other -- when you talked about the other previous midterm plan that Mr. Tanaka said that they would like to target at such M&A opportunities. But it seems that the other, there are not many specific targets. Why is that? And to Mr. Takahashi, because the cash flow, your cash flow will be huge, so how are you going to allocate cash? Because for the whole industry, even with 5G, CapEx will not increase, and I think that is the other industry consensus. And once things move on as they are, then the other balance sheet seems to be more ineffective from the financial point of view. So for KDDI, how much investment -- how much M&A are you willing to do? What is the capacity of KDDI to do that?
So I think I talked about JPY 500 billion for the M&A when the other current plan started. And currently, although we have been using the JPY 300 billion or so, and we have 1 year or so to finish up the current plan. So to what extent shall we go? I think it is not appropriate to talk about specifics in this arena. So how are we going to allocate the cash and the cash flow on the different businesses? Takahashi-san, it's the question for you.
So JPY 500 billion is the number for the current plan, and so the other Life Design or IoT, the other center is for IoT growth opportunities. And we are going to the search some candidates for the coming 1 year or so. And for the next plan that we're going to work on a next plan and the other investment for growth and shareholders return should be well balanced. So today, please forgive me if I do not talk about specifics today.
Then if there are any other questions? There's a person in the third row on the right-hand side.
My name is [ Takahashi ] of UBS Securities. And there are 2 points that I'd like to ask. In regard to the impact of the new rate plan, I understand that churn rate has gone down. But meanwhile, when we look at the revenues, you do campaigns and so on, and there's a negative impact there, I believe. But aside from the campaigns, in terms of revenues or the ARPA, what is the changes taking place there? That's the first question, and I'd like to have Mr. Ishikawa reply to that.
As you've just mentioned, there is the campaign. So consequently, there is going to be an impact on the ARPA. But there are good things and bad things initially that took place. The good things were that the flat rates were high, and there's also the student rates that are impacting things. And there are some negative points as well, but for the most part, it's a matter of the time access. And we're seeing momentum in the downstream. So that on a short-term basis, the negative impacts emerge. But I believe that eventually, there will be a difference. So that on the long-term basis, the campaign is a 1-year period, and from the second half of the next fiscal year, I believe that recovery will begin. So that on the total basis, I think that things are going as anticipated.
There was about JPY 20 billion that was anticipated and perhaps, it may be slightly above that -- excuse me, slightly below that.
Second point is in regard to the terminal sales, it seems that this has increased in the third quarter. Is it because of the new plan, because it has become more broadly adopted? Can we assume that the terminals have come down? Mr. Ishikawa, could you reply?
On a year-over-year basis, the number of handsets has increased, and also the unit price is going up, with both factors at play. But there is considerable growth that is observed. As for the momentum, there is recovery. And so for the new as well as the existing areas, things are moving forward steadily. That is our understanding. So in regard to the handset discounts, there is not too many changes observed there. Or you may be asking about subsidies, is that correct?
Yes, that's correct.
In that regard, the subsidies are down. Consequently, compared to the previous year, the acquisition cost for the sack, we believe that this has gone down.
Any other questions? Yes, at the person toward the back of the room on the right-hand side, please.
My name is [ Moriyuki ] from SBI Securities. I ask the same question in the previous -- the other meeting. What is the other traffic of the users after the au Pitatto Plan was launched? I said -- you said the au traffic was kind of the au slowing down. Could you please elaborate on that? Because I personally thought that the traffic would increase, but previously you said that, that would decrease, traffic would decrease. Ishikawa-san, please?
The traffic is contained and controlled. For short term, we thought that the traffic would be rather slowing down and that was as we anticipated. But as people start to use the applications and so on, the traffic per the handset is increasing. So at the beginning, the customers do not use so much but the au then that they'd like to enjoy smartphones more and more. And I cannot talk about specific timing for customers to do that, but the au traffic is increasing. So it's not that the -- that traffic remains whether controlled or contained, whether the traffic is on the level as we anticipated. And the traffic is not getting stronger in the last 2 month.
Let me add. For the smartphone, traffic -- average traffic is growing. And for the au subscribers for Pitatto Plan compared to the previous traffic then as Mr. Ishikawa said, that -- but all in all, traffic is increasing. But for Pitatto Plan, the subscribers are more sensitive.
And on Page 2, you explained about the factors for the other increases. In the others is the biggest the other element other than the others strategic, the other costs. The JPY 27 billion -- other than JPY 27 billion, what is the other big element here described as others? What is this others? So while you are checking that up, my other question. So in the new business area, I think your strategy is not so different from that of DOCOMO for the au Life Design. What about IoT compared to DOCOMO, what is the difference? How is your strategy different from DOCOMO's for IoT?
Can I go back to your second question? So as to this column, others, so strategic cost is JPY 27 billion. Other than that, what does other includes? The JPY 8.4 billion, coming from the other sale of the other terminal cost and access charge decreased JPY 7 billion and the others are not disclosed. And other that global, JPY 4.6 billion, this is plus 4.6 billion and the rest is not disclosed -- sorry about that.
Thank you for that. And so what about the strategy of IoT? What is the difference from DOCOMO's? Mr. Mori, please?
As Mr. Takashi said earlier, not only communications business but we would like to absorb values surrounding the communications business, and I think DOCOMO is doing the same. In that situation, we talked about LPWA in the presentation. For IoT, in other words, communications attached. The other things with communication or communication attached will increase. In other words, we would like to grow market, DOCOMO and other net carriers want to make the market bigger, larger. And we will work with that. So the other things with communication will be increased, expanded. In other words, data surrounding communication or business using the data or to support all that, we have cloud and infrastructure. And we would like to offer as many elements and services as possible. Have I satisfied you with this answer? So at this moment, you're saying that there is no clear difference between you and DOCOMO. When you look at details, you will see some other differences, the scopes or the areas or the strengths might be different. It all depends on how our competitors who develop their business but we would like to what I have just described.
On the macro point of view, global IoT platform is now in place, at first for Toyota. And this is going to be a very big differentiating factor. And secondly, the acquisition of SORACOM. We are currently analyzing the SORACOM's process, and that is also going to be a differentiating factor with the DOCOMO. In particular, SORACOM provides free gateway services and cloud. And as I mentioned earlier, we'd like to provide packaged services and this, the cloud-based services of SORACOM would certainly be one of KDDI's strengths, which will allow us to provide the solutions and that is going to be a strong point from the macro point of view.
Do you have any areas, specific areas that you would like to talk about?
As I mentioned earlier, SORACOM has 7,000, 8,000 business examples, which are now being analyzed. So once we come up with specific targets, then we will package them with the existing platform to start marketing and sales activities. So in due time, we will present some used cases in the press release.
And we'd like to take just one more question. Does anyone want to ask a question? There's 1 person in at the -- in the front row towards the left.
My name is Ando of Daiwa Securities. And it seems like I have been chosen to ask the last question, but I'd like to ask 2 questions. First is in regard to your thoughts in repurchasing company stock. I'd like to ask about your basic thinking here and what kind of flexibility you're considering. And also the balance with the dividend. What are you thinking in regard to this as opposed to dividends? I'd like to inquire about your thoughts.
In regard to the repurchase of company stocks, our belief that the stock prices are too low. And we had gone to record levels previously, but now we felt that it's really at a low level now. And although KDDI is conservative and does not move actively sometimes, we are trying to repurchase and we have come up with the number of JPY 50 billion because we believe that our stock prices are too low right now. As for the balance of this with dividends, we believe basically we should pay dividends. But on time-to-time basis, we believe that repurchase of our stock should be carried out.
The second question is in regard to the news that was reported and how do you perceive this? I would like to inquire about your impressions about the news that have been reported, and if possible, since you've done a press conference on this, what kind of interaction took place is something that I'd like to ask about.
I introduce this briefly. The next era will have a communication, finance and commerce at the core. So we're looking at a new world, and as mentioned that it will be a data-driven management. But between the customers and IT, it's necessary to look at the engagement or how much you know about the customer. That will be the structure of this new world. And this could be described as data-driven management, or it could be that big data will be the core of company activities. And it may be IT times ARPA, or the strength of engagement will be mainstream. And communications is as Mr. Takahashi mentioned, it's communication multiplied by something else. And so knocked it and maybe looking at this but MVNO will not provide adequate engagement. This is a speculation on my part but taking that into consideration, then I could understand the thinking that is behind their efforts. And it seems like a natural outcome to their strategy to move forward in this area. And in regard to communications, networks can't be established with a single effort. And we make about JPY 500 billion per year in investments, and it's quite difficult to come up with investments of JPY 600 billion buildup-something. So you have to take advantage of other elements, otherwise, it will be difficult to have a network that can appeal to customers. But in regard to how Rakuten perceives this, currently, it would be pure speculation on my part to consider what they believe -- what they feel about MVNOs.
And with that, we'd like to conclude the presentation of the third quarter financial results of the year ending in March 2018 of KDDI. Thank you very much for your presentation.