SoftBank Corp
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SoftBank Corp
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Thank you very much for waiting. We would like to begin the briefing for earnings results for the 3 months ended June 30, 2021, of the SoftBank Corporation. We would like to introduce to you the presenters for today. SoftBank Corporation, President and CEO, Miyakawa; Board of Director, Executive Vice President and CFO, Fujihara.
Today's briefing is streamed live on the Internet. Thank you for being here. Without further ado, Mr. Miyakawa will be giving you a presentation for the earnings results as well as the business of SoftBank Corporation.
Once again, I am Miyakawa, President and CEO. I will be giving you the briefing for the earnings results for the first quarter of the fiscal year 2021. I will be giving you the overview of the performance and the businesses. In Q2, I will be giving you more details of the businesses.
First is consolidated performance. In terms of the revenue, it was JPY 1,356 billion, up approximately 16%. There was completion of line consolidation. And last year, due to COVID, the sales of the mobile handsets have been negatively impacted, but that recovered this year.
If we go by segment, we have seen increase in the revenue in all of the segments. In terms of the operating income, it was JPY 283.1 billion, up JPY 3.2 billion year-on-year, which was a slight increase in the operating income of 1%. If we look segment by segment, Enterprise business was up 23% in operating profit, and had covered the decline in the profit of the Consumer business.
As for the net profit, regrettably, there was a slight decline. In terms of the details, there was valuation gain of the companies that we invest in and there was an increase. But because of the increase in the corporate taxes, there was a decline.
So this shows the summary of the performance of the first quarter of 2021. The increase of the revenue was 16%; operating profit plus 1%; and net profit was negative 1%. So at the start of a year, we believe that we did pretty well.
In terms of the progress for this fiscal year, we are aiming for JPY 5.5 trillion in revenue, and the progress was 25%. In operating profit, the progress was 29%. In net profit, the progress was 30%. So overall, we are making progress steadily.
So as you can see progress in operating income by segment is about 30%. So we will continue to realize our target without being complacent. So now I will one by one explain each of the businesses. So the progress in operating income by segment is about 30%. And now let me explain the Consumer business first. So in terms of revenue, was up 11%, thanks to the recovery in sales of mobile devices.
Last year, sales activities at the shops were restricted because of COVID. This led to stagnant growth in device sales, but this recovered. And in terms of revenue from the mobile segment, we are now beginning to see the impact of mobile service price reductions. Therefore, the segment revenue declined. But as I had explained at the beginning of the fiscal year, we are already expecting a full year impact of about JPY 70 billion. So we are in line with our projection.
Looking at operating income, ARPU declined due to the new price plans, thus the operating income was down by 3%. Cumulative smartphone subscribers increased by 1.68 million year-on-year. This is a 7% increase from the previous year. The increase in cumulative subscribers is driven by Y!mobile. There are migrations from SoftBank brand to the lower price brands. But we have also been able to retain customers from migrating outside the group.
And we see new acquisitions from other carriers performing quite favorably, resulting in Y!mobile's cumulative subscribers to grow by 10% in 3 months. So this momentum will be maintained. In order to promote that, we have introduced data carryover feature in Y!mobile. And in 2 weeks, we will be revising our data increase options to make this plan more attractive.
And with regards to our online dedicated brand LINEMO along with our highly regarded 20 gigabyte JPY 2,480 plan, we are now introducing and announced this new plan for 3 gigabyte at JPY 900. This is a reflection of customers' voice. We will continue to respond to our customers as much as possible so that they can truly feel that the prices have come down.
And also, as part of our enhancing our disclosure, as I had mentioned at the beginning of the year, we are disclosing for the first time, our numbers on the electricity subscribers. Cumulative subscribers increased by 45% year-on-year to 1.88 million. We are not dependent on just electricity revenue.
But actually, there's a set discount with the smartphone subscription, which is actually effective in preventing churn. When you calculate the churn rate, if the user subscribes to the set discount, the churn rate is about half of those who haven't subscribed to the set discount. So with regards to sales of electricity, we would like to continue to grow the subscription.
So next is Enterprise business. The revenue for Enterprise business was JPY 171.5 billion, which was up 6%. In terms of the operating income, it was up 23% at JPY 38.5 billion. Enterprise business' model has significantly changed in the past several years. We are not selling the telecommunication services on a stand-alone basis anymore. What we are focusing on is recommending solution with the objective of solving the management issues in which the customers are facing.
In terms of the breakdown of the solution revenue, going forward, we would like to disclose like this. So I have created this slide. Recurring revenue and onetime nonrecurring revenue, we would like to continuously disclose this information to you. Out of the JPY 47.3 billion in revenue for the first quarter, if we look at the breakdown of the cloud, security, digital marketing, which are recurring revenue, they contribute to approximately 70%.
In terms of the nonrecurring revenue, is related to the temporary expenses, the onetime expenses on the customers like the IoT -- putting the IoT devices as well as implementation of the software. So those are the nonrecurring revenue, which are onetime.
So we would like to break it down to nonrecurring revenue and recurring revenue. And you see that the recurring solutions revenue is growing 19% year-on-year. It is a stable business, contributing to the expansion of our performance. We now have more confidence, in that this will become the pillar of the growth of the Enterprise business.
Now I would like to talk about the Yahoo and LINE businesses. Yesterday, the Holdings has given the results briefing. So I would like to give you the explanation from SoftBank Corporation's perspective. The revenue of Yahoo and LINE business has increased by 36% due to the consolidation of LINE at JPY 373.4 billion.
In terms of the operating profit, there was an impact of increase in the accounting-related expenses due to LINE consolidation, but we were still able to post 1% growth in operating profit. You may think that 1% increase in the profit is not enough. However, as a business, it has grown, as you see here, JPY 7 billion. So the growth rate was 14%. So there is a steady growth as a business.
On the other hand, due to consolidation of LINE, there was a depreciation of the amortization of intangible assets, and also there was an impact from the expenses of stock-based compensation. So overall, it has become 1% growth in the profit. However, we believe that there will be robust growth for the future.
In terms of the EC volume, there was -- increased by 6%. Last year, there was a significant growth in demand due to COVID-19 impact. So there was a huge growth. But this year, we were again able to overachieve that.
So let us now turn over to PayPay. Cumulative registered PayPay users has exceeded 40 million. And I need to fully explain this, but this continues to experience strong growth. And we want to highlight one KPI, which is the number of payments. In order for PayPay to become a super app and build a financial ecosystem, the number of payments is the most important KPI. In just this Q1 alone, the number of payments reached 790 million times. This is 1.8x from the previous year.
So we will continue to place the importance on the number of payments and we -- so that PayPay will become one of the most used payment app. PayPay's GMV for the quarter was JPY 1.2 trillion, which is 1.7x year-on-year. And we're expecting to consolidate PayPay as our consolidated subsidiary next year onward. So I think you can say that the foundation is being built steadily, so along with the consolidation of PayPay next year, where we'll continue to really enhance this business and the plan for this app.
And this is the last subject, which is the collaboration with NAVER. And I would like to also discuss the progress on Beyond Japan. TBCASoft is a company that offers international network for QR settlement using blockchain, and SoftBank and NAVER are jointly investing in this company. SoftBank has been investing in this company from the very beginning as seed investment, but we have decided to make an additional investment. So we will continue to maintain our 20% stake in this company. NAVER stake will be maximum 8.9%.
And the objective of this joint investment, let me explain this on this slide. So the purpose of this joint investment is to cooperate with NAVER in expanding the international QR code payment ecosystem around the world. Initially, we will have Taiwanese inbound tourists to Japan, have them use their QR code settlement in Japan. So that will be our first target. And we are now trying to link the different QR code payment service providers. So PayPay is also considering participation. We will promote Beyond Japan in collaboration with NAVER.
So in summary, Q1 progressed steadily. I think we have started on a very nice beginning, start off. So Q2 onwards, to be honest with you, we can expect greater impact of mobile service price reductions. We're looking at JPY 70 billion in terms of impact on a full year basis. But if you look at the strong performance of Q1, I believe that we will be able to achieve the full year earnings forecast, which we laid out at the beginning of the year. We will continue to strive towards achieving that goal. So we will continue to strive towards our corporate philosophy of information revolution, happiness for everyone.
So that was a very brief explanation, but this is our explanation for the first quarter ending March 2022. Thank you very much for your kind attention.
[Operator Instructions] On the left hand side, in the front row, the gentleman in the white shirt.
From [indiscernible]. My name is Ichikawa. I have 2 questions. One is that you have become the assume of the President. And I think that the performance is quite robust. But was there any discoveries that you have had, if that's not shown in the numbers? That's my first question.
The second is the mobile service price reduction. On the full year, you are expecting that JPY 70 billion in impact. In the first quarter, maybe it's hard to say the exact numbers, but what kind of numbers did you see? And how do you think that the impact will -- how will it impact from second quarter on?
Thank you very much for your question. So in terms of the performance of the company looking at it from the President of the company, well, I have been involved in the business as the technology person. But after taking the role of the CEO, I am experiencing many things. So the -- so myself, assuming the role of the CEO occurred under COVID-19, and there were various restrictions. And one of the restriction was communication with the employees. I have to communicate with the staff online. So I don't -- I still don't feel that I am really a CEO because I don't have that kind of interaction with my employees.
And to your question about the impact of the price reduction of the mobile service, on a Q1 basis, there was JPY 10 billion impact. Usually, in the first quarter, it is a transition period where March, we will see a lot of movement of the customers. So a JPY 10 billion -- a little over JPY 10 billion in the month of April to June. And in the second quarter, we believe that it will be a little over JPY 15 billion. So those are the kind of impact that we are expecting.
But during the full period, there would be launch of new iPhones. And if we are able to have a good inventory of the iPhone, there would be switching of or the upgrading of the handset on the side of the customers. So in that sense, there may be some negative impact. But overall, there would be JPY 70 billion negative impact to the revenue. So does that answer your question?
Yes.
Then the gentleman, second row from the front in the second right-hand corner.
This is Kato from NHK. I have 2 questions. First is churn rate, one of your KPIs. From last year Q1, 1 year has passed, the churn rate has gone from 0.53% to 0.1% -- 1.01%. It seems as though it has gone up. What is the reason behind this increase in churn rate? Of course, competition has intensified during this period. So I'm sure that has impacted. So would you be willing to comment on this? And secondly, about mini plan for LINEMO. Price is 3 gigabyte, JPY 900. So price level, you would say this is similar to an MVNO, extremely affordable low price. But what is the competitive landscape today, including other MNO field players in SIM?
With regards to churn rate, it did deteriorate. And we had some -- there's a chilling effect. But up until April, competitors had rolled out different campaigns. So it's true that it has worsened slightly. But since May onward, this has really come down. And now the churn rate is within our expectations assumption. So we're quite relieved. So with regards to the increase in churn rate, because this KPI is extremely important, we will continue to monitor this closely and manage it accordingly.
And with regards to LINEMO, we really took a big step on this. This was LINE MOBILE previously. So from SoftBank's point of view, this is basically MVNO service that SoftBank has really granted LINE to utilize as a service provider. So this is positioned as an MVNO. Now when you take questionnaires to the customers, we have seen some outflow. And we were wondering why the customers are not staying with LINEMO.
And when we looked at the survey, they only use 3 gigabytes. But -- so they were looking for a price level equivalent to cheaper, lower-priced MVNO. So we thought that it was better than outflow to other carriers. So that is why we made this drastic step. But this had a big hit with the market much more than we had expected. In fact, we saw a lot of inflow from other custom carriers. So this led to additional new acquisitions.
So with regards to competitive landscape, I think we will see a lot of price competition. We have called ourselves price leaders. However, but I think somewhere, maybe we were on a defensive. So maybe we need to go back to our starting point, which is being on the offense. So that is why we have decided to launch this very drastic mini plan. And we believe that in this competitive landscape, we will continue to endeavor on challenging initiatives.
In the middle row, the gentleman in the front row.
My name is Vishnu, Reliance. I have 2 questions. The first question is related to mobile service price reduction. You said that in the first quarter, there was a JPY 10 billion impact. It seems that the SoftBank brand has seen decline in the subscribers. And Y!mobile, I think that there was a price reduction. And I think those 2 things had impacted significantly. So if you could give us the specific breakdown of the reasons, I would appreciate it. And the second point is that there is more penetration of 5G. I would like to see -- I would like to know whether there was a positive impact like the traffic increase? I would like to know the progress of the penetration of 5G?
The overall ARPU, I think, should be discussed. SoftBank brand, the fixed price plan as well as the large data plan, the ARPU there and also the middle to low data capacity Y!mobile and LINEMO, which is being sold online, we have 3 brands overall. Each ARPU is different. Y!mobile had a low data capacity to middle data capacity, and we had lower price range so that it can be differentiated from the SoftBank brand.
The difference of the ARPU between SoftBank brand and Y!mobile brand, of course, exists. So we had been differentiating through the data capacity and also by content. There were various methodologies that we have taken for differentiation. So it is very difficult to explain in just one phrase. So I may sound a bit ambiguous, but the users of SoftBank brand, the people who are price-sensitive tended to migrate to Y!mobile brand. When this migration occurs, from the perspective of ARPU, it will come down. So the overall ARPU is down.
As for LINEMO, the migration from SoftBank brand had occurred. So the migration from SoftBank brand was bigger than the migration from other carriers' brands. The ARPU is a result of all. In the first quarter, there was an impact of JPY 100 decrease in the ARPU. There are 30 million users and there were various migrations occurring and the impact of the ARPU was negative JPY 100. If you need more specific numbers, Mr. Fujihara would be able to supplement, but that's the overview.
To your question about 5G, the -- there are handsets which respond to 5G. So there are more users of 5G. There are a little over 13,000 base stations for 5G currently. Our LTE base stations, we have 230,000. So compared to that, 5G base stations are still small. However, next spring, after the results briefing, we would like to get to the 90% coverage of the population. We want to have 50,000 base stations for 5G, and we would be able to cover that much. And then when we make that happen, we believe that the traffic will be increased through the usage of 5G. We believe that when that happens, there would be migration to the SoftBank brand. So those are the things that we have on mind.
And in terms of 5G, 5G becomes stand-alone starting from this fiscal year. And IoT devices will be increased in number according to our expectations. Out of all of the smartphones, 170 million units are there. And so the number of smartphones is bigger than the population of Japan. But we believe that there would be IoT devices, which would exceed in number of the smartphones.
So how we charge for the services? What kind of business models that we will create? If we don't make a mistake, we believe that we would be able to create a business that would be even bigger than our consumer business. We would like to be careful, but we would like to steadily go towards this direction.
And a question then the gentleman on the front row, on the left-hand side.
[indiscernible] Earlier about PayPay, you said that number of payments is extremely important to become a super app. Can you explain the reason? And what is your sort of intentions -- initiatives to become super app, including collaboration with NAVER?
So among the smartphones, how many times do you open PayPay screen? Basically, that's what it comes down to. So when you open the PayPay app, in the middle, there are different apps, so -- links to other apps. And so this leads to the expansion of economic ecosystem. So basically, they have to use it in order to open the app. So there's a lot of financial applications. So you can do transfer -- money transfer, like what you do in the banks or you can add taxi apps. So there's a lot of different types of apps.
But we believe that the settlement app is an entry point for financial ecosystem. So how much this application is used on a day-to-day basis? This is really critical to us, and that is why KPI, payment -- number of payments, this KPI is extremely important to us. I hope that answers your question.
And what about collaboration with NAVER because I think you mentioned that?
So in order for that app to be used overseas, first sort of a collaboration is necessary. So as a QR code service provider, the greatest of all is Alipay today. And if you look at it from the strategy, Alipay, it's really about how do you expand the ecosystem of Alipay. It seems also that's their focus is on. We believe that -- and there are many friends around the world who have launched the secure code payment service.
Now if we were to just simply use PayPay, then there are a lot of hurdles to overcome. So for example, in Taiwan, there's a QR code payment company like the ones you see on this slide. I'm really going into a details right now, but if the users of this QR code payment come to Japan, they can make payments with this same app at merchants that have already installed payment -- PayPay already. So then they will be able to make all the payments in Taiwan. So hopefully, we can do this vice versa. So our PayPay users will be able to use PayPay anywhere they go in the world.
Now again, we need to get a permit and license from the supervisory authorities, regulators. So I will not be able to go into too much detail, but we want to be both competitive, but develop together this QR code payment ecosystem, and we want to expand this around the world because we believe this is a win-win model. As different carriers cooperated in roaming service around the world, we would also like to build this world of QR code payment ecosystem. So I hope you will look at this as a first step for that.
Now we would like to take 2 more questions from the venue. On the left side, the gentleman in the third row.
From [indiscernible] business, my name is Sato. I have 2 questions. The first question. So compared to the last first quarter, the handset sales had increased. I think that's because you were able to open your stores. So the online sales and online support system, I think, are being promoted. But how are you going to use the online service and the physical service?
The second point is in Ebino in Miyazaki, the 3 carriers are having temporary stores taking turns and the SoftBank employees had gotten the request from the residents on that. So what are the challenges for securing the presence in the local areas of Japan?
The physical stores and online stores, selling the handsets through those channels, we have realized that the customers -- types of customers are quite different in the U.S. There was an increase in the online sales of the handsets. We would like to do online where we can. That's why we are enhancing our online capabilities.
On the other hand, there are customers who would like to go to the physical stores when they buy handsets or change their contract. The mobile phone is digital, but the users are humans who are analog. So even though it adds to cost, we would like to maintain our physical stores. That's our policy. The balance of online and physical stores, I believe, that in the future, online stores will have a bigger ratio. But at this point, we cannot imagine a future where there is no physical stores.
In terms of the maintenance of the stores in the local areas of Japan, we have to think about the cost. We need to have a proper amount of revenue to cover the cost. Of course, we would like to have a presence in the local regions because there is an initiative of revitalization of local cities in Japan and we are asked to do various projects. But one of the bottlenecks of those projects is the low penetration of a smartphone, which becomes the infrastructure for building those platform.
And one of the solutions to that is the joint store that we have created. In order for local residents to benefit from the digital tools, we need to have the residents to have the smartphone to experience the digitization. If the interface on the one hand -- one side is analog, the digitization will be hindered. We want to provide a solution to this problem. We are having smartphone classes in the local regions, and we are harking on that. And one of the answers that has been derived from those initiatives is to retain physical stores. So that's why we have created that joint store in Miyazaki. That's my answer.
One last question, the women on the right-hand side of the room.
Tsukiyama from Asahi Newspaper. I want to ask a question about sales channel. MIC and FTC has requested reexamining evaluation assessment of sales channels like the distributors. What is your policy and comment on this?
So with regards to the scoring of the shops, so for example, if you sold SoftBank brand or Y!mobile brand, there was a difference in scoring. But this has been corrected. We make sure that there's no barriers. So we thought we had built in a place where it's more fair. But day-to-day, we get these guidance from the regulators. So we take this sincerely and we make improvements as necessary. So I will not think we're 100% achieved. But whenever there's a point or something that's been pointed out to us, then we would do our best to improve it. So thank you.
That will be all for the questions from the venue, and we would like to move on to the questions on Zoom. [Operator Instructions] From Kyodo, Mr. Nakajima.
My name is Nakajima from Kyodo. Can you hear me?
Yes, we can hear you.
I would like to ask about the number of subscribers of LINEMO. There were 1 million subscribers for KDDI. And I would like to know how the subscribers are for LINEMO?
So we are not actually -- officially disclosing it. But so compared to 1 million of KDDI, it's still very small. It's less than 500,000. And we have Y!mobile and they have a low price service as well. And what the customers want can be responded by Y!mobile. So there are many who are subscribing Y!mobile service.
So we are not at a point where we can disclose the number of subscribers of Y!mobile, but we now have a cumulative of 7 -- approximately 7 million subscribers of Y!mobile. So LINEMO plus Y!mobile are the number of the low-price users. So that would be a little over 7 million, who are using the low-priced service. So I may be scolded for saying too much, but that's the rough number.
My second question. April to June, the net profit had come down. One of the reasons you cited was corporate taxes. And could you talk a little bit about the background?
Mr. Fujihara is very good at answering that question, so I would be giving -- handing over to him.
Thank you for your question. Corporate taxes, with the LINE consolidation, and also because of investment, there were some temporary things. So half of the JPY 13 billion was from that temporary impact. So half of that is coming from the onetime factors.
Next is Mr. Horikoshi San from Nikkei BP.
This is Horikoshi from Nikkei BP. Can you hear me?
Yes, we can.
I have one question about semiconductor shortage. Does it affect smartphone shipment or building base stations? I'm sure there's an impact. So what sort of risk do you foresee for Q2? And related in June, MIC I think gave administrative order with regards to 5G visitations, how is the progress in that?
So with regards to semiconductor shortage, with regards to our base stations, to be honest, we have not had any impact. What's probably most concerning going forward is that Apple, with regards to iPhones, and in fact, iPads, we're not able to get enough supply yet already. But iPhone, they have already did a press conference on how challenging it is. So we are wondering whether there will be sufficient supply of iPhones going forward.
And also with regards to June administrative order -- administrative guidance, excuse me, I was the CTO, responsible for this business until the end of March. So it was my inability to confirm our target of 10,000 base stations. We have always been checking that. But in this base station opening plan, we had this number of plans, we plan to launch by municipality, and we submit that information to MIC and were licensed accordingly.
So in terms of 10,000, we have achieved the total or we have given the total, but we have failed to meet the number in some areas. And in some other areas, there was in excess. And that coordination was done remotely, but because it was remote, it did not go quite well, and I know this is just an excuse. So I must say that it was my responsible for not being able to manage this well.
But thankfully, and as you had just questioned about the progress since then, so in the area which we failed to build base stations, we have covered it now. And until next spring, we're looking at 90% in population coverage, which is quite an ambitious target, and we're stretching for that. But so far, we're making a good progress. So at this point in time, we're not planning to make any revisions. I hope that answers your question.
Next is from Nikkan Kogyo Shimbun newspaper, Mr. Sito.
My name is Can you hear me?
Yes, we can hear you.
I have 2 questions. The first question is, in the near future, digital agency will be established. I would like to know how your take is for that? And with that, what kind of business opportunities will there be with the establishment of digital agency? What will be your strength? For example, will you be going after the local government projects or central government projects? I think that you have a various line up, including security. So how would you differentiate yourself with the competitors? That's my first question.
Minister Hirai, after assuming his role, we had been having conversation with them about the establishment of digital agency. The Japan is lagging behind in digitization. And I have been concerned about that myself. I talked about the local region revitalization, but we have noticed that the users there don't know how to use the smartphone and there is no smartphone interface.
The government's digitization and the digitization of the users, those have to go hand-in-hand with each other, but there was a gap. The smartphone penetration ratio is lower in Japan. And I think that there was the shortage of effort on our end, who are selling the smartphones. So we want to do our best, so that we can digitize Japan overall, including the population, and we want to contribute to the digital agency.
In moving towards digitization, I would like to speak about what we would like to do. We are lagging behind now, but we would like to first work on digitization of the corporations. That's the first stage. Now there are a lot of paperwork and that should be transitioned to cloud, so that the way of working will be digitized and cloud will be used more. Digital transformation, DX, will start from there. Digital data will be utilized more so that new industry could be created. That will be happening in the second phase.
What we will see after that stage will be digitization of individuals. The individuals would be able to benefit from the digital tools. So that would be bringing about digitization of people lives. I think that's the ideal state for digitization of Japan.
With that in mind, SoftBank would like to provide the digitization from the perspective of telecommunications, inclusive of 5G. And together with the Holdings, we would like to provide the information to the users about how useful the digital technologies are. We would like to help in the linking of the data as the urban areas digitize. So we want to create a design of data interaction and data connection. Sometime this year, we hope that we can share our blueprint for how we accomplish that.
So this Takeshiba building that you're here. there is still -- the digitization has occurred as building OS. There are 1,400 sensors embedded and the building itself is able to have a face recognition of the people coming in and it would be able to lead, guide. The people who come in can be led to the floors of their destination.
So in terms of the digitization -- in terms of the urban OS, that can be done by the local government and the central governments, but we would like to provide a beta foundation that would enable the urban OS. And towards the overall digitization of Japan, SoftBank would like to do whatever it can to help it. So those are the areas where we are hoping to be in. So that's my answer. It was a bit long.
I would like to move on to the second question. The space satellite market, how do you view it? So NTT is working with SKY, Perfect TV, and they have announced projects related to that. SoftBank has HAPSMobile and you have been focusing in this area for a long time. So in the aeronautics, the spatial area, how do you think that the competitive environment would look like in the future?
As for space, we will be working on that in beyond 5G. So we will have a mesh type telecommunications that includes the communication in space. So 6G, 7G, 8G, I think that space will be included in the specifications. We are conducting various researches to prepare for that. I myself had been focusing on HAPS. And the -- so we wanted to -- so we believe that the ecosystem, which is happening on ground is not enough to get to the area where satellite is.
So that's why we have introduced the HAPS business, which includes the stratosphere, which is able to go up to 20 kilometers. So now there is a discussion going on whether space will be included in the 6G. And so the verification of the technology is already conducted, but whether that is economically viable will be considered. So now the design for mass production is being made for the equipment.
If we are able to do a mass production, then we would be able to consider the actual manufacturing through mass production. But at this point, there are many bottlenecks which are regulations. So just because we have a new project, we would not be able to launch it in the following year. So we have to think about the regulations of other countries, and it would take at least 3 years to get a clearance in terms of the regulations. So with that in mind, we would like to focus on HAPS business.
The SKY, Perfect TV, the space data center concept, I think this is great. And AST concept by Rakuten is also great. And by having a lot of players challenging to do new things, new industry will be born. So I am absolutely for having various activities going on in this field. So does that answer your question.
Because of time constraint, we would like to take 2 questions from the Zoom participant. Next is Mr. Ishikawa, freelance journalist.
This is Ishikawa, I'm freelance journalist. So at MIC, they're talking about reallocating platinum band width. So when they will be reallocating this? But Mr. Miyakawa, you have struggled quite a bit with platinum band. So please make -- provide us with your comment on this.
I don't want to get in a fight with MIC. But when we were to be allocated 900 megahertz initially, it took us 6 years. And I've learned quite a lot of things. And during this time, in terms of our frequency, we were only doing -- using 2.1 gigahertz. So without no execute as much as, we use MICs are coming -- come back for a second serving. So we will have actually launched 150,000 base stations, and we will ultimately be achieved 180,000. So that's the timing.
But as a result, in this world of 5G, this is an era of enormous volume -- traffic. So the base stations will be offload and now we have large capacity setbacks. So I think in the end result, I think we have been appreciated.
Now with regards to reallocation of platinum band, I think we have customers among the 3 carriers. I mean, the existing spectrum is being used by customers already. So we have the dialogue with our users as well. So I hope that they will take cautious steps. So that's one point. I did mention that to them.
And secondly, with regards to the base stations, we can build a tower and set up a wireless chain. It's not just sending out radio wave. That's not the end. Every year, there's a software upgrade as much as maybe 2 or 3 times a year to increase our specification. Otherwise, it does not cater to new services. So -- the software sometimes could end up in JPY 10 billion.
So upgrade of such equipment is really for the benefit for the customers to provide better services. But if the allocation deadline is too short in terms of time line, it could affect the service quality as well. So we have also expressed a concern for worsening of the service quality.
But Mr. Ishikawa, you expressed it in same way of reallocation of platinum bandwidth. But it's not that -- what we're really essentially discussing with MIC is that in terms of spectrum itself, if it's given to the carriers, it becomes like a vested interest because once you receive it, then it's renewed automatically every 5 years.
So rather than that, we also need to be able to give opportunities for others to use that spectrum. So maybe somewhere down the road in some kind of a timing, it should be given to others -- granted to others as well. So that's the sort of the nature of the dialogue we're having with MIC. So we're at the table discussing on how and when to realize that.
So it got lengthy Mr. Ishikawa. But what I want to say is that with regards to platinum band, including myself, I really do understand people who want it. But to be able to effectively use that is really -- we have had this history of working, sweating and working hard to obtain it. So I think it's probably not the appropriate discussion because you don't have it, you want it. That's my comment. So thank you.
The last person is from Mr. Masuno from Nomura Securities.
This is Masuno from Nomura Securities. Can you hear me?
Yes, we can hear you.
Maybe my question is overlapping with others. So when we look at all of the segments, the revenue and the operating profit, I think it's well balanced. But in terms of the net increase of the mobile subscribers, it has declined and that concerns me. In April, there was a big competition. And in May, June, July, August, I think situation is calming down. And Y!mobile, LINEMO have created new programs like data carryover and also the new programs for low price plan. And I think that you would be recovering through these initiatives. And do you see that there would be a prospect for increased net increase?
So you're exactly right in your analysis. Up to April, there were many campaigns from competitors. Because of that, we did struggle. But after May, thankfully, we have been able to steadily recover. May, June, July, and now we are in August, and we are now back to the growth path for the net increase up to March 31. The end of this fiscal year, I think that there will be a lot of things happening. But we want to have the capacity to be able to respond to the customers' needs as they change. Now we have a JPY 900 price plan for LINEMO to respond to the customers' needs. So what we would like to do for the full year is to take initiatives so that we can achieve our target. Thank you very much.
Thank you very much. So with this, we end the earnings results for the three months ended June 30, 2021.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]