SoftBank Corp
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SoftBank Corp
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Ladies and gentlemen, thank you very much for waiting. We would like to start SoftBank Corporation summary of earnings results briefing for second quarter of fiscal year 2019. We would like to introduce to you the presenters. From your right, SoftBank Corporation President and CEO, Ken Miyauchi; Representative Director and CTO, Junichi Miyakawa; Board Director, Executive Vice President and CFO Kazuhiko Fujihara.
This briefing will be streamed live on the Internet. Please be aware of that.
Without further ado, I would like to ask Mr. Miyauchi to give you the summary of earnings results for the second quarter as well as the overview of the business. Mr. Miyauchi, please.
Ladies and gentlemen, thank you very much for coming to this briefing session. My name is Miyauchi from SoftBank. I would like to give you the summary of earnings results briefing for the second quarter.
First of all, the sales. We were able to increase it by 32%. Inclusive of Yahoo! and after retrospective adjustment, it was increased by 6%. In all segments, we were able to see increase in the revenue. Yahoo! announced their results on Friday, and their revenue increased: Distribution business increased its revenue steadily, Enterprise business and Consumer business. In all of our segments, we were able to see increase in the revenue. Maybe I have shown you this in the last presentation, but now we are seeing diversification of the sources of revenue.
In your newspapers, there are articles, which says that the consumer markets in Japan is mature, et cetera. The consumer mobile business is growing but we are seeing diversification of the business. We now have Yahoo! on board, Enterprise business, broadband and the companies, which has been acquired by Yahoo!. We will see more diversification of the sources of the revenue and we can rest assured that we will stably grow.
In terms of the operating income, comparing last year and this year, there has been increase by 25%. Post Yahoo! adjustment, retrospectively, there was a growth by 7%, meaning that there is a steady growth. In terms of net income, it increased by 11%, JPY 327.4 billion in the first half.
We are well balanced. As you can see on this chart, in the revenue, we were able to increase by JPY 134.7 billion after retrospective adjustment for the operating income, plus JPY 33.8 billion and net income, plus JPY 12.8 billion. The first half saw a very balanced growth.
In terms of the progress against the forecast for fiscal year 2019, if you look at operating income, we have committed to JPY 890 billion for the full year. And in the first half, we were able to get to 62% in terms of progress. As for net income, the progress rate was 68%. In terms of the profit, we were able to go above plan. There will be a lot of new businesses coming up in the second half. So at this point, we are maintaining the forecast for the moment.
At the time of the IPO, we said -- we talked about the growth strategy of SoftBank. We will grow our carrier business, but we will be growing Yahoo! even further, which is the Internet business. And capitalizing on that power, we would like to further grow the new field of business. We have just begun our Beyond Carrier strategy. It's been just 1 year, but we have seen bearing of some fruits of the strategy that we have in place. We will be implementing our strategy more in full scale going forward.
I would like to dig deeper into the explanation of our telecom business. In terms of the Consumer business, as I have said, it is growing. The sales of goods is slightly dropping, but broadband and mobile has grown. So overall, we have grown 4%.
In terms of the cumulative number of smartphone subscribers, as you can see on this chart, we have 2 brands and MVNO, LINE MOBILE. So we have 3 brands in total, and all of the brands have grown respectively. In total, compared to the end of first half of last year, we were able to increase the subscribers by 1.94 million. We want to get to 30 million in several years' time. Of course, there would be external factors that would be impacting. But we are growing little less than 2 million subscribers each year, so we have been able to see steady growth in this area also.
As of October 1, amended Telecom Business Act has been implemented, so there is no 2-year fixed-term contracts anymore, and now we take no cancellation fee. And there are some people with concern that there may be more cancellation of the contract. And even though I cannot mention on the specific numbers, but there has been no change. Under the new Telecommunication Business Act, we have eliminated the fixed-term contracts. And by looking at the current situation, I think that it was the right way to go for us.
As for the SoftBank brand, we have already introduced unbundled plans. As I have been saying, last year in September, we had already launched unbundled plans. As for Y!mobile, starting from October 1, we introduced the unbundled plan, and we reduced the communication cost as well as providing higher data capacity. So I would like to go a bit deeper into that.
Ultra GIGA MONSTER Plus was launched September of last year. And when I explained about this, I received some questions on this. And last year, we reduced the fee drastically. And I have said that there will be some minor adjustments, and that was exactly what has happened. So you see comparison with company A and B. And if you look at the high-capacity data plan, even though other companies have also reduced the fee, we have maintained competitiveness. So it's equivalent to other companies or we are cheaper than other companies in terms of the 2%, 3% plan. So Docomo and KDDI introduced a new plan, but our number of -- number has not changed and smartphone has grown, and the mobile growth has not been hindered.
From October, in Y!mobile, we launched unbundled plan. I have said that there may be a 10% drop, but by having the unbundled plan for Y!mobile Plan S, the -- there is 12% decrease in the monthly fee. So for [ MR ], well, [ SM ] are the basic plans. And that has been increased from 2 gigabytes to 3 gigabytes and 6 gigabytes to 9 gigabytes, respectively for SM plans. So we were able to position ourselves very well in the market.
In addition to that, you can see the number of samples, but with the existing customers, we carry out customer satisfaction survey. So you have the active users who watch many movies, students, active business persons, their satisfaction level, as you can see here, or first-time smartphone users. Maybe they only need 5 or 6 gigs. For those customers, Y!mobile is cheap and the satisfaction level is high.
With regards to LINE MOBILE, this is mostly for social media purposes. So each of the customers' segments, satisfaction level is high. So as I have been saying from before, brand positioning and marketing have been successful. I think this is a demonstration of our success.
Next, let's look at the broadband cumulative subscribers. With regards to broadband, we have a bit of Yahoo! BBs left, but this is shrinking slightly. And ultimately, we believe it will only be SoftBank Hikari. This is up 12%. So Hikari is progressing very steadily, and we believe that this will continue to grow.
Furthermore, if you look at the Enterprise segment, fixed line is slightly down, but mobile and business solution and others have been contributing, with a total of up 4% increase. In particular, if you look at the business solution and others, in the last 10 years or so, we have been planning, cloud computing or digital marketing, or AI security, RPA, all of these are the business solutions that we have been developing over a decade. This will all be called IoT solutions. And you can see that all of this add up to -- up to 21%. So we believe that Enterprise segment is an area which we can grow significantly going forward.
In light of the situation, there's a service that's receiving a lot of attention these days. Mr. Miyakawa is actually very familiar with this, but this is the Centimeter Level Positioning Service. Many enterprise customers have been inquiring us, and there's about 100 companies and projects in progress. So we will have 3,300 locations nationwide with the SoftBank proprietary reference point. This will be linked to satellite, and there'll be positioning correction. And you can see that the deviation is just few centimeters. This is a service-of-a-kind in the world.
In terms of precision, we are #1, no doubt about that. So this can be rolled out to Enterprise business. For example, we jointly announced with Yanmar, within next few years, all the agricultural machinery like this will be automated. This is much easier to automate than having cars drive automatically on highways or narrow roads. It's easy. But if you go with the current GPS system, there will be unplowed fields. We've done this. And with our demonstration, we know this already. But with this new positioning service, it will be less than 1 centimeter in deviation. So with the positioning information, we will have no unplowed field missing.
In addition to that, inspection service. We believe that drone will become even more active. Even in the United States, you can have delivery service in front of your house with using drone. But you need to have high precision because if you look at the Japanese homes, it's so close to each other that you have to have a very precise positioning. Otherwise, you will have delivery service to your next door neighbor. So we need to look at the rust and deterioration of the base stations, and we've already started implementing that in our base stations. So with drone, we can tell in which area, which base stations are there cracks or damages. And this is also linked to the IoT service. We will be rolling out 5G in the future. So with -- will allow us to inspect infrastructure. Or if we want to build an infrastructure, we can do this in a speedy and low-cost manner. And I know that this will no doubt contribute to that. And this is one of the examples for us to grow our Enterprise business.
So 5G. With 5G, the world will change. The pre-5G service, we rolled it out to the basketball games, [ Mr. Hachimura ] was playing in this game. Each of the carriers are already carrying out POCs, proof of concepts. So we've done this already at Fuji Rock Festival, and we do this in numerous places. So this will be all at once, from now until next March, when the commercialization of 5G will start. And then within 1 or 2 or maybe 2 to 3 years, we will see 5G network around the nation. And when that day comes, it will be shift from 4G to 5G. So with 4G, you saw that explosive expansion of smartphones with 4G, you see movies. So 5G, how will that change? I think the enterprise, the industry itself will be transformed with 5G. So this is why we want to put in utmost efforts.
And now as a carrier, we are providing lifeline services. And we would like to take this opportunity to express our heartfelt condolences to everyone who had suffered from the typhoon. And because of this opportunity, I would like to talk about SoftBank's disaster response activities, especially with global warming.
I think last year, in the West Japan regions, we saw many floodings and typhoon damages. We had Typhoon #15, 19 and 20, which brought about enormous amounts of rain. And we are truly implementing disaster countermeasures.
In particular, in order to provide network response plan, we are strengthening nationwide network centers. So in critical sites, in operation, we will have more than 48 hours of operation during the power outage. And also, we will have fuel stockpiling where you can use gasoline to generate power in case of power outage. And we will also have action plans for base station power outages, and we will have various solutions for recovery. For example, satellite, antennas and different measures. So we have been able to really build up on ability to counter disasters. Even in the recovery activities in Typhoon 15, it was Chiba prefecture was hit by it.
And because we are close by, we tried to go there right away, but the roads were blocked. So we're taking lessons from that. Typhoon #19 was about to hit Japan. Two days before the typhoon came, in the path of typhoon, we established mitigation headquarters where we sent engineers. And this team has been led by Mr. Miyakawa. So more than 10,000 staff were in action, including our partner companies. Aside from that, we provide a free charge service, free Wi-Fi service and other support measures.
In any case, our job on one hand is to be responsible for social infrastructure as a carrier. I believe that -- I believe there's a possibility that we may be hit with other disasters next year. So I just want to make -- let you know that we will continue to strengthen our disaster response. Every time typhoon hits and there's a disaster that we need to spend an enormous amount of money, but it's important that we're always prepared and ready to counter that. So this is a situation with the telecommunications business.
So let's move on to Yahoo!. Yahoo! announced their results and the stock prices have gone up today. It's a very good thing. In terms of Yahoo! Business, as you can see on this chart, media, commerce, both included in total, revenue grew by 4%. If you look at the Yahoo! Japan monthly logged-in user IDs, that has exceeded 50 million. Last year, in Q2, it was around 45 million. And this fiscal year, it has exceeded 50 million. They have become the subsidiary of SoftBank. And the users of SoftBank and Yahoo's e-commerce, there have been a lot of synergies and that synergy led to this growth.
In Yahoo! Business, the media business. So I talked about IoT and enterprise. I said that there is a room for growth. In the area of digital marketing or in the area of digital transformation, that -- in that -- the era is almost there. So SoftBank's Enterprise team and the Yahoo's sales team have created the Yahoo! Service Promotion department. And we are looking at various Japanese industries, starting from big companies in Japan, and we will support the digital marketing of those companies.
In the data, there are a lot of data like CM or the other media. And in the area of IoT, there's device management and the -- device management, so things will be connected in the area of IoT. So how data will be utilized will be critical. Arm Treasure Data, which is our group company. And Treasure Data and Hakuhodo have created INCUDATA, and enterprise digital marketing will be advanced. So PR, advertisement, existing services will go digital, and Yahoo's media business will play an important role in that. And together with Yahoo!, SoftBank will be providing total solutions. I believe that the full-scale service will be starting from December, but we are ready now.
So in Yahoo! Shopping, we have -- so there are 15 million of the SoftBank users have linked their ID to Yahoo! Shopping. And going forward, for Enterprise, the Yahoo's tools will be used for digital marketing for the Enterprise customers. In that sense, e-commerce is steadily growing. And in the first half, we have been able to see 12% increase. We have just started it, the PayPay flea market, PayPay mall have been started. PayPay flea market will come near the top of the iPhone app. So, of course, the top is PayPay, but these things will be expected to grow.
So Taobao and Tmall is operated by Alibaba, and we would like to have Yahoo! Shopping, PayPay mall and PayPay flea market in our group, just like Alibaba is doing. And so there is [ deployment on ] PayPayPay project going on, where the point reward is made in the amount of 20% maximum. And so there's active deployment of e-commerce across reorganizations. Yahoo! is, of course, neutral but SoftBank services will be linked to this project, and this is bringing about very interesting advantages for our customers.
So Zozo is aimed for the consolidation by Yahoo! and tender offer is in progress. And the tender process will -- is expected to end on the 13th, but Zozo is a fashion e-commerce. And the various analysts from overseas were very interested. I recently went to an R&I roadshow overseas, so I believe that we can create a very strong e-commerce by having Zozo. We want to become #1 in Japan, and we are working towards it.
Last but not least, I would like to talk about the growth in the new fields, new areas of all business.
Smartphone payment service, PayPay. I was in Kyoto yesterday. And in Kyoto station, I tried to buy a bento box and PayPay was enabled there. And also, I went to Matsuyama and I was able to pay with PayPay in the airport of Matsuyama. I was very appreciative of that fact. So PayPay has a very strong power now nationwide.
So the most updated figures. It is 19.2 million in total in terms of the registered users. And I think around August, it was 8 million, but -- and has grown very drastically. It has been 13 months since the start of the service, and Yahoo! Japan, a SoftBank -- and SoftBank group, we have all worked together for this joint venture. And we were able to be prepared for the hike of the consumption tax from October 1. The cashless, cash back incentive may be working, but I think that through the various initiatives that we have been taking, people are familiar with PayPay.
The number of usage per month has doubled since last month. So this growth curve is quite steep. So when we do campaigns, so we always say that we have to increase the capacity by 10x. So the growth is very drastic.
In terms of the QR code payment service, the intent of use by the users. In the past 3 months, we have been able to grow very drastically. In the last 3 months, so we have seen very handsome growth. And in terms of the intent of use for cashless payments on a daily basis, when we have looked into this, the number of people who said they want to utilize cashless, probably because of the cash back incentive increase of -- we have seen increase of the intent of use of cashless payments.
In the past, people were accustomed to paying cash, but that's changing. And PayPay has enabled us to grow, and SoftBank -- and for SoftBank and Yahoo, PayPay will be our super app. And through the super app, we believe that we can conduct various kinds of businesses.
So in the awareness survey. So if we include all of the credit cards, it's 41%, but the 31% of the people say they want to use PayPay. So PayPay is a tool to use in terms of the cashless payment, and it's exceeding the company's -- the railway complex transportation company's e-money. So we are growing very steadily.
In terms of functions, we're seeing increasing use of utility bill payments. So we believe that PayPay can be used in the future to pay taxes as well. So it can be used to pay bills for electricity, gas, water, tax, et cetera.
And recently, we have been licensed by FSA to do a fund transfer business so we can now provide withdrawal service and money transfer service. So this will continue to develop as a super app. Simply put, as you can read from this page, the red services here. So we have all sorts of services. But what's in the red print? We started with offline. And from August, we started online, such as Yahoo! Shopping. And then recently, we started on utility bills payment.
We have already started the P2P payment service from the beginning, but we believe that where we have the most potential for growth is the gray shaded area or gray print area. We call this app financial, Alipay, that's their world. It's the same thing. So it's post pay or pay data, or small loans, insurance, these are the money management services. Maybe once the number grows to 30 million, 40 million, we will be able to add these new additional financial services. And as a super app, we will be able to advance into the world of fintech, so we -- please look forward to this.
Now every day, and I cannot speak about global business, but we are seeing a lot of negative reportings about WeWork. But actually, in Japan, it is doing extremely well. And this is the business that I [ found, from the ] bottom of my heart, glad that we carried this out, we started this. It's only been 1 year and 7 months we started. This is the share office model, and we have already 17,000 members. And WeWork Japan locations now expand to 23 locations in 6 cities. Most of these locations, we have people who are waiting for cancellations. Nihonbashi, we started in August is already full house. Toranomon, we started in October, but it's already full. Hyogo and Osaka, we are still yet to have tenants come in. But in Japan, it is growing very steadily, and there's more room for expansion.
And the customers, the tenants who are using this service are extremely satisfied. It could be SoftBank Enterprise business, it could be SoftBank new businesses, but they have offices in all of our different locations. PayPay only started with 30 staff or so. They have about 2,000 employees today. So they have to move around one after another, and it's easy to move offices. So in that sense, WeWork is progressing very nicely.
Next is DiDi. This is also a new business model in Japan. It's a taxi-hailing platform. If you look at the number of downloads of the app, it's only been a while since we started. From July, we continue to be #1, 3 consecutive months. In terms of number of contracted companies, 333 taxi companies and SoftBank have signed contracts.
It's not nationwide yet. As you can see from the next page, we have 16 cities as of October, and we plan to expand to 20 cities by the end of 2019. We started in Osaka, Kyoto initially. And now, Tokyo and Sapporo. The pace of expansion is very rapid. So DiDi is a very profitable model in China already. And I think in Japan, you can have a lot of expectations for this business as well.
In particular, DiDi is a very convenient service for the Chinese visitors. You can switch easily from Japanese singles to Chinese. So you can just use it in Japan, even if you download it in China. So this is another business we want to continue to grow.
Next is OYO Hotels. Again, we're seeing some negative news about OYO Hotels. I want to explain that as well. On October 23, we announced a full-scale launch. It's called OYO Hotels Japan. But actually, starting back from April, we have done a prelaunch. There wasn't an app yet, but in [ Jagran ], [indiscernible] we have done prelaunches in these online booking sites. And today, we have more than 5,200 guest rooms. So in one stage, we have come up to this level. And for 6 months, we are trying to demonstrate to see whether we can do this for [indiscernible] for full scale. And so now, we have the OYO Hotels app and you can just use it as it is. So we will launch business operations in 39 prefectures.
By the way, in the beginning, and this is the average of month 1, 2, 3, 4, but the occupancy of the hotel -- so not vacancy but occupancy. So initially, the hotel's average occupancy is usually 42% or so. And then after 4 months, it's 84%. This is the same with DiDi. When I meet with the regional taxi companies, because of DiDi, they are very grateful to me.
Their actual vehicle ratio is like 50%, 60% initially. But now it's much higher. So the room occupancy rate was only 42% or so, but now it's like 84%. So same with the DiDi model, OYO Japan, the fact that occupancy has come more than 80% is -- in Japan, it's at 1.43 million rooms, they say. And maybe the top-tier hotels don't need to be part of OYO, but the mid-level hotels who lack systems, we believe that we can quickly recruit and have them join OYO Hotels.
So in addition to the app, we have ability to book from various online sites. This is like digital marketing that I have explained earlier. By using OYO app -- by implementing OYO app, we can have users migrate from these different online booking sites. So the hotel's digital marketing capabilities will be enhanced through DiDi. I believe that our job is to assist them with that.
This is the collaboration with SoftBank Vision Fund Investees. So we collaborate with these investees that we believe will be successful in Japan. We will continue to do more and more of that, but we will continue to also engage in other new businesses to expand our entire business.
The 3 lines of business here. We will grow our core business as a carrier, the telecom business, but we will also continue to build up on new businesses. We will be able to grow our Internet business, our industry business. This is beyond carrier strategy. And with this, we will be able to increase our revenue and profit.
So growth and return. We will make sure that we pay back to our investors with dividends. So it will be a balanced strategy. So with this, I end my talk. Thank you so much for listening.
Thank you very much. We would like to move on to the question-and-answer session. Those of you with questions, we will be bringing you the microphone. Please state your affiliation and your name before posing a question. We would like to take as many questions from as many people as possible. We would like to limit the questions to 2 per person at max. Please raise your hand if you have any questions. In the right block in the first row. Please ask your question.
My name is [ Igawa ] from Nikkei Newspaper. There are 2 questions that I would like to ask you. The first question, the full year forecast. You have maintained the current forecast, so the -- up to the second quarter, you have been doing very well, but you have maintained the current forecast. So what are the items that you're considering for the full year? That's the first question.
The second question, up to September, in terms of the competitive environment for mobile business, the device sales compared year-on-year, I think it was behind. Is it because of the rule change and you had conducted the -- you have decided to reduce the price for devices up to September in order to capture the customers? Is my understanding correct?
So the first question about the full year forecast. The progress is -- excuse me, OI is for 62% and for the income, 68%. So in terms of the progress, so you may think that we may grow more than we have forecasted. We would be able to achieve the committed figures, but of course, we are eyeing on new investments for new businesses. So that's why we have decided to go conservative. So currently, at this point, we would like to maintain the forecast as is.
So you are forcing the investment into new businesses.
Well, we are thinking about this comprehensively. We don't know what will happen in the future. So we are always allowing ourselves some room so that we would be able to do what the consumers want us to do. Until the end of September, the -- because the new law was implemented from October 1, the discount level has changed. And from October 1, it's completely unbundled. However, we did not conduct proactive initiative to capture the customers by the end of September.
But because of the competitive environment, when Docomo and KDDI had conducted their own initiatives, we had to conduct various initiatives to counter their initiatives, and iPhone 8 had seen discount of JPY 60,000. So we were aggressive in that sense. But it was not conducted because of the implementation of the new act from October 1. So that was not our intention. Does that answer your question?
Any other question? The second row from the front in the middle section.
[ Huga ] from Bloomberg. Earlier, you said that WeWork is doing extremely well. So I have a question about that. So the business you have in Japan is a joint venture. Is this profitable at this point in time?
When we say it's profitable black ink -- I guess in a true sense, it's not in black ink yet.
EBITDA basis?
Oh, no, maybe you should say.
Excuse me. With regards to WeWork, we don't publish the numbers, so it's difficult for us to give you the specific details. But if you look at it by property, it's a very high occupancy rate. So we already can see breakeven in horizon. And once it reaches a certain scale or once the sales activities are stabilized, then we will be able to stabilize our performance.
So we can probably be profitable, turn into black ink in the near future.
So 6 cities in 23 locations, within 1 year, what's your projections on your expansion?
So it's 17,000 today. So in terms of number of membership, we believe that we can expand up to 30,000.
Also, in the United States, because of the governance issue and also the performance issue, IPO has been postponed. Has there been any changes on capital structure as a result of that? As far as I understand, the U.S. has 50%, and the rest of the 50% has been held by SoftBank Group and KK. So in -- from the perspective of governance and also from the perspective of maximizing profitability, now that you have decided, do you have plans to expand this business? So the share, the structure -- change the share structure?
I am not in a position -- or it's not the right timing for me to share about this and talk about that. But at least I can say that the business in Japan has always been a joint venture from the beginning. So the structure of 50, 25, 25, in that sense, is successful. And I believe the U.S. side believes that it's also successful in Japan. So I think the style will be continued. That's probably the right way to look at it.
And with regards to the overseas situation, I'm not in a position to make any statement. So I can only ask -- answer questions about WeWork Japan.
The next question please? In the central block, in the back, lady in the back.
From Asahi Shimbun, my name is [ Murayi ]. I would like to ask about 2 -- PayPay. I have 2 questions. One. You said that you will go to the fintech area when you get to 30 million or 40 million. And what is this 30 million and 40 million? My second question, you gave an example of anti-financial. So anti-financial has a very big impact in the credit score and you have Yahoo credit scoring. And in PayPay, would you be utilizing the credit scoring capability as well at this point?
So 30 million to 40 million, well, I said too much. So I don't know what will happen in the future. But if you look at October, 5 million -- was it 4 million? So there was increase by 4 million users. It's a user -- number of users. So 30 million to 40 million, it's -- I was referring to number of users, the people who use PayPay, the registered users of PayPay. Every month, we are seeing steady growth of the number of registered users of PayPay.
This month, because we are conducting various kinds of campaigns, we are seeing increase in the numbers as well. So 30 million to 40 million registered users, I think that we will see that in the future. Maybe we would not be seeing increase by 4 million like we have seen in October. However, I believe that PayPay will be utilized even more. We have 1.5 million stores who enable the payment of PayPay, so there is a synergy in growth.
When we get to certain scale, the registered users will start utilization of the services like postpay, which utilizes fintech for example. I think that we would be able to consider various kinds of services when we get to that point.
Could you answer my second question?
To your second question about the credit scoring, we have joint venture with Mizuho Bank. It's called J.Score. We are already conducting the credit scoring service in J.Score. There are, of course, privacy issues, and there may be some concerns posed by people here. But the people -- the SoftBank users who are changing their handsets very frequently, we have that kind of information. So it's a joint venture. So we are hoping that we would be able to have the similar kind of joint venture with Yahoo. And in the case of J.Score, the interest rate differs person by person, 1%, 5%, 7%. So I think this kind of services can be done in PayPay as well.
The fourth row from the front. The gentleman in the right-hand block.
[ Yunosawa ] from Yomiuri Shimbun. One question. With regards to handset sales, if you look at the material, fees and commissions have increased because you have carried a proactive sales activities. Meanwhile, the handset sales, the units have fallen. Now handset sales, do you just say that the profitability have deteriorated for handsets business?
The handset sales itself did not have much upgrades. So that is why there's a decline. But in terms of acquisitions, so new acquisitions, there's -- it's been steady. So if you -- there's an increase of sales cost.
So in other words, we have new and upgrades, and we're always closely monitoring that. The new users -- so we said 1.9 million handset smartphones have increased this last year, but there's a slowdown in upgrades, I believe, that's the portion. The upgrade cycle is prolonged, so upgrade sales have been declining.
We would like to move on from the central block in the middle of the first row, the gentleman.
My name is [ Ishino ], freelance. I have 2 questions. I would like to ask about the handset sales, follow-up question. After October 1, after the new act was implemented, a revised law was implemented, was there any break to the sales of the handsets? Or is there not much difference? Or has there been change in the sales of the handsets like higher end to middle end change? The second is Tokusuru Support, which has been revised from 50% support. The other companies, including KDDI, have decided to go to 1/3 support and changing from a 4-year installment to 3-year installment. And you still have 2 years out of the 4 years, and I was wondering if there's any initiative that you are conducting following the other competitors.
In terms of the sales of handsets after October 1, the new handset sales have decreased slightly, in particular, higher-end brand. In terms of Y!mobile, the lower-priced handsets are selling steadily. However, the liquidity has gone down. So the 3 companies have been sharing the customers through the MVNO. The number of cancellation have gone down also. So overall, the liquidity has gone down.
But in September, it was very different from other Septembers. So there was a huge number for September, and also, there was a consumption tax hike in October. So it's very difficult to make judgments just looking at the October figures. But in the next briefing of the performance, we would be able to a clearly state how the implementation of the revised law impacted our business.
In total, our enterprise business is doing very steadily. So in total, the number of smartphones did not see significant decline in terms of sales. Tokusuru Support, it's 50% of the price support, and the media as well as the critics have criticized our plan. I hope that you understand what we are trying to aim for. Tokusuru Support, the -- this may solicit some misunderstanding in terms of the naming, but we are having communication with MIC on an ongoing business. So the -- so it's a residual value guarantee program for the 4 years, and we would like to continue that.
I would like to explain to you why. So we are continuing with Tokusuru Support. I would like to emphasize that there are close to 0 user complaints. The higher-priced handsets, well, not all but 80%, so the 50% support before the unbundled plan. And the Tokusuru Support, which came after the unbundled plan, the ratio of the customers has slightly gone down but not much difference, meaning that for customers, when the customers want iPhone 11 Pro, rather than buying it in lump sum, they would buy it in a 4-year installment. And with the residual value guarantee, they would be able to get the service when they try to upgrade. So towards this plan, there is support of the customers. But as I have said, I think that we have invited the 50% -- invited misunderstanding through saying that it's 50% support, so we have had communication with various experts to revise the areas where -- which caused misunderstanding. So we would like to continue this service.
Any other question? The gentleman in the very front row on the right-hand side.
[ Imahi ] from Nikkei Shimbun. Two questions. First question, I want to ask about shift from 3G to 4G. You're carrying out the campaign, Docomo, just the other day, I think said they will stop on operation in 2025. KDDI has also announced this. So what is the timing for you? How much are left? And what -- how long would it take for you to migrate?
And second point is with regards to the disaster response. From last year, we see large disasters, one after another, including typhoon. I know that you -- there's been disruptions in telecommunication as well, and I know that you have been able to quickly recover. And I know that you are collaborating with the government as well. But what are some of the challenges, issues you face as a carrier, not just your company but as an industry, the carrier sector?
So the migration from 3G to 4G, at the appropriate timing, we will announce it. But at this point in time, we still have large customers. We have enterprise customers, and we are still in the process of discussions with MIC, Ministry of Communications. So we, at this point in time, are not able to say when. But in any case, it will be a shift to 4G or even 5G, so at one point -- at some point, we will announce it.
Your second question about disaster response. Mr. Miyakawa is the head of the headquarters for disaster response. I will let him talk.
So disasters, I think every year, we're continuing to see that the size or the scale of the disaster is much more than we have expected, so the 3 carriers need to collaborate in case of emergency. When there's a large-scale incident, we [ lend 30 ] fiber -- optical fibers or we lend each other vehicles for disaster responses as well. Sort of we share goods together. We've been doing this from the past, but I believe that something that's happening in Europe. So multiple operators are using one single code. They launch that. So whoever the base stations may -- that's remaining, that's intact, remains, whoever it belongs to, all the carriers will be able to connect to the network.
And I think that carriers in Japan need to have a discussion about that. And also battery, cars, power source, vehicles, we need to have different responses. But I think the greatest challenge is the workers, the engineers, they all go to the same place all at once. It would be nice if we can optimize it, this manning, so that we can distribute the engineers and the workers in a balanced manner, and that will be more efficient. And we are in discussion with the partner companies about this.
We would like to move on to the next question in the left block in the first row.
My name is [ Sam ] from Reuters. I would like to ask about WeWork. The parent company level in the U.S., there's an understanding that there is a restructuring going on by SoftBank. But in WeWork Japan, are you conducting any kind of restructuring in order to accelerate in order to be profitable faster?
So WeWork Japan, there are only small number of people there. About 240 people working very efficiently in that sense. Rather than restructuring, we need to increase the number of staffs. Also, the occupancy is quite high. So as strategy in Japan, what we have been communicating with SoftBank enterprise team and the WeWork team is that they have been eyeing on good buildings. And recently, there was announcement of having WeWork at 4 floors of the new building in Shibuya. So for the good properties, as soon as we announce it, it will be filled with occupants. So for WeWork Japan rather than restructuring, we need to increase the number of people.
Any other questions? Then the gentleman in the very front in the center block.
[ Murayi ] from Shukan Weekly Diamond. I have some clarifications on your financial performance with regards to Rakuten. So Rakuten decided not to announce the rates in October. So they're starting out small. Miyauchi-san, you talked about the unbundling plan, and you talked about you want to pay attention to what Rakuten does. So Rakuten did not announce the rates. So how did that impact your performance? Your progress was good. So you did not have to lower the rates. So is that a better progress for you? And with regards to projections, you did not have to lower the rates, which you had expected to do. So maybe give you some headroom. So can you share about that?
With regards to Rakuten, I cannot speak about our competitors. But according to Nikkei's article, Rakuten wanted to announce a large capacity, JPY 3,000, and I don't know. But what I can say is that we don't know what rates they will announce, if they have different strategies in mind. But as I've been saying over and over GIGA MONSTER, GIGA MON Plus, these are large capacity plans. Ultra MONSTER Plus, these are becoming powerful products. And at the same time, it's less than 10 gigs. Y!mobile is progressing really nicely. So regardless of the pricing of Rakuten, we believe we can compete with our 3 brands.
Of course, we may need to fine tune because this is a competitive landscape. But what we can say is that just because Rakuten didn't announce -- this is how we are. I'm not -- that's not the situation. Starting back 4, 5 years ago, when MIC decided to advance MVNO, we launched Y!mobile, so that we will not lose out in a competition against other MVNOs. And as a result, Y!mobile continue to grow. And of course, there were times where it was difficult, but now we were also expecting large capacity world. So that is why we decided to drive SoftBank brand in that direction. So in that sense, we know that Rakuten will announce different tactics or they will have different plans, but that's not something we can speculate on. So I believe that we can capitalize on our 3 brands, we can easily -- we can fine tune against it.
And also about competitors. So Rakuten this is the fourth carrier in this industry. The -- they said that they were not able to start on a full scale from October 1, and KDDI said that it was expected. So as a carrier, what is your perception?
Again, I can't speak lightly about this subject. It's difficult to answer that question just in one word. All the engineers knew about this, maybe May, June, even before that because base stations require construction. So construction is the key. You can do network virtualization, and of course, that's the core discussion. But ultimately, you know how hard we had to work on, we struggled. Mr. [ Song ], in a place like this, he was always criticized about the poor connection. And looking back, I think we were criticized for 7, 8 years in a row, poor coverage in the rural cities, in Ginza, in small shops, back of the room, you can't get connection. People complained about that for 7, 8 years.
So what is most costly? It's the tower construction. It's the negotiations to get a site for building base stations and really constructing base stations and also backhauling. You have to connect it with optical network. So when you take into account all these different elements, this is a big task. It just so happened that with YBB with ADSL mobile, we have maybe 2,000, 3,000, maybe 4,000 base stations, cell stations. And we used that to connect the last mile with metal or copper. And this was where we really struggled but -- so you have the challenges for backhaul.
And then we purchased Vodafone Japan, and we only had 15,000 base stations. People talked about poor coverage. Now we have this enormous connection. So I can't speak for others. But when you take into account all the struggles that we've gone through, it's not an easy job and engineers know this.
So unless they have a completely different way of doing this, maybe HAPSMobile, you can drop it from the sky. If they can do that, maybe it's a different story. But that's a future technology. So you have to build a base station. That's the basis. So Rakuten will need to work on it for many years to really build it out. Anything you want to talk about? Is that all right?
Because of the limitation in time, we would like to take last 2 questions. So the first question goes to the central block in the middle from Bloomberg.
My name is [ Huga ]. I would like to ask about share prices. So after the IPO, it's been a year. And in September, you were able to get to JPY 1,500, which was the IPO price. And today, the -- it was JPY 1,499. And the individual investors had expected that there would be increase from JPY 1,500 when they bought it. But what is the reason why you were not able to go beyond JPY 1,500? So diversification of the revenue resources and the enterprise business, growth, you have talked about those areas of growth. But what -- how do you view the current stock price and the prospect for the future?
As for the stock price, I would not be able to speculate the future. We went beyond JPY 1,500 in August right after the announcement of our results, and there were days when we were above JPY 1,500 and below JPY 1,500. And on average, I think after August, we have been able to exceed JPY 1,500. So JPY 1,500 is not our goal. So it's the IPO price that we had last year. But our focus is to improve our business results so that we can make our shareholders happy.
And I believe that we can accomplish that. The performance of our business was quite good. And as I have been saying, we are not eyeing just on the carrier business. In smartphone -- on top of smartphones, we want to have various businesses, and we want to work on new businesses as well. So comprehensively, we can work on the businesses that we have in place. I think that we would be able to get our stock price level where the shareholders would be happy. That's my belief. I hope that answers your question.
Then this will be the last question. Left block, the gentleman in the middle.
[ Suzuki ] from Nikkei Asia Review. I want to ask you about OYO Hotels business, which you carry on a joint venture basis. You said that it will be full scale going forward. So since the announcement in April, 6 months have passed. How did you feel for this business? And also, in this business of hotel business, hotel services, how are you going to provide services to this business?
Again, this a joint venture business. OYO 50%, Vision Fund 25%, we have 25% stake. It's a joint venture business. In that sense, we started from April. The full-scale launch is October 23. And -- but they're quick to move. So in 39 prefectures, we have more than 160 hotels. But if you just go with the number of hotels, I think we're publicly #5. But each of the hotels are small hotels. So in terms of number of rooms, it's 5,000 plus.
But where you really need to pay attention the most with OYO business is the occupancy rate. So you use OYO's operating system, you use OYO's education system. You renovate using OYO's taste, and you manage the hotel with digital managed marketing and with IT system. Through this, occupancy rate was maybe 42% on weekends and maybe 20-some percent on weekdays, could be increased to 60%, 70% to 80%. Then the hotel owners will be very happy. And at the same time, OYO Hotels Japan will be able to gain profits from those. So in that sense, it has a big potential.
So I believe maybe next August, there's Tokyo Olympics and Paralympics, I think maybe we had 30 million inbound tourists this year and maybe more next year. And there's just lack of hotels in Japan. So we need to revitalize the hotels, some small- to medium-sized hotels. And hopefully, we may be able to contribute to the revitalization of the regional areas, rural areas. So with the power of IT, we can revitalize 0 IT hotels. So this is where we can have big expectations going forward.
By the way, as SoftBank, what sort of support do you plan to extend in the future?
Well, when we say support, this is a joint venture, so it's an independent business as a joint venture. But our new businesses like PayPay, so we can provide different special points or privileges to the users of PayPay or it could be linked and collaborated with DiDi, the taxi hailing service. So these are different benefits that can be offered by SoftBank, KK. That is all. Thank you.
Thank you very much. With this, we would like to conclude the Q&A session. This will conclude SoftBank Corporation summary of earnings results briefing for second quarter fiscal year 2019. We will be showing the -- this briefing session on video on our website on on-demand basis. Thank you very much for coming to the briefing session for this quarter 2 results. Thank you very much.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]