SoftBank Corp

TSE:9434

Earnings Call Transcript 2023-Q2

[Operator]

Thank you so much for waiting. We would like to begin SoftBank Corporation earnings results for the 6 months ended September 30, 2022.

We would like to introduce today's attendees SoftBank Corporation, Representative Director and CEO Miyakawa; Board Director, Executive Vice President and CFO, Fujihara.

Today's presentation will be broadcast live via the Internet. Now Mr. Miyakawa will now give an overview of SoftBank's consolidated financial results and business overview.

[Junichi Miyakawa, executive]

This is Miyakawa. I would like to present our second quarter results. Revenue was up 3%. Revenue by segment shows increase in all segments. Operating income was down 13%. By business segment, the consumer business, so a 13% decrease in profit due to the continued impact of price reductions. The impact of price reduction was about JPY 50 billion in the first half, but is expected to shrink to about JPY 40 billion in the second half and is expected to bottom out the fiscal year and decline further.

The Enterprise business segment, which itself performed well, had a 4% decline in profit due to some special factors in the Yahoo! JAPAN/LINE businesses. Mainly due to increased costs from strengthening personnel equipment and increased sales promotion expenses, profit declined 14%. Net income was down 23%. This was due to a decrease in operating income as well as worsening financial expenses related to write-downs on investment securities and litigation.

As shown in the summary, revenues were up, but profits were down. As announced, the consolidation of PayPay was completed on October 1. We are now able to see the impact of the consolidation and would like to share it with you. Since PayPay became a consolidated subsidiary from an equity method affiliate on October 1, we remeasured PayPay's corporate value. As a result, we will record a remeasurement gain of JPY 294.8 billion in the third quarter. Amortization of intangible assets of JPY 26 billion is planned to be recorded in the current fiscal year.

The total operating income for the first half of the fiscal year, including this impact is JPY 767.4 billion. Therefore, we announced in May, we are 77% of the way to the full year operating income forecast of JPY 1 trillion. As mentioned, we are making steady progress toward our forecast. Therefore, we have decided to revise our operating income and net income upward.

The new operating income forecast is JPY 1,050 billion, and net income is JPY 540 billion. This is the breakdown by segment. We have lowered our forecast for the enterprise segment by JPY 9 billion because we have recorded a provision for litigation, which we did not anticipate at the beginning of this fiscal year. The Financial segment will be newly established from the third quarter, so it is included in the forecast from this time onward, I will elaborate later.

To summarize, we are making a steady progress towards achieving our management goals of JPY 1 trillion in operating income this fiscal year, generating JPY 600 billion. And free cash flow, we are progressing well toward a V-shaped recovery.

Now about the segment, let me start with the consumer business. Revenue mainly driven by electricity business, we saw 1% increase. Operating income due to mobile service price reduction impact, it was down by 13%. Impact of service price reduction makes it harder to do the business in terms of operating income, but thanks to sound smartphone cumulative subscribers numbers, which was 7% up. And for mobile subscriber net additions, smartphone net addition increased by 28% year-on-year and main subscriber net additions increased by over 300% year-on-year. In terms of mobile number portability, we see more inflow from other carriers than losing our customers to other carriers.

For Consumer business, full year operating income progress in the first half of the fiscal year, it was 66%. Last year, it was 57% compared to that. We are doing well because of the good progress, we thought about revised our forecast upward for consumer business. However, in order for us to be well positioned for competition in the latter half of this fiscal year, we decided to have a full year forecast at JPY 480 billion remained unchanged.

For mobile service price reduction impact compared to last year, we saw JPY 24 billion in terms of impact from mobile service price reduction. However, it's been smaller and smaller. And looking at by the year, for this fiscal year, we are looking at the negative impact by about JPY 90 billion. But next year and onward, we expect to have it improved. So we are beginning to see the light at the very long tunnel.

And for Enterprise business, revenue was up by 3% compared to last year, primarily driven by Business Solutions business, which was up by 13%. Operating income was down by 4% and which was unfortunate. However, as you can see, there are 3 major factors behind the decrease. Business is going well. So excluding those onetime impacts, we would have seen 4% increase in terms of enterprise operating income.

Solution business like cloud and security, we saw increase by 11%. So it's been enjoying steady growth. As the foundation continues to expand, it's going to be a great foundation for enterprise future growth.

Now Yahoo! and LINE business. Revenue was up by 5%, thanks to Commerce business. And operating income was down by 14%, primarily due to cost for future growth like hiring and marketing. E-commerce GMV was up by 6%. As you may know, Z Holdings had financial results announcement 2 days ago, so I'm not going to go into detail here.

Last but not the least, I would like to explain the newly established financial business segment starting from the third quarter. First of all, the company is included in the financial segment are comprised of our direct portfolio companies. In addition to PayPay and PayPay Card, 100% of payment service provider, SB Payment Service in which we hold a 51% stake PayPay Securities. These are also included. PayPay Bank and financial companies affiliated with LINE are not included.

First, I would like to explain about PayPay and PayPay Card. The number of registered PayPay users reached 51.21 million at the end of September, a 21% increase year-on-year. As for the users, we plan to accelerate the expansion of the number of users by deepening the linkage between PayPay and LINE going forward. The number of payments, which PayPay considers the most important, increased 43% to JPY 2.38 billion and GMV also increased 43% to JPY 3.5 trillion.

GMV expansion and the start of charging margins resulted in a 128% increase in revenues to JPY 53.2 billion. As a result, PayPay's EBITDA has steadily improved. And in the first half of fiscal year 2022, it has been reduced to minus JPY 10 billion.

I would like to talk about PayPay's initiatives for future growth. As I've mentioned before, for fiscal year 2021, SoftBank users accounted for 43% of PayPay's GMV. PayPay as a universal service and mobile users from other companies account for the majority at 57%, but considering that SoftBank users account for about 1/4 of the total, I think, you can see that we were able to successfully send customers from SoftBank to PayPay. We will continue to leverage SoftBank's customer base in various ways to accelerate PayPay's growth.

As announced in July, the transfer of the credit card business from Yahoo! Japan to PayPay was also completed on October 1. From now on, PayPay and PayPay Card will work together to achieve further growth. The strategy is to integrate PayPay and PayPay Card into a seamless service to promote the use of both QR payment and credit card payment and increased GMV per capita.

Next is about SB Payment Service, which we haven't explained in detail so far. So let me take some time to explain it in detail. First of all, this is engaged in the business of providing a comprehensive range of payment services, such as credit cards, e-money and QR codes to online retailers to real stores. The volume of transaction has continued to grow at double-digit rates, reaching JPY 5.3 trillion in fiscal year 2021. This company was initially established to reduce the cost of intra-group settlements back in 2004.

Although most of our business was telecommunication bill settlement at the time of establishment, we have expanded our business beyond the telecommunication domain since 2011. And now our non-telecommunication domain is growing at a rapid 31% annual growth rate. So the performance of this business continues to grow as GMV increases with operating income of JPY 9.4 billion in fiscal year 2021. This company is profitable, and we expect it to continue to grow even further. The future growth strategy is to increase the number of merchants and increased GMV per merchant.

In order to increase the number of merchants, we will strengthen alliance with PayPay and our Enterprise and Distribution businesses to increase GMV per merchant, we will aim to enhance our own solutions such as payment device and AI-based flow detection. Currently, the group is jointly developing its own solution called PayCAS, which offers multiple payment methods in a single unit. This will bring payment opportunities within the group, maximize GMV and open up the SMB market for the group as a whole.

Now let me talk about PayPay Securities. I have not explained about this business in detail before. So again, let me spend some time to talk about this business today, PayPay Securities business is to provide asset management services linked to PayPay app. Investment by PayPay point and asset management by PayPay that is investment opportunities that this company provide to users. PayPay Securities growth strategy is to efficiently expand user base by leveraging PayPay's customer base.

If you look at left-hand side, with PayPay, you like customers to experience investment by using their points. And once they get used to investment, we'd like them to take one step further to go into real investment experience through mutual asset investment or securities equity investment. And this is the company's performance.

Cumulative number of point investment users. As of October 2022, the users exceeded JPY 7 million. Looking back, in April 2020, PayPay mini app was launched under the corporate name One Take BUY. And then in February 2021, the company's name changed to PayPay Securities to further enhance collaboration with PayPay. So as a result, as you can see, the business achieved that number fastest in the industry.

Back in August this year, we launched Asset Management mini app compared to the last 12-month result, which was about 10,000 per month in terms of new accounts opened. We have seen a sharp increase in inducements through point management. This was something unique as far as I am concerned. Again, we launched mini app in August this year. As a result, acquisition unit cost of securities account decreased to 1/14.

PayPay, which is a platformer helps as to efficiently acquire users. In fact, most of the users are young users and many are female users. And we can expect very fast growth because it's online securities as opposed to physical securities shop business. Our growth strategy is to grow further through group synergies. So we want to really pursue growth as a group through that synergy.

Finance business operating income is expected to be negative for the fiscal year due to expected negative income of PayPay, but we want to aim for financial business growth by leveraging group synergies.

So to summarize, we revised our full year forecast upward since Mobile business is very good in terms of net addition and integration of PayPay and PayPay Card for further business growth was explained. And last but not the least, we aim for Financial business growth by leveraging group synergies. Information revolution, happiness for everyone. Thank you very much for your attention today. Thank you.

[Operator]

Now we will then continue with the question-and-answer session. [Operator Instructions] The first question from the floor.

[Unknown Attendee]

This is [ Ishino ], freelancer. My first question is related to Rakuten, and they are Rakuten is asking for 5 megahertz from each carrier. What is Mr. Miyakawa's point of view? That's my first question.

And the second question is about net additions going really well. So before, Mr. Miyakawa, in the previous presentation, you mentioned about the LINEMO growth, which is not satisfactory to you. So what's the current view on that? And do you think you have to take other measurements against that?

[Junichi Miyakawa, executive]

Thank you so much for your questions. Regarding Rakuten's Platinum Band, let me answer from that question. Personally, I truly understand what they are saying. We, as SoftBank Mobile since our establishment, for the first 6 years, we kept saying that we really wanted the Platinum Band. And for carriers, having Platinum Band or not makes a big difference in terms of business competitiveness. Therefore, I fully understand what they are saying.

Having said so, the frequency we are using is to be handed over to them, then we have to first consider our customers. So we -- all carriers, as providers, among us have to first confirm and make sure that we don't make it any convenience to the users. So 15 megahertz times 2. This is what we are using and our customers using it. If this is reduced down to 2/3 volume, then the users who are able to use it right now fully won't be able to use and get the profit of -- the benefit of that use. So therefore, we have to take enough time to be able to hand over to them.

So right now, we are using a higher frequency. And for the first 6 years until we get the license for Platinum Band, and we made our efforts to cover setting up 120,000 base stations. So because we had built more base stations, we were able to provide a variety of services like unlimited services or a large capacity service. So which was contributed from our initial efforts. So we would like to take enough time with them having a recent conversation. And so that we could convince them that we also have certain conditions considering the customers.

And the second question about LINEMO. Recently, the users for LINEMO has been increasing, but we don't put too much weight on that. I mean our purpose is not increasing the number of users. For those who would like to only use online, then it will be great. And we just opened up the doors widely to those customers as well. And those who are close to that range of customers who joined Y!mobile, and they would like to have smartphones but don't know now enough how to use it, and they can visit the actual shops to learn how to use it and then learn the benefit of using smartphones. This is what we are using. We are providing -- centralizing the actual shops to increase the net additions. So for LINEMO, we don't see any needs to do something against LINEMO question.

[Operator]

Next question, please?

[Unknown Analyst]

My name is [ Suzuki ] from Asahi Newspaper. I have 2 questions. First, about roaming for emergency purposes, the MIT has been leading discussion. So could you give us your view, Miyakawa-san, about roaming? At KDDI's financial announcement, CEO talked about roaming not only for emergency purposes, but also for regular purposes. So taking that into consideration, what's your view on roaming? That's the first question.

And the second, what is called JPY 1 smartphone. Again, MIT has been discussing how to present price appropriately for consumers. So again, what's your view on regulation for mark down of the devices. For example, so-called JPY 20,000, regulation is out there.

[Junichi Miyakawa, executive]

Thank you very much. Roaming, we are positive about roaming. And timing-wise, we want to make it happen as soon as possible. That's how positive we are, but there is a challenge like unable to call back. So we need to make sure that we have a process and system in place to allow such things like holdback functionality happen.

For carriers are now able to show the caller number, so fire station, for example, once they get the call, they can take note of the incoming call number, then they should be able to call back. But if you wanted this systematically, it may take time and effort. And also quality needs to be taken into account how much quality standard should be expected, something that the government needs to think about, I think. And also, there is other way to support roaming-like functionality like dual SIM. So all carriers should have discussion to offer a dual SIM which is affordable.

And our network back in the time when I was CTO, there was a huge Tohoku earthquake, and we tried a lot of things to improve the quality of the network. And one of the things that are unique in our network is, even though voice cannot be connected, but data should be alive. And also data and SMS are separately carried through the network. So that means even though voice and data are not available, at least a text message can be conveyed in our network.

So again, we should have discussion -- meaning carriers should have a discussion to clarify what we can do now and what we cannot do now. And talking about what's called JPY 1 smartphone, I think, you're referring to an issue of reseller. And I don't know who should be leading, but carriers compete against each other to make devices as available -- excuse me, affordable. And maybe we started reducing price of devices more than necessary. Then consequently, there are things like JPY 1 smartphone, one carrier alone can't do.

However, I agree with the idea of setting up bottom price. And once such standard of practice is in place, we want to follow. One thing that I have been hesitant about is 5G growth, which is low in Japan, we need to increase migration from 4G to 5G in terms of user numbers. But again, once rules and practices are in place, we like to follow accordingly.

[Operator]

Now end of middle row third from the front, a gentleman, please.

[Hugo Miller, analyst]

Hugo from Bloomberg. Two questions from me. One is about PayPay's remeasurement. What is their corporate value?

[Junichi Miyakawa, executive]

Let me answer one by one. It's just below JPY 1 trillion, just below JPY 1 trillion.

[Hugo Miller, analyst]

Is this as of September or as of October 1?

[Junichi Miyakawa, executive]

Precisely as of end of September. So it was remeasured by one of the big 4. So they -- this is based on their evaluation.

[Hugo Miller, analyst]

My second question is about financial segment shown in the graph. So this fiscal year, JPY 19 billion of negative figure. And after that, as twice as your height, it's going to be a turnaround. So next fiscal year will be turned around?

[Junichi Miyakawa, executive]

Let me clarify on this. So right now, PayPay is actually looking at IPO. The Financial segment as a whole, when will be the turnaround? I'm not in a position to make a comment on it. Even though we said that we would disclose the information as detailed as possible. Unfortunately, at this moment, we are not able to disclose details.

[Hugo Miller, analyst]

As for a follow-up question, the negative figure includes securities and PayPay Card, and this fiscal year is a negative figure, but next year onwards, PayPay alone? I understand that you're not in a position to talk about it, but sorry about my question. But...

[Junichi Miyakawa, executive]

So you are actually talking about PayPay alone. So this fiscal year, PayPay and PayPay Card, I cannot mention the total number of these 2 aggregation business performance, but Financial segment of ours, SB Payment Service and I mentioned that JPY 9.4 billion in positive. So PayPay Card, we are in full acceleration to boost the business. And we are now expecting their fast growth this fiscal year, but not in negative.

So therefore, PayPay Group, including the PayPay Card maybe you can calculate on your own because I can't mention it from my own. So please excuse me.

[Hugo Miller, analyst]

So you mentioned that the PayPay is looking at IPO. However, last time you mentioned that in the negative figure, it's difficult to go IPO. But today, you -- I feel like you are preparing for IPO.

[Junichi Miyakawa, executive]

Yes, we have been preparing for IPO, but we haven't had enough numbers for that yet. Of course, EBITDA negative figure has been improved, as I explained in the presentation. And yes, we are now seeing the turnaround range. I think that's all I can say for now. Thank you so much.

[Operator]

Next question, please, on the floor.

[Unknown Attendee]

[ Ishikawa ], freelance writer. T-Mobile, iPhone 14, smartphone directly connected to satellite is becoming popular and popular and SoftBank has started HAPS business, for example, I heard from Miyakawa-san before that HAPS in Japan is challenging still.

[Junichi Miyakawa, executive]

Thank you for your question. Direct communication between satellite and mobile devices excluding spectrum challenge, it's possible technically, but from device to satellite, which is uplink and satellite to device, downlink. Downlink is easier, but uplink because of the power on device side, it's difficult for smartphones to get connected with satellite. So full-scale service with satellite may be difficult for smartphones.

I tried some experiments in satellite a few years ago in the states, and I did experience myself challenge for uplink. So that's why we started HAPS business and thanks to better line of sight, we could deliver quality of service from the satellite. So eventually, we want to really commercialize HAPS service.

And of course, we have to consider price which should be affordable. And also, we need to look at ARPU of developing countries, which need such service more than developed countries. So solar panel, which is used by satellite needs to be replaced to make it affordable and also efficiency of batteries and power need to be improved. So there are a lot of challenges that we need to overcome. But I think that we are able to -- we should be able to address those challenges. So again, we have not given up HAPS idea. We are still looking at those fundamental technologies.

Talking about satellite, one web is finally up in the air. So by the end of next year, we want to make it complete. So that we want to create environment where communication can be delivered from satellite to the ground.

[Operator]

Very right. On the first row.

[Unknown Attendee]

Suzuki, freelancer. Sorry to be so persistent, but regarding PayPay, back in August, there was the same questions, not only becoming a turnaround, but there is some space to grow. So I would like to see how you're going to aggressively promote PayPay business as a whole. How much do you expect in terms of turnaround volume for PayPay?

[Junichi Miyakawa, executive]

Yes, we still want to be very aggressive with PayPay, JPY 600 billion, JPY 700 billion. Yes, I personally believe that we can be still more aggressive, but PayPay CEO is the one to make a final decision, not only the number of users, but most importantly, we are only working on payment business with more than 50 million users. But real PayPay's business model is, as I repeatedly explained, first layer, second and the third layer the finance segment, which we receive interest and so on.

So one of those functions, there is a payment service. Therefore, in order to judge a business performance of PayPay with only payment service, it's still very small. Therefore, we would like to also focus on second and third layer, not only focusing on turning around the business, but how we can expand our business as a whole with second and third layers, not only to provide first layer service, but as a finance portal service and also as a group synergy, S&S service, which offered by LINE. So a group as a whole, once we can collaborate strongly and we can expand our business and even accelerate our business growth. So that is followed by turnaround.

[Kazuhiko Fujihara, executive]

Let me add. This is CFO, Fujihara. Your ex-IPO was question just before. Regarding PayPay, it's not decided yet. The PayPay is the company that we would like to target IPO. So in order for us to take a step forward to IPO, I mean, we are ready means that we are ready, we are preparing for our future potential of right timing for IPO.

[Operator]

So due to the time constraint, we will take one more question from the floor. The second seat from the front in the center.

[Unknown Analyst]

[ Hussy ] from TBS Television. Maybe from different angle, inflation, weaker yen, price hike, I wonder if those things that are happening around the world have an impact on your business.

[Junichi Miyakawa, executive]

For price hike, I don't think it has a huge impact on our downward trend of income, but the more impact we are feeling from price reduction, mobile service price reduction in Japan. But electricity bill hike has a huge impact. That energy bill increase is squeezing, to be very honest with you, because we are telecommunication business, and we consume a lot of electricity. And probably we have to generate electricity by ourselves to address such energy cost in the long run.

Impact by weaker yen, both positive and negative, a little bit negative than positive in terms of impact of weaker yen. Equipment that we source globally are project in yen terms, so it's not really a huge impact on us. But again, weaker yen. At the moment, we don't feel very, very strong negative impact from that on our business.

[Operator]

That's all 4 questions from the floor. Now we'd like to take questions from participants over Zoom. First, Mr. Otsubo from Sankei Newspaper.

[Reo Otsubo, analyst]

This is Otsubo. Can you hear me?

[Junichi Miyakawa, executive]

Yes. Very clear.

[Reo Otsubo, analyst]

Regarding dual SIM mentioned earlier, KDDI's presentation the other day, CEO Takahashi mentioned about it in the -- as for the part of preparation of emergency situation and then we talked about the other carriers. So we would like to hear what's the current situation of the discussion. And what is the measurement on especially the device, which is not compatible with dual SIM?

[Junichi Miyakawa, executive]

Yes, CEO Takahashi directly contacted me regarding the dual SIMs, and we are under discussion. As soon as possible, we underground started discussion in terms of technologies base. So I also requested to work around as soon as possible for earlier realization. As for a mobile device, which is not compatible with dual SIMs, the measurement against that, if we are to use this dual SIM, current status, then won't be able to use it, therefore, need to change. This is not a service that can be applicable to all users. So rather than all users, but limited to the users, which is under the warranty, we can provide such service.

Regarding roaming, what I think is that in the event of emergency, yes, we must have it. And I'm very positive. But in the event of a large failure, the mails cannot be reached, and the payment cannot be processed. You can't take trains, cannot purchase train tickets. Other than ordinary communication services, there are a lot of failures. So including data, e-mails, we have to build the system that we can provide. The minimum speed is fine, but we should be able to connect to e-mails and data in the event of emergency, so that people can use PayPay and e-mails can be accessible. So for that, we need to have a longer discussion, continuous discussion.

[Reo Otsubo, analyst]

And one more. Regarding JPY 1 mobile device, to set up the bottom price.

[Junichi Miyakawa, executive]

Let me clarify what's the current situation around that. Right now, I think MIC is in a position to start discussion. And rather, I believe that Fair Trade Commission is taking this as a serious matter. So to prevent further recurrence of resellers we need to fully understand the background of such instant. So we need to take measurements against that.

[Operator]

Next question from analysts or institutional investor. The first Masuno-san from Nomura Securities.

[Daisaku Masuno, analyst]

Masuno from Nomura Securities. I have 2 questions. First, overall, it's very positive announcement. That's my observation. Anyway, first question, for consumer business, acquisition is good, and profit is good, but you want to be well prepared for the latter half of the year. But you may not be able to sell devices at a cheaper price as easy as than before. It may cost you more. So I wonder what kind of plans you have in terms of selling devices first.

[Junichi Miyakawa, executive]

First, first half I don't think that we spent a huge amount of money in order to acquire customers. But now that COVID situation is eased, so it's a good time for us to exercise our selling capabilities and marketing capabilities I am looking at the sales report every day. And our sales team working crazy to acquire customers in order to offset downward trend of ARPU. So for net ads, our companies put our all efforts to acquire new customers, and we remain focused for the last half of this fiscal year.

[Daisaku Masuno, analyst]

Second, about PayPay -- it looks like PayPay is getting stronger and stronger than other businesses compared to other businesses, LINE and Yahoo. So I feel that there's a huge gap between PayPay and LINE. But to you, Yahoo is closer to you and LINE is like closer to neither. So not only equity relationship or capital relationship, but also other aspects, you may want to strengthen relationship with other group companies like LINE. So how can you make it more engaged?

[Junichi Miyakawa, executive]

I agree with you. I agree that our businesses need to be linked further and engaged with each other even more. Almost every month, we have a meeting getting all CEOs of group companies together. That kind of initiative was started by my predecessor Miyauchi, and now I am trying to set up a meeting to gather group companies' top management to improve our integration with the group companies. Thank you very much for your feedback.

[Operator]

Now next, SMBC Nikko Securities, Kikuchi-san.

[Satoru Kikuchi, analyst]

This is Kikuchi. Thank you so much for your presentation. I have 2 questions.This fiscal year's net additions and ARPU have improved and the churn rate the past 6 months was a little bit higher, but it's getting better I see. So there may be some seasonal factors, but as a whole, I think, it's a good result. However, even we see this trend, I think, it's still difficult to see the V-shaped recovery in the next fiscal year. So we only have 4 months to go until the next fiscal year. In order to see this turnaround V-shaped recovery, I think, we have to -- you have to start seeing some more concrete ways towards next fiscal year, including mobiles and other business segments. So what is your plan for the next fiscal year?

[Junichi Miyakawa, executive]

Regarding consumer segment -- so for consumer, in terms of operating income, the figure we built at this year can lead V-shaped recovery next fiscal year. It's not enough yet. So as you mentioned, Kikuchi-san, in order for us to fill in the gap, we expect Enterprise segment further growth. PayPay, Yahoo, LINE's further growth will be covering up and to achieve V-shaped recovery next fiscal year. We would like to accumulate one by one.

So as you pointed out, we are not in -- we are not fully satisfied with the situation towards V-shaped recovery yet. So cost reduction, which we accelerated this year. So next fiscal year, we will see the positive impact of the cost reduction. So additionally, with these cost reduction efforts, we will also see some V-shaped recovery.

[Satoru Kikuchi, analyst]

My second question is about balance sheet and your capital. And so I think equity is a bit thinner. So JPY 100 billion of CapEx will be reduced next fiscal year. So I would like to see if your plan is okay or not. So PayPay, you may have some positive income from PayPay. So maybe next fiscal year, some turnaround may be possible, but I would like to see your budgeting plan, where you're going to focus on particularly what area like telecommunications area to be focused on. So when you see some positive situation in BS, then what kind of initiatives you're going to take and what will be the priority?

[Junichi Miyakawa, executive]

So regarding balance sheet-related matters, as CFO, Fujihara will talk about later. So as for budgeting, next years, we may have some extra space. But ever since I became CEO, it's been quite tight. So same as next fiscal year, I think, that is JPY 600 billion of balance between dividends. But next fiscal year's CapEx of JPY 100 billion will be reduced. I would like to make a commitment on that. So the structure is different from this year to next year. Therefore, we cannot spend the same CapEx. So we would like to focus on where and when to focus on or not. So next fiscal year, CapEx investment will be reduced.

As I mentioned JPY 100 billion will be committed. And also, shareholders' return, we would like to achieve what we have committed. And 85% of total shareholder return ratio is right or not. We have to have a thorough discussion around this, but we are not going to make any surprise change. Therefore, as for the dividends, we would like to pay a thorough attention on that.

[Kazuhiko Fujihara, executive]

Regarding balance sheet, I would like to talk about more in details, JPY 13 trillion of total equity. So we have grown to this level of company. So as of October 1, when the PayPay was consolidated, so we have -- you might see that equity is a bit lower, but it will be around 25%. So we would like to have more disclosure later on.

[Operator]

The last question before closing, Tanaka-san from Mitsubishi UFJ Morgan Stanley Securities.

[Hideaki Tanaka, analyst]

Just one question from myself. For revised upwards of operating income about JPY 50 billion. And also you talked about revaluation gain from PayPay. JPY 295 billion plus amortization equal about JPY 270 billion. So effectively revised downward by JPY 150 billion. So how could you clarify our revision of forecast?

[Junichi Miyakawa, executive]

Well, we don't think we reduced significantly downwards. Yahoo and LINE, their disclosure is in line with our views and PayPay is working hard to earn the business. I think we are comfortably revised forecast upwards. All in all, business performance and revaluation gain contributed to our upward revision of forecast.

[Hideaki Tanaka, analyst]

So about a revaluation gain compared to initial forecast, how much bigger and smaller?

[Junichi Miyakawa, executive]

A little bit bigger than initial forecast about remeasurement gain.

[Operator]

That's all for Q&A session. Once again, thank you very much for attending earning results for the 6 months ended September 30, 2020, announcement.