SoftBank Group Corp
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SoftBank Group Corp
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[Foreign Language] Thank you very much for waiting, ladies and gentlemen. Now we would like to start the SoftBank Group Corp. Earnings Result Announcement for the 6-month period ended September 30, 2018.
First of all, I would like to introduce today's participants. On the front row, from left, we have Masayoshi Son, Chairman and CEO; Ken Miyauchi, President and COO -- excuse me, Ken Miyauchi, Executive Director; and Yoshimitsu Goto, Senior Executive Corporate Officer and Head of Finance and CFO.
At the back row, from left, Kazuko Kimiwada, Executive Corporate Officer and Head of Accounting Unit; Kazuhiko Fujihara, Senior Executive Corporate Officer and Head of Business Units, CFO of SoftBank Corp.
This meeting is live broadcast over the Internet and can be heard by telephone.
Now I would like to invite Mr. Son, Chairman and CEO, to present you earnings results and business overview. Mr. Son, please.
My name is Son, thank you very much. Before we begin the presentation, I would like to make one comment.
I would like to address the questions you must have on our relationship with the Saudi Public Investment Fund and how that is impacted by the tragic case of Jamal Khashoggi.
So before I start that, I would like to make comments before -- as I believe that you have questions on this. We were deeply saddened by the news of Mr. Khashoggi's murder and condemn this act against humanity and also journalism and free speech. This was a horrific and deeply regrettable act. Therefore, we have raised our concerns with the other party, and we believe that this should not be -- have happened.
The other day, there was a event held by Saudi Arabia, and I did not participate in the conference and I canceled the participation. However, I did visited the Saudi Arabia. And the reason is because I wanted to meet directly with senior Saudi officials, and I wanted to raise our concerns directly with them. We want to see those responsible held accountable.
At the same time, we have also accepted the responsibility to the people of Saudi Arabia, an obligation we take quite seriously, to help them manage their financial resources and diversify their economy.
As horrible as this event was, we cannot turn our backs on the Saudi people as we work to help them in their continued efforts to reform and modernize their society. So from that sense, we hope and want to see those responsible held accountable.
So now let's talk about our winnings on Japan championships by our SoftBank Hawks, and we are happy to be able to win the Japan championship again. All those managers, players, staff, without their tremendous effort, we couldn't make that happen. So I really much appreciate those efforts. Especially for those fans who made a strong support to the team, I really like to extend my gratitude for their support. Now let me go into my presentation for the recent performance of SoftBank Group.
SoftBank 2.0, since about 2 years ago that we have started this work, compared to our business since the foundation, we call this next phase SoftBank 2.0, as if we're starting or founding the business once again.
In the past 10 years, SoftBank has been regarded as a telecom business. Our core business has been regarded as a telecom business, that's most of the people's understanding, I believe. However, after the acquisition of Vodafone K.K. and joined mobile phone business, well, just about 10 years ago, right after the foundation, we call our business as an Information Revolution company and the way I've been saying that our company does the information revolution. But the past 10 years, most of the Information Revolution has been done by the telecom business. That's most people's understanding. However, when it comes to Information Revolution, from my understanding, this is not something that done by only one company, but actually done by many of the partners who shares the same vision.
It's like Mr. Ryoma Sakamoto or Katsu Kaishu or Takamori Saigo, those people actually stood up to refresh the era of Japan with a corporation from the many angels, and they made Meiji restoration. I believe it's not something that we can make the Information Revolution by only one company or only one person so that we do need to have clusters who share the same vision to make this Information Revolution happen. So that Cluster of No. 1 strategy, something that I've been using these days.
In this graph is the EBIT for SoftBank Group, overall. This EBIT, for the past 20 years, especially the recent 10 years or 10-and-some years since the acquisition of Vodafone K.K. in 2006, mainly the contribution was -- came from telecom business or the Domestic Telecom. On top of that, we have added SoftBank Vision Fund. And actually, you see this blue bar is a contribution from SoftBank Vision Fund. It is now accelerating EBIT, which is we aimed under the SoftBank 2.0.
Right immediately after we announced about the establishment of SoftBank Vision Fund, many people asked me, "What are you going to do?" In the past 18 years, return on investments was 44% as our track record, which making a 44% of the return. That was also the comment that I made at the announcement. But about 2 years ago, which we announced the SoftBank Vision Fund establishment, compare with the time of 18 years ago, actually, most of the biggest companies are becoming too high in their valuation. And also, many people said that the Vision Fund is investing too much size -- too big size, so that they expected that the return can be much lower than they used to be. That was the many friends told me as well.
Therefore, I decided to counter -- rather than counterarguing that, I decided to show the results and outcome. That's what I was determined to do. The market was too high, and the investment size was too high.
For these 2 concerns, the result is shown here. I think we can do this. I think Vision Fund can be successful. That's what I think now. And this number, JPY 1.4 trillion EBIT in 6 months, but on a full year basis, this momentum can be maintained. I want to keep this momentum. This is something that SoftBank has never experienced before. The EBIT scale that SoftBank has never had before can be realized.
Next year, we will far exceed the scale we are seeing this year and maybe a scale that Japanese economy has never experienced before. I think that will be the level we can have in EBIT. That is what I feel inside.
Until now, I talked about a decade or 2 from now many times, and I was told -- said to be exaggerating or too lofty or too ambitions or big mouth, but when we talk about numbers 5 or 10 years down the road, I have never fell short of the plan that I always set out. What I've said, I have confidence, and that's my pride, that I never fell short of what I said. So we want to grow next year and the year after that without making any excuses.
So let me go into detail. This is net sales, EBIT and net income numbers. Now furthermore, by business segment. This is the breakdown of net sales, and EBIT breakdown is shown here. As I mentioned at the outset, excluding Vision Fund, we are still growing steadily.
For the past 10-or-so years, we have grown at the same pace every year. And especially in the past 2 years, the Vision Fund contribution is becoming bigger. And SoftBank Group always has large interest-bearing debt. So sooner or later, we will face soft punk -- but burst, but no, we will not have that. The Internet bubble in year 2000, we learned many lessons there and risk management. So we will try to keep the right balance of net interest-bearing debt, so we'll be within a few times of our profit, adjusted EBITDA.
SoftBank domestic business, our telecom business and SoftBank Corp, IPO plan was announced the other day, and so let me make some comments on that.
Now this Domestic Telecom business is growing continuously. Net sales and EBIT are both growing. Especially, the EBIT growth is 9%, and free cash flow growth is 11%, and smartphone is also growing steadily.
We have 3 brands, SoftBank Mobile, main brand. In addition to our main brand, we have Yahoo! Mobile, and recently, we added LINE MOBILE. We have the capital alliance with LINE MOBILE. So now we have 3 brands.
The large-capacity data -- the large data users, SoftBank Mobile users, the heavy users and the cost-conscious users who do not use large data who want lower price in using mobile, which uses Y!mobile. Y!mobile is JPY 1,480 for 3 gigabytes. And the low -- so in a low-priced, low-cost smartphone market, we have overwhelmingly #1 share.
In addition, in SoftBank Mobile brand, we have ultra Giga Monster, JPY 3,480 for 50 gigabytes, and in addition, video, SNS are free, included in the data packet. So the unit price per gigabyte is much lower than the others, probably half or 1/3 of other competitors. So this gigabyte unit price, compared to the U.S. or European mobile carriers, we are the lowest. We have the most competitive or affordable price in the world.
I often hear about the price, low price -- we often talk about the service where the customers do not use much data, but 80% of the users, especially young users who use YouTube or Instagram or other SNS services, Line, Ameba TV, Hulu, [ Gavel ], the users who use a lot of these services, they do not prefer the low-cost smartphone. They want to use large data. So large data with these services, they account for 43% of our data traffic, 43% of our data traffic, especially video or Instagram, SNS-centered services, 43%.
With the brand service alone, it accounts for 43%, and therefore, we are offering this for JPY 0. Cost per gigabyte is JPY 0. So on top of this unit price of giga unit price, we should also incorporate this factor, this benefit. So even at large data volume, our giga unit price is low, and it's simple and easy to understand. It's [ SML ]. So Y!mobile is offering this low price, on the other hand. So from both aspects, we are affordable.
In September this year, terminal and data separation was instructed -- guided from the government, and we immediately addressed the guidelines and we separated -- we provided a separate plan for terminal and data. So for those new customers, most of the customers for those who are newly coming -- joining to SoftBank, we're providing the separated plan. And starting from the next fiscal year, Y!mobile will be also planning to do so at the same time.
Sorry, I caught a cold and my voice is not clear. Sorry about that. And my smartphone market in Japan has not been matured yet. Actually, there are many customers who still use non-smartphones. Especially for the enterprise customer, more than 1/2 of the enterprise customers are using traditional handsets. And therefore, we believe we will be able to grow in smartphone penetration with the highly added values, with the reasonable unit price per packet compared to the other market in global-wide. And also, I would like to provide appropriate pricing.
On top of that, we do have Beyond Carrier strategy, which means that we're also providing services other than telecom service in Japan. The key for that strategy is what I have mentioned earlier, which is the synergies with SoftBank Vision Fund.
Those customers who enjoy SoftBank network in Japan and also those customers enjoying Yahoo! Japan and also enterprise customers, we believe we'll be able -- also able to provide the opportunities to enjoy our Vision Fund portfolio businesses through the joint ventures in Japan.
Like we created Yahoo! Japan in Japan 20 years ago with the -- this trend of AI technology, we would like to start joint ventures with new technology. For example, WeWork Japan, which is making a rapid increase in growth. Especially, this company already showing the profitability. DiDi Japan also launched a service in Osaka. PayPay. Something similar to Alipay service is just launched in Japan, and we are aggressively developing the market. And also, our alliance with Yahoo! Japan is even deeper. Recently, we have made an announcement on strategic partnership with Toyota.
With all those, we are expanding our new business domains: FinTech, robotics, sharing economy, security, AI, IoT, cloud and others. So those new businesses here, through the joint venture, mainly, and also a collaboration with SoftBank Vision Fund, we would like to increase such businesses.
Also, any type of routine work in office that we would like to show the robotizing. You may think of Pepper when I talk about robotics, but those routine works in SoftBank head office, there are many routine works and we actually replaced with the robotics.
On top of that, we also add AI. So more than 2,000 digital robot has already been working for our routine works. So by doing so, we will be able -- we have been able to reduce the overtime. On top of that, we have -- we're also thinking to reduce our human resource by 40%.
Number of SoftBank Mobile, for those who focus on mobile business, we would like to reduce that by 40%. And why are we doing that? It's because, to provide the low-price point services, we also need to make more efficiency in our workings, not forcing people out from the job, but rather, we would like to have a structural reforming with the RPA so that we'd be able to improve the efficiency at the same time.
By doing so, we will be able to address the many variety of pricing points and services. And for -- now that we are preparing for IPO and with that -- with those efforts, we believe that we'd be able to have robust forecasting schedules for the increase in profit and increase in sales.
I'm not saying -- I don't believe that it is okay to reduce the profitability or sales because we need to reduce the cost or we do need to reduce the pricing points. I don't want to make such an excuse. Since my foundation of the business, I never have used such excuse, so that we would like to make sure that we will be able to take full responsibilities for the stakeholders, and at the same time, aim for the increase in sales and profitability. So that we not crying and reduce the resources, but rather, we would like to encourage those people or employees can now focus on the new business or new synergies last year -- or that this year that we will be shifting from the telecom business towards new business development.
So here is the 2018 forecast, increase in revenue and profit. We would like to make sure that we will be able to achieve that before the IPO and also generate stable free cash flow, promote Beyond Carrier strategy and enhance collaboration with SoftBank Vision Fund and prepare for IPO. So as a result, after -- once the IPO happens successfully, we will be -- also able to secure, in a way, to access ample funding through the listing. So using such ample funding, we would like to aim for further growth and use that supply for the SoftBank Vision Fund or repayments for the interest-bearing debt and so on.
Next is Sprint. After the acquisition of Sprint, it suffered for a while. However, we made a continuous effort reducing resources, reducing costs, and we've been working very hard to make turnaround happen. And as a result, EBITDA increased year-over-year after the acquisition by SoftBank and also increasing the operating income.
I don't like to make any excuse at all. So even we are suffering, but we didn't want to make any reduce in profitability or sales. Even you have to go through the difficult time, but we've been making profitabilities with reducing inefficient cost. And actually, network speed is already improved by 31.5%. So without any excuse, the company has been increasing the profitability, also making a good CapEx, improved the network. But at the same time, for Sprint, most important event is that the main story, which is the merger with T-Mobile.
Actually, right -- first day after the acquisition of Sprint, I've been thinking about this as the main story. And now, finally, I'm very confident that we will be able to make this merger happen. The reason because, together with T-Mobile and Sprint, we believe we will be able to provide first and best nationwide 5G.
Because of the collaboration of those 2, we will be able to make that happen. So the spectrum that held by Sprint and also network held by T-Mobile, combining all those 2, we will be able to create first and best nationwide 5G network. Therefore, the connectivity in rural area is going to be better. And also, by doing so, we will be able to create many jobs. And with the job creation, this is also important, one of the most important policies for the current administrations, and this is something that we will be able to address with this merger.
And with this strong network, we will be making the CapEx so that we need the nationwide network, and also, we need to have a good price competition. Right now, Sprint and T-Mobile is actually providing raw prices and also providing the price competition without stopping such strength that we would like to develop further. That is good for the U.S. people as well so that we very -- having further confidence in receiving approval by the regulatories in the United States.
Next, Yahoo! Japan. Yahoo! Japan business is mainly advertising, and this advertising business is growing steadily every year. And in addition, another new business pillar is e-commerce, and this is also steadily growing. Its number of premium member IDs and shopping transaction value is growing every year.
So Yahoo! Japan revenue is PayPay and new business customer development. So we are using cost as the healthy wholesome investment, and that is why the profit is down, but this is from healthy reasons, justifiable reasons. Therefore, I would like to grow Yahoo! Japan going forward.
Next is ARM. Number of chips shipped is growing very rapidly. Market share, mobile is mostly ARM. But other than that, in other areas, ARM is growing its market share. And in addition to the terminal side, ARM -- the network side and cloud side, ARM is also growing, and so we are trying to have ARM in both sides. IoT will grow dramatically and will shift to AI. ARM is tackling this and increasing the headcount and R&D investment to be on the offense -- investment on the offense.
Lastly, SoftBank Vision Fund. We are not just recklessly making investments, we are focusing on one theme, which is AI. SoftBank Vision Fund will promote its Cluster of No. 1 strategy with AI.
20 years ago, Internet started. And now, AI is about to start on a full scale, not just on the research and development level, but as business and as service, it is about to expand very rapidly. So this is where we want to develop our Cluster of No. 1 strategy.
When we started this a year ago, we did not have this at all. But including the ones in the pipeline, the unicorns, there are 67 unicorns. In less than 2 years, we now have 67 AI-centered unicorn group.
This is only us. We are the only company who's doing this in the world. These companies are emerging in Japan in the form of joint venture. They are coming into Japan. This is like we invested in Yahoo! in the U.S. and established Yahoo! Japan in the form of joint venture. Just like that, there will be an expansion going forward.
First is WeWork. If I go one by one, it will take 48 hours, so I will only talk about the main ones, the one I have not talked much in the past. So just a few companies here.
WeWork is growing and it's spreading and expanding the number of offices and the number of cities. Using AI, the service is expanding continuously.
Coupang, this is like Amazon in South Korea, e-commerce in South Korea. It is the unrivaled #1, and it's also growing very rapidly. And we are already the leading shareholder, but we want to back them up even stronger and even deeper. They have AI. They are utilizing, leveraging AI power.
And Tokopedia, this is Indonesia's unrivaled #1 e-commerce player. They are also growing rapidly, and they are leveraging AI power as well.
Paytm, this is India's payment service, and it's an unrivaled, unparalleled #1. And their transaction volume -- payment volume in the first half of this year was around JPY 4 trillion, and they are growing at a great speed.
2 or 3 weeks ago, our group company that just got listed, Guardant. They use AI capability to do the blood test of human beings and analyze DNA, DNA analysis, DNA digital sequencing to detect cancer cell as quickly and precisely.
In the past, DNA digital sequencing existed, but it was like encryption. So looking at encryption with human eyes and DNA analysis, the types of cancer, how progressed is the cancer cell in human body had to be watched by human eyes, but this was nearly impossible. And therefore, AI machine learning will be doing the analysis. By having AI do this for us, the biopsy of cancer cells using needle, looking at it in the microscope to find the cancer cell will be shifting to liquid biopsy, blood test. The cancer pieces that flow in the blood will be detected.
27 cancer centers have adopted this 100%, and Guardant is doing the early detection of cancer through the standard approach, and they have become the standard. When we invested initially as SoftBank Vision Fund, SoftBank Group invested a little and then SoftBank Vision Fund invested followed by that. And in about a year, the amount has increased by 3.5x. It is now about JPY 100 billion, so our equity holding is around JPY 100 billion now.
Opendoor. When you want to sell your own house, it takes 6 months to a year to sell your own house, to have someone buy your house. It takes 6 months to a year if it's a house that is being used.
Opendoor will sell this in 24 hours. The contract can be closed in 24 hours, and this is another growing company. This company uses AI to appraise the house, the property and make an offer, so that in 24 hours, you can find a buyer.
From another perspective, real estate property -- real estate brokerage is organized, and using AI power, the company is growing. This company is called Compass. And you may not have imagined this, but office, airports and hospitals of glasses -- glass, the glass, sensing with IoT, it can become like a sunglass, shade. Glass become sunglasses. And when the sun moves, the glass becomes smoky or it will become like a sunglass, your shade. Using AI, it will be a real-time sensing. On a real-time, the office can be shaded. And the benefit from this is the employees will not have their eyes blind -- blinded. It will not be too bright. And the temperature will be 5 degrees lower, on average, which means the air-conditioners, the electricity charge for air-conditioner can be much lower.
So the company called [ View Here ], also using AI and also taking advantage of AI providing the efficiency in cost for electricity and air-conditionings, so using nanotechnology and the coating is glass. This is also us as a major shareholder.
So for the health and welfare for employees and also for the reduction in cost for electricity, you don't need the shade anymore, curtains anymore.
Katerra, using AI, they actually minimized the construction schedules and cost for 40-some percent, also making growth rapidly. We are a majority in this company to Uber, DiDi, Grab and also here, those -- close to 90% of the worldwide ratio business in terms of riding is also our portfolio, and we are the major shareholder of those. GMV, aggregated annual GMV already coming to JPY 90 billion.
In addition to rideshare service, recently, food delivery from restaurants is becoming a big hit in business, sushi restaurants, soba noodles. Those cater is not exactly the same with this food delivery, but actually, those caters actually was delivered by that restaurant itself. So the time of peak that they don't have people to deliver those food so that the demand didn't really much, but those restaurants and the delivery itself has been separated. And Uber actually not only transport people, but also, they have a new service called Uber Eats and deliver food instead of provide the ride for people. And this trend is actually growing rapidly. So this is because of smartphone and GPS, those made the big difference. With those penetration, we believe this is a new business model.
Using AI, also creating heat map and also providing dynamic pricing. Especially, in China, making a rapid growth in this food delivery, Alibaba acquired an integrated company called Ele.me. So the pronunciation is a little bit difficult, but Ele.me here, user numbers is already 167 million. Active riders, actually, 666,000. Can you imagine that? It's really difficult to imagine for such a number of people with these bikes they are delivering food. Inside of these box, there are many foods like pizza, ramen noodles, so many things, sushi, maybe probably. And 666,000 drivers actually providing such Ele.me service, and the number of registered restaurants, already 3.5 million.
Taobao, the Alibaba Group, 576 million active users; with Alipay, 870 active users, with 167 monthly active user of Koubei. Of -- those customers actually can enjoy Ele.me service. And also, they are providing the customer base. And the SoftBank Vision Fund is investing, this business.
This so-called on-demand food delivery, actually expect it to become JPY 14 trillion in 2 years.
So JPY 10 trillion in rideshare, we'd call it; and also food delivery, only in China, expecting JPY 14 trillion in 2 years. So amongst all the world population, if we only pick up China only for food delivery service, JPY 14 trillion. So we can imagine how big this business can be. Especially this last-mile delivery, food, people or, going forward, e-commerce last-mile delivery can be also provided through such a service. And logistics spend as percent of GDP, 15% in China. And also, global average was 12%, is the logistics spend. With the power of AI also creating heat maps, we believe this can be disruptive in industry and redefine the business model.
Conclusion. As I mentioned in the very beginning of my presentation, SoftBank 2.0, those grayed portion of this bar, on top of that, SoftBank 2.0, which is also SoftBank Vision Fund, was added onto our traditional business. As a result, we have increased EBIT by 62% and the net income by 700% increase. Next year, we would -- next year and following years, we would like to, and I'm myself convinced that we will be able to, improve further in these numbers. So Vision Fund doing very well, performing and also aiming to increase SoftBank KK's profit for our fiscal '19 and after. And we would like to have this IPO successfully. And for that, we would like to aim to increase its profitability and securing a way to access ample funding through SBKK IPO and others and use those for the growth of SoftBank Vision Fund and others, maximizing shareholders' value. And also, Information Revolution make people happiness. That's our company philosophy. And we would like to create a new era with such great technology.
Thank you very much. That is all for my presentation.
Thank you very much.
Now we would like to open the floor for questions. If you have any questions, please raise your hand and wait for the microphone. Please begin your question by stating your name and affiliation. We would like to take up 2 questions per person so that we can take questions from as many people as possible.
[Foreign Language] So the lady in the front row, please.
My name is [ Iyagi ] from TV Asahi. So DOCOMO announced that they're going to return JPY 400 billion level of the returns. And do you consider the same level of the return?
As I mentioned earlier, we would like to return to the customers, but at the same time, we would like to aim for profit. That's what I think.
And next, my next question. Mr. Suga, chief secretary -- Cabinet Secretary -- that telecommunication operator has a room to reduce the price by 40%. How do you think about that?
Yes, we take it seriously and we would like to address in good manner. 40%, how do you think about that number? We -- as I mentioned in my presentation, we have a Y!mobile which provide a reasonable pricing point and also for -- SoftBank brand which provide the -- for the heavy data users. And we would like to proceed with such a dual-brand basis.
And then the next gentleman.
Nikkei Computer. My name is [ Ogata ]. As you mentioned at the outset, the Saudi Arabia-related question, so second or third JPY 10 trillion funds, will this impact your future strategy? Could you elaborate?
We still have money in the Vision Fund 1. In addition, the IPO is underway, and therefore, we can collect money. So we will use that effectively for now. I think it is still too early to go ahead with Vision Fund 2, so we will be cautious in our next step. However, the big trend is that, Vision Fund 2 and 3 -- in a general direction, we have no change in the SoftBank 2.0 strategy. We want to continue expanding. That's our current stance.
And my next question is Pepper. So for corporate use. It's been 3 years since you launched the enterprise model. And the companies that are renewing the contract is a little sluggish. So the humanoid-type robot from SoftBank is leading the way, and you are the father of Pepper. And so your son Pepper, what is your summary of the 3-year history? And what is your possibility of the humanoid robot going forward?
So this humanoid robot future, this is something that will continue for 30, 50 years and 100 years. So right after the emergence of PC, did it have the function we have now? No. Likewise, the humanoid robot just emerged, so there's room for improvement. Functions need to prove. Some customers think that Pepper is very useful. Like Hamazushi and other restaurants, they think they're helping the store management very much. So we will continue support and improve the function so that they can leverage and play a bigger role. It is a long-lasting, important theme going forward.
Next question, please.
My name is Oshika from Asahi newspaper. So Mr. Son, you mentioned about Mr. Khashoggi's murder; also mentioned about journalism, humanity and free speech. And you take those seriously, but the same time, SoftBank Vision Fund has relationship with Saudi public investment fund. So with this tragic case of Mr. Khashoggi, do you have some hesitations to go further? Mr. Branson of Virgin Group decided to cancel the transaction. And you, Mr. Son, how did you feel about that? Do you think that's separate things? Without any hesitation, would you like to go ahead and proceed? Or did you have some kind of hesitation in your mind?
Before this tragic case happened, we have already accepted a responsibility to the people of Saudi Arabia to help them manage their financial resources, and we can't or so all of a sudden drop such responsibility. So things that we have already accepted, we would like to pay -- or fulfill our fiducial duties. For the new cases or new projects, we would like to carefully watch the outcome of the case. And once the explanation is fully made, then we will think about it once again.
So I believe that you visited Saudi Arabia, and also you have met with senior Saudi officials. What kind of things did you discuss? And did you also discuss with Crown Prince of Saudi Arabia?
Yes, I met with Crown Prince, and also I met with ministers and senior Saudi officials. And I directly raised our concerns with them and asked for the further clarity on this tragic case.
What kind of response did they make?
They said they are taking this very seriously. That's how I felt.
Yes, center part of A3 section.
My name is [ Sunal Park ]. I work for [ Calai ] and am an entrepreneur. I'm from Brazil. You recently invested in Brazil, in a company called [ Loggi ]. I guess my question is, do you intend to increase your presence in Brazil?
Yes, I would like to increase our investment. I don't know which company, but we are very much excited about the opportunity that's in front of us.
And the second question is, well, as an entrepreneur, I would like to my pitch my fintech to you, if you will.
We are always open. [Foreign Language]
My name is [ Takita ] from TV Tokyo. I have some questions. First, relationship between U.S. and China. U.S. government has enhanced the screenings and [indiscernible] regarding the investment from China. And I believe, Mr. Son, your business is made very much in China as well. Do you expect that there will be an impact to your investment in U.S. due to this relationship between China and United States?
We've been making investment around the world, and about 30% of all is invested in United States. And about the same level, 30%, are invested in China. The remaining 40% is in other countries. That's the distribution, our investment so far. So 30%, 30% and 40%, meaning that we are investing in everywhere. And center of [ such ] economy is United States and China. And also, remaining 40%, we're investing in others. So we are not biased or we are not dependent in certain market, but we are just in neutral or just see the business opportunity without any political reason that are making the investment decisions, which we will continue going forward.
Relates to my first question. You mentioned about the merger between Sprint and T-Mobile, and you said that you have a confidence in approval. And relates to my first question once again, your investment in China or business development in China. Do you think these investments could impact to the merger approval between Sprint and T-Mobile?
Sprint management or the business in Sprint is done by local management. And immediately after acquisition, I myself was heavily involved in the management of the business. And also, we have sent many management from SoftBank to Sprint, but now we are shareholder of Sprint but management is fully done by local management and local employees. So because Vision Fund has nothing to do with Sprint and they are doing the business by their own local management and local employees, therefore, I don't believe there was any impact from the -- such things that you mentioned to the merger between T-Mobile and Sprint.
Person in A1.
[ Nogami ] from [ AHK ]. In this financial results briefing, the valuation of the Vision Fund is increasing. So they're all lead platformers, promising platformers, for the next generation. EU and Japanese government are now trying to strengthen the regulation on the platformers. In Japan, the discussion in the METI and -- MITE (sic) [ METI ], it's increasing, so Son-san, what do you think about this stringent regulation in each government?
As platformers, the GAFA 4, 5 companies, GAFA -- the influence is too tilted to GAFA. If that is the problem, then we are coming up with a brand-new power or business outside of GAFA. So from balance point of view, we will be a different company, a new company in a different domain. So I think this will be one solution. On the other hand, data can be utilized in various businesses. And if that is to be regulated, then security or privacy management is important for us human beings, but at the same time, if this usage is blocked, then it will inhibit our growth, so we need to hit the right balance between the two. If the automobile society comes, then the pollution or the accidents occur from automobiles, and that's why we needed the traffic rules and regulation. It's only natural, but the automobile society should not be negated entirely. And likewise, when there is an AI era coming, this trend cannot be stopped by anyone. And it should not be stopped, in the first place. AI can make people happier. I believe that AI can do that. So we need to prevent the negative aspects and to regulate so that negative impacts will not be occurring.
So U.K. government had the digital taxing. So for -- IT companies that have certain level of sales were taxed across-the-board. This kind of across-the-board taxation, regulation, what do you think about that?
Well, if one government or one company tax or regulate across-the-board, then that country may be left behind from the evolution of the world. Can this country be blocked from electricity supply? It's like that. It is risky. A country without data interchange will stop the evolution of the country. So we need to see the right balance in managing this issue.
[Foreign Language] So front row in the middle seats, please.
[ Tokoshima ] from Asahi newspaper. So in your remark, you mentioned that Y!mobile is also planning to introduce the separation of terminal and service charge. I thought that Y!mobile were already introducing -- or have already been introduced with such a plan. What is the new plan that you are expecting? And also, for the -- are you expecting a further reduction of the price from the current pricing?
Miyauchi-san, can you make a comment on that?
The separation plan for Y!mobile. As Mr. Son mentioned earlier, next fiscal year, in the first half, we are expecting to address this separated plan between terminal and data. They do have some monthly discounts, so from the sense, the price for the device can be reduced little.
Relates to that question. So Y!mobile, JPY 2,980, do you expect that this is going to be reduced from there?
So the plan that we have started from this September in SoftBank brand, those 2 plan that we have launched, that, with the introduction of separated plan, 20% to 30% has been reduced. Y!mobile is already reasonable price point already, but there are some direction in terms of reduction, 10% to 20%.
For details, we will be finalizing sooner.
Technology journalist. My name is [ Tsuda ]. I have a question on Arm. You mentioned earlier that, until last year or last time, it was more the edge-side-story IoT, but today you focused on the infrastructure and data centers and telecommunication [indiscernible]. You talked about those points [ about the neo verse ]. Arm, the company, IT core, with license; UC Berkeley and RISC-V. The free CPU core is emerging. What do you think about this? What is your view? So RISC-V and -- RISC-V, the large U.S. players like GAFA are participating. So what is your view on this, please?
RISC-V. It's an open source, and they're working hard and we respect that. However, when they try to develop responsible products, IP issue as -- and security has to be insured. Hacking or virus or various issues are emerging these days, so who will ensure that? This is another point that needs to be considered, so I think that will be a bigger problem or a bigger issue. RISC-V is countering the IoT chip. So Arm's royalty is $0.01 or $0.02, to begin with, so $0.01 or $0.02. To save $0.01 or $0.02, the free, open-source companies, will they go to the OS or go for something that is not responsible or where security is not insured, just to save $0.01 or $0.02? that will cause another different problem, so...
[Foreign Language] So next question, please. [Foreign Language]
My name is [ Nishida ] from TV Asahi. You mentioned that you're going to reduce by 40% of the human resources in SoftBank Mobile. Is this to address what has been said by the government?
Yes, that's right.
The person next...
My name is [ Yuga ] from Bloomberg News. I have 2 questions, please. First, regarding your IPO. So after the IPO, you'd like to aim for the increase in sales and revenue. And also, you mentioned about the use of proceed from the IPO, but the DOCOMO announced the price reduction. And also recently, the Nikkei average is reducing or declining, so the valuation is going -- is valuation be -- going to be impacted, offering size, operating time? Is that going to be impacted from this DOCOMO announcement?
That's what market is going to decide. And also today, as I just mentioned in this presentation, we would like to aim for increase in revenue and sales. And for that, we are going to reduce the resources by 40%, reducing the costs, so that without any excuse we would like to aim for all the increase in sales and revenue. So increase in -- it's not guaranteeing the increase in profitability because we are providing the separated plan between device and data. And going forward, customer have more option to choose, like, simply device and so on so that the sales from this device absolutely month-wise is decreasing, which is expected for our forecast. So that increase in sales are not -- is something that we never know until we actually do, but at least that's something that we provide in the options for customers. Originally speaking, we are not making money from the device sales. Actually, the price of the device, that's impacts to the amount of sales, but the profitability doesn't really impacted or reduced due to providing the cheaper-pricing-points device. So the sales may not increase, may slightly decrease, but the profitability, including our cost-reduction initiatives and so on, we would like to aim for that. Dividend policy-wise, we would like to aim for high dividend, which is that SoftBank Group has good, ample funds from these proceeds; and also the repayment of the debt. And with the dividend, high dividends, with the increase in revenue or the profitability, I believe that the market will digest and decide regarding this pricing point for the device.
My second question is about your corporate philosophy: Information Revolution make everyone happiness. So you, Mr. Son, how much do you think has been able to achieve with your corporate philosophy? So with your slides in the presentation, there are so many pages, so that I am assuming that you have more dreams to achieve or more vision to achieve and so on. Or are you satisfied to some extent already?
I haven't satisfied at all yet. It's just the beginning and now that we are becoming the main story.
[Foreign Language] So third row, please.
Toyo Keizai. My name is [ Okuda ]. In the prior question. Mobile telecommunication headcount will be reduced, and the mobile price needs to be reduced. And you said that the trend -- yes. So you said, for large data plan from packet, it is sufficiently low. So from various perspective, it is already affordable, you said. Now why then do you have to take further measures? And this 40% reduction in headcount, when do you think this will take place? Could you share with us the time line?
So Y!mobile unit price compared to U.S. and Europe is efficiently affordable, low. Large data packet unit price on SoftBank Mobile side, including video streaming, the packet unit price is lower compared to others, as I mentioned in my presentation. So why are we cutting, reducing the headcount? DOCOMO's price plan, up to next spring, they are not specific yet what the price will be, so we have to be prepared that, whatever situation, we need to be on our toes and not making any excuses; and achieve the profit increase. To achieve that, we need to reduce our costs and improve our management efficiency. Instead of just using our gut feeling or just work hard, we need to use effective measures and introduce more RPA and use the people we free up in the new businesses to come to a good solution for our new ecosystem.
So what is the time line for your 40% reduction?
We need to work on this steadily, so it's not any specific time line like 12 months or 18 months. So probably over the next 2 to 3 years.
Next question, please.
My name is [ Okayase ] from TV Asahi Morning Show. So you mentioned about the Saudi incident. So you met with Crown Prince. And how Crown Prince explained about Mr. Khashoggi's tragic case.
This was not something which should have happened.
Did he mention about his involvement, anything like that?
No, not at all.
[Foreign Language]
My name is Negishi from Wall Street Journal. So regarding this -- Mr. Khashoggi's tragic case, but also there is other issues in humanity with Yemen. And also -- and do you still have a possibility to receiving money from Saudi Arabia based on such cases? And there are some companies in Silicon Valley that does not -- [ there's any ] company that does not want to accept SoftBank Vision Fund money because of the relationship with Saudi Arabia?
Other than Mr. Khashoggi's incidence and case, there are many political related; and also relationship between U.S. and Saudi Arabia, Japanese government and Saudi Arabia, Iran and Saudi Arabia relationship. So there are complicated issues with those relationship. So me as a businessman, I believe I should not involve in political side of such case. At SoftBank Vision Fund, how we should think about the new money: Because we don't yet know or the clear understanding of the case, so we would like to be careful watching the outcome. And those companies who are receiving the money from us, as of today, I haven't heard any case that -- there may be some impact too, but so far, I haven't heard that there are any companies that does not like to accept the money because of the relationship with Saudi Arabia. So we would like to be sincerely address this issue and also carefully watch the situations.
So A, line A, second.
My name is [ Ikta ] from Asahi newspaper. So mobile price, SoftBank brand, the main one, do you have any plan for price reduction?
In September, this handset separation plan was announced. And Giga Monster, ultra Giga Monster, plan was announced. 43% of the overall data traffic is YouTube or Instagram or the other services, 43%. And this will be counted on a free-of-charge basis. And that means that 43% price discount is offered because this 43% is counted as free of charge. That is in effect 40% price reduction. It's a big impact, we think. Even then, furthermore, other companies' price strategy and our price understanding are still being explored. We are watching very closely.
So you said your basic stance is to increase the profit. So DOCOMO's, that was at the sacrifice of the profit, right, what DOCOMO is doing? So you are not thinking of doing that.
Well, there is a series of price reduction. And what to do next will be continuously considered and dividend policy. I just talked about the general terms. So before the IPO, there are things I can say and cannot say. It's very sensitive. So I just -- my staff gave me a memo to correct my words, and so yes, I will correct my words.
So we announced the separated plan in September, and we have already reduced the pricing point by 25% to 30%. That's the current situation. Answering to the previous question and depending on the competitive landscape and situation, we always like to make sure that we have sincerely addressing the situation. But whatever it is, we ourselves will do our cost-reduction effort. And like you saw from the Sprint slide, we would like to keep our continuous effort on our own.
Next question, please.
My name is Takatsuki from Nikkei business. So separated plan. You have introduced such plan and reducing the service charge, but at the same time, the device is going to be more expensive so that it's going to be offsetting, anyway, and it doesn't really change the burden on the customer. And NTT announced they will be reducing their price from the service charge, outside of the discounts from the device. And how do you think about that?
So customers can have more option to choose more reasonable devices. Up until recently, main lineups for the devices are expensive one, but customers will be able to choose more reasonable device, including the SIM-free devices, so that the customer themselves will be able to choose to reduce their cost. And as I mentioned earlier, we have already providing the cheapest pricing point by Y!mobile even compared with our peers in domestic and peers in global market. And separated plan as a data packet plan we have, including those services YouTube, Instagrams, those is going to be no cost. So with that actually, that those SMS services actually occupying about 43% of our traffic. And that is going to be reduced from the cost perspective, meaning that it's going to be beneficial for the customers. So more options for customers, simple and more variety of options, which we believe is going to be beneficial for the customers. And also, that can be also the cost reduction for customer themselves. Of course, we don't stop trying our efforts.
And next question, please.
[ Ibawa ] from Nikkei newspaper. I have one question on financials. So the interest-bearing debt for the equity holding, you said 32%, but with the share price decline in October, what is the level now?
This is Goto speaking. Currently, the market price, the interest-bearing debt ratio was 32%. This is loan-to-value. As we've been saying in the past, SoftBank Group's, this is the equity holding that we temporarily have. After the decision making in SoftBank Vision Fund, it's been transferred, and so it's 26% sufficient level. After this, if IPO realized, then these financial results will improve even further. And so we don't see any problem here.
So 35% is your target, and no change there.
Yes, as one guideline, yes.
So due to the time, that we would like to have this last question.
My name is Otsubo from Sankei newspaper. Some detailed question. Sorry about that. So SoftBank brand service charge with the separated plan or with the more options with SIM-free device and so on, customer will be able to enjoy the cheaper price or cheaper cost, but for the young generation, probably that is okay. They can think by themselves to reduce the cost, but choosing the SIM-free device by themselves may be difficult for the elderlies. Will that be also educated by shop staff and so on for the older segment customers?
That's what, why the shops are for. So the shop staff -- customers can ask any questions without any hesitation. And hope we will be able to meet their requests as much as possible.
Right. Thank you very much. That's about time. So we always -- I hope that my answers were -- sincerely addressed your questions without any excuse that we would like to grow even further.
Thank you very much.
Thank you very much. This concludes the SoftBank Group Corp. earnings result announcement for the 6-month period ended September 30, 2018.
The video of this meeting will be distributed on demand from our website and Ustream website. Thank you very much once again for joining SoftBank Group Corp. earnings result announcement for 6-month period ended September 30, 2018. Those who are with us over the Internet or by telephone, thank you indeed for staying with us until the end of the meeting.