SoftBank Group Corp
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SoftBank Group Corp
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Welcome to the SoftBank Group Corp earnings results announcement for the 9-month period ended December 31, 2017. Thank you very much for waiting, ladies and gentlemen.
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; Yoshimitsu Goto, Senior Executive Corporate Officer and Head of Finance Unit. At the back row from left, Kazuhiko Fujihara, Senior Executive Corporate Officer and Head of Business Unit. And we have Miss Kazuko Kimiwada, Executive Corporate Officer and Head of Accounting Unit.
This meeting is live broadcast over the Internet and can be also heard by telephone.
Now I would like to invite Mr. Son, Chairman and CEO, to present you the earnings results and business overview.
My name is Masayoshi Son from SoftBank. Thank you very much for your time today.
Recently, I've been thinking that what is human being? What is life? What is company? What is enterprise? Because artificial intelligence has been evolved so much with great speed. So that's the kind of a base question comes up to me in my mind, and I've been thinking very deeply about those kind of questions these days.
From that sense, I again thought about what is SoftBank? And also I thought that how the SoftBank should be, not in the short time period, but also mid- to long-term period-wise, how should we set the company? That's something that I've been thinking these days. So with this, today's presentation not only showing the recent result of the business, but also I would like to discuss and present you the view on how I see SoftBank and how the SoftBank's -- the enterprise itself should be. That's something that I would like to touch on today with this opportunity. So now let me go into the presentation.
So what is SoftBank? About this question, I would like to come back on this question after I go through the business results and overview of the business performance. So always keep in mind that what is SoftBank, and then that I would like to explain to you the business result and performance.
So consolidated results. As you can see, sales, net sales, adjusted EBITDA, EBIT, net income, as you can see, these are the figures and results for each, and the breakdown for that, that I would like to explain a little bit detail.
First, net sales up 4%, and as you can see by colors here for the breakdown of this net sales. Adjusted EBITDA, up 3%. Also, you can see the breakdown by colors. Especially the big growth came from Sprint, as you can tell from the chart.
EBIT, 24% up. So we see the 24% up in the breakdown. As you can see from this slide, Sprint made a great contribution, almost doubled in EBIT. So that you may think that the Sprint is troubled company. But actually, they are making a steady turnaround. And in the 9 months period in EBIT, JPY 290 billion results has been made. So compared to the year-on-year basis, it has been doubled. So that's very important point here.
And also on the very top, which is the Vision Fund, SoftBank Vision Fund. It's just about a year since the launch of the SoftBank Vision Fund but has already made about JPY 236 billion level of the contribution to the EBIT.
Net income, 20% increase. In here, we have some impact from changes to Sprint's deferred tax on the provisions of new U.S. tax law. A year before, we had a onetime gain due to the sales of Supercell shares and Alibaba shares, so that was another onetime effect. So both of them are onetime. But even without such a onetime effect, actual growth in net income is still 39%.
In here, the derivative loss from Alibaba is also included. And the derivative loss, it was that Alibaba share price increase, then accounting-wise at the way we recognize derivative loss which has explained in a previous announcement, but we still have some misunderstanding from the market or there's many questions comes up with this. So that -- let me once again remind you what is this about.
So end of December -- based on the share price by the end of December, and in a cumulative basis, we have about JPY 662 billion of derivative liabilities, but this is the accounting number. So next year, June, that amount will be reversed as a derivative gain. So once we have a recall or the derivative liabilities, it is not a sad news or a bad news, but this is just a time difference, so the same amount of liabilities will be recognized in gain. So that's something that I want you to understand so that the derivative loss or the liabilities is substantially 0.
On top of that, we have a gain on sales of JPY 565 billion, so that in June 2019, we are expecting this much of the gain on sales from Alibaba share.
And on top of that, because we have recognizing derivative liabilities due to the Alibaba share increase, but with this transaction, we have monetized the Alibaba share, but actually, the remaining, which is not a monetized portion, Alibaba share is larger and this portion actually that the more share price increase, the more that we will have unrealized gain of Alibaba share. Therefore, in terms of Alibaba shares, it's better for -- of course, for us and SoftBank shareholders if we see the share price increase in Alibaba.
So that you see the derivative liabilities due to the Alibaba share price increase, but this is only the onetime time difference from the accounting's point of view so that this is not a real loss. That's something that I wanted to remind you once again, so you can have a better understanding.
So excluding such onetime gain and loss, and the substantial net income was increased by 39%.
And since many people thinks or believes that the SoftBank own so much debt and the big ones that interest rate increase in United States and we have a lot of borrowings or because of the crash of equity market, if that kind of things happens, because of too much debt in SoftBank, are we okay? That kind of question also comes in often.
But year 2000, when we have an Internet bubble, we have gone through that, we survived that bubble. That time, we, SoftBank, was also -- or question that we may be bankrupt or we may not be able to survive, so that we have never imagined -- well we shouldn't believe that there will be no such equity market crash once again because we do know and understand that we should be -- factor in such a crash. Market crash happens time to time. So that's why, for the balance of the debt, we always be very careful and always see very close the balance of the debt.
And how we do that? In EBITDA, which is cash flow from operating perspective, up to 3.5x against EBITDA is from our perspective healthy. In other words, we want to keep it under 3.5x. When we acquired Vodafone Japan, it was 6.5x. So we borrowed a lot when we acquired Vodafone K.K. But up at -- up to 3.5x level, we think it's healthy. And at the moment, we have 2.8x, which means we are still in the range of safety.
And with regards to holding equity, or the assets that we have, up to 35% against assets we have, that's the threshold. Even though the share price goes down by 1/2, we are still okay. So up to 35% against asset is the level which we should be okay.
At the moment, it's not 35%, but we have 23%. So definitely, we are still in a safe zone. Even though the stock market goes down, the value of the stock down by 50% or even 1 quarter, we are still okay because net interest-bearing debt divided by equity value of holdings is 23%, which is again within the range of safety from our perspective.
Again, we have gone through the Internet bubble. That's why we are really carefully managing our financial status. That's how we manage, with discipline.
So talking about Sprint. Revenue, flat. However, cost-reduction efforts are going steadily well. As a result, since we acquired SoftBank -- excuse me, Sprint, adjusted EBITDA doubled in 5 years. And operating income, accordingly, up by 92% year-on-year or $2.5 billion.
And talking about tax reform, well, thanks to tax reform, Sprint has gained some benefits. So as a onetime effect, we have seen some positive impact on our result. But even excluding the onetime benefit, we were losing money in the past, but now we are gaining money. In fact, free cash flow doubled year-on-year. So from priorities of measures, Sprint has been improving. And average download speed increased by 60%. So network-wise, it should be helpful for Sprint to acquire more customers.
But Sprint or we are not satisfied with the current level of network. We want to build the next-generation network strategy. For example, we will build new macro sites. And also, we're going to have a tri-band on cell site and 2.5 GB TDD, we will leverage that spectrum even further. And we have strategic agreements with cable company -- or we will have strategic agreement with a cable company. And when you talk about 5G, Sprint will be the one that would leverage 5G more aggressive than others.
Whether 2.5G is applicable to 5G or not, that has been a question in industry, 2.5 GB band. Sprint has that band more than anybody else in Japan. In fact, we utilize a 2.5G band for iPhone and others. And in fact, that band carries the most traffic in SoftBank network.
And in the States, for 5G, we want to employ 2.5G as a standard for 5G so that -- because that band has adopted as a standard band by 3GPP. So that means that Sprint can leverage that band more aggressively going forward. In fact, early in 2019, we're going to start building network by leveraging 5G or 2.5G band. So with 5G network, Sprint has about 120 2.5G. But if you use a 60 MB, you can deliver speed like 1 GB. And if you use 100 megahertz of the 2.5G band, you can deliver 1.7 GB band, which means on a wireless network, we can deliver that speed, which means we can build most advanced, strongest 5G network.
But also, not only 2.5G, other carriers in the world want to utilize millimeter medium wave band. But if you use wide band, it's like a hotspot coverage. That means it's not really useful as a mobile network because medium wave network is more suitable for hotspots as opposed to broad coverage. But if you use 2.5G, you can build a network coverage like 4G or even better than 4G or LTE.
And Qualcomm gives full support from chipset perspective. And as a network vendor, Samsung, Nokia and Ericsson supports Sprint. So faster than anybody else and stronger than anybody else, Sprint can build a network, 5G network. That's how we see Sprint network.
Other carriers don't have that much spectrum in the first place. And most of the bands that they have are used for 3G and 4G. But Sprint, even though Sprint doesn't have as many users as others, but Sprint has most spectrum, especially 2.5 GB band, they've got great capacity in 2.5 GB band, so with 5G coming in, Sprint can build the strongest 5G network with a 2.5 GB. So Sprint will come back in terms of network when 5G is around.
And to strengthen the management, we have now, Michel, former CEO of Altice and former CEO of Vodafone Europe, as a CFO of Sprint. So Sprint has bottomed out and now ready to turn around by making network #1 in the States and by getting more customers.
And when it comes to Sprint, whether they go on their own or collaborate or merge with others, we will continue studying a lot of options and opportunities going forward.
And now talk about Yahoo! Japan. Advertising revenue grew steadily and Yahoo! Shopping is also going well in shopping transaction value. In Japanese e-commerce, I believe Yahoo! is the most growing -- fastest-growing e-commerce business in Japan. And Mr. Kawabe will be our next CEO to lead Yahoo! Japan, and Yahoo! Japan is really offensive mode, so to speak.
And ARM. ARM-based chips shipped, 15 billion in 9 months or 20 billion for 1 year, that has biggest share in mobile. But because we are ready with the new design of the chip, so that we are expecting to accelerate the revenue increase going forward.
And about this new chip, we have agreed with Samsung's [ top-notch chip ] and also in -- well advanced and also good pricing new version chip design is now ready in licensing. It's now ready to start.
In the server side, HPC, high-performance computing area is also where that ARM is developing. Also used in Nintendo Switch, IoT and other products, also have more penetration in ARM-based chip, and that we believe that we got the corner of the game so that we have a stronger position in terms of the competition so that they will be able to our expand market share further.
Alibaba, total revenue, 56% increase. Of course, making a lot of upfront investment, but still they are making good net income, increased by 20%. Free cash flow also increased by 35%, so that they keep growing.
Fortress. So we have a technology area and a finance area. And this company or this business is to enhance the finance size of the resources and expertise. So that we have announced the transaction with Fortress and we have officially received the approval from the regulators and we have completed the transaction. And so that we believe we'll be able to enhance the management and more expertise, leaderships and so on.
In SoftBank 2.0, I mentioned before and the key for that 2.0 is Vision Fund -- is the SoftBank Vision Fund. Since the last earnings result announcement, we have already making 20 investments. And in the past 3 months, we have added 6, so that in total, 26 companies are now portfolio or are the investee of SoftBank Vision Fund, so that you can call it they became the SoftBank family. And most of them are unicorns. They are already being unicorn or they are to be unicorn sometime soon. So those are the selected companies that we have invested from Vision Fund.
So I would like to also share some of the new investments that we have made newly, for example, Compass. This is the real estate big data platform. So when you buy or sell a house, there are about 3% of the commission to the agents in Japan and same as U.S., about 6% of the commission charge needs to be paid to agent. In that, this company make it more efficient to -- and create a platform to promote the transaction between buyers and sellers and they are making a great growth. This company, I believe, is going to be a great unicorn. And because one of the biggest shopping that the people does is the house or the home, and I believe that this company can help that decision.
And the other thing is the automobile. This is the #1 used car wholesaler in Europe. And this is also the platform and the company called AUTO1. What's interesting about used car is that unlike new car, each car is a unique product. So each individual car has its own price. So that depending on the mileage, depending on the damage, depending on the condition of the car, the price is all different by car. So that the pricing is different and also this provides the auction to the professional dealers. So this is very suitable for Internet service.
In Europe, in the past 4 years -- actually they started from very much scratch and with these 4 years, they have already grown the cars sold by 420,000 and also the number of dealers has now achieving 40,000. So number of dealers increasing dramatically and they became #1 as a platform in Europe.
Katerra, this company provides the end-to-end design in architecture technology platform, IoT or AIs, for the designing of the new housing, so that the Internet power has been fully utilized for this service so that the design to sourcing to manufacturing and delivery to assembly. So as a result, project time line used to be spending about 2 to 3 years. But now that they can provide the completion within about a year or so, so that the cost itself can be also reduced dramatically. So that's something that made it happen by this company. This company just launched about a few years ago but also making a dramatical growth.
And Wag! U.S, they have the most number of households with pets. Actually, number of pets is bigger than number of kids, that's what I heard. And dog walking, pet walking, so that this is a matchmaker between the dog owners and dog walkers. So this is a matching platform. As a result, in the past 2 years, again, starting from the scratch, active users in monthly basis achieving 58,000. And also monthly active dog walkers exceeding 20,000. So it's like Uber drivers and the Uber riders. So as a platform that Uber is providing, but this is the dog version of Uber. So that's Wag! That's probably easy to understand in a way. So it's also making a dramatical growth.
The Founder of this company is very young but he has been developing a lot of social games and made it successful. And whenever you do the social game, that you have interactions between the players and players and you can increase friends, so that kind of design and development has been again applied to this area, this industry and he made a very successful service here with lots of users.
Ping An Good Doctor, this is the China's largest one-stop health care portal with the market cap. And this PINGAN subsidiary, which is the Ping An Good Doctor. So this company is also great. They have -- usually when you have a online service and you may be able to receive the advice from the medical doctors, but most of the cases, doctors who are actually seeing patients in hospital use his or her saved time to provide the online service at the same time. But for this Ping An Good Doctor's case, they have an around-the-clock dedicated Ping An Good Doctor for this service, so this is not the other jobs from the doctors, but actually, these doctors are dedicated to Ping An Good Doctor service around the clock. So there are about 1,000 such doctors in the service.
And it's growing dramatically. In fact, 190 million users are already registered to the service. So again, this is growing so fast. So dedicated doctors provide service online and prescription can be issued online, which is authorized by the Chinese government. And also, medical products can be sold online and also delivery of the medicines can be done. So now this is in the Vision Fund portfolio.
And HealthKonnect, when you go to a hospital, you get some return if you have health insurance. And it's sometimes cumbersome to file for return of the charge that you pay because you have to write on a paper, and that's very inefficient. And there are a variety of insurance companies that provide such service. And from hospital's perspective, it's cumbersome. It takes time and effort to process that claims.
But when it comes to Ping An HealthKonnect, this HealthKonnect provides platform to hospitals, not only insurance that PINGAN provide but also other insurance claims are processed on a platform. And again, this service is growing so fast, and I see huge potential in this platform. And again, this is now as a part of SoftBank Vision Fund portfolio.
So in different areas, unicorn companies or potential unicorn companies are joining in Vision Fund family, if you will.
And Uber, which is often talked about in the media. And Uber is now one of our investees. And monthly riders, 75 million per month. Monthly drivers, 3 million. And daily rides, 15 million. So Uber is a world leader in ride-sharing service.
Now Uber is part of our family. We are the largest shareholder, with 15% of Uber's equity and we decided to send 2 board members. And total investment, approximately $7.7 billion for 1 investee. So $8 billion for 1 investee, which is probably impossible for traditional venture capital to make, because venture capital's fund total size is usually around 1 billion. That's the total size of the fund usually. So if the total is 100 billion or 50 billion, it [ 13 billion ] per deal is impossible from traditional sense. So venture capital usually invests in different rounds like A rounds and B rounds. But SoftBank Vision Fund or SoftBank, we invest in unicorn companies that is the leader of a certain segment, so whether or not they can do IPO. But when they can do IPO, that's the measurement that we are looking at when we make a decision on where to invest.
And also, something unique about us is we have a global view. For example, in the case of ridesharing, Uber, DiDi, Ola and Grab, if you combine them together, daily rides is about 45 million per day. So again, 45 million rides per day if you combine Uber, Ola, Grab, DiDi together. So that's the service size that we deliver. So the market share globally, you can calculate yourself. But anyway, for those ride-sharing services, SoftBank is the leading shareholder.
So next-generation transportation, well, from a global perspective, unlike -- not only looking at Japan but also looking at around the world, train services and subway services are something that you don't see outside city centers. So we can say that we have the biggest transportation network in the world because, in the future, cars might end up being in commodity. So automobile, maybe, from transportation perspective, can be just a part of the whole. So where the platform may have better value or bigger value than automobile itself. In fact, PC was the center of IT in the past. But hardware or PC is now commodity, just a part of the IT. But platformer like a Google, Alibaba, Amazon and Facebook, those platformers have better, bigger value than just the PC makers. And in the case of transportation, we will be a big platformer in transportation. And automobile or hardware is just a piece of the puzzle or part of the whole picture. So SoftBank, through Vision Fund, will continue investing in different areas to enhance the group's capability.
In fact, there is certain limitation in the industry, which is 30-year cycle. That's a common issue that IT companies may face. When you become the absolute #1 in the world, you may think that the company will dominate the IT world. But whether that company remains at the top of IT world is questionable. Because the former IT leaders may not be the leaders anymore. Why? Why? The peak of the growth comes, and after the peak, they may not go bankrupt, but they will lose the glory days. Because after 30 years, let's say, you found a company at the age of 30 years old. And in 30 years, you will be 60 years old. And the breakthrough technology that you employed in the past may not be cutting-edge technology anymore in 30 years. Obsolete. So you will lose the glory days after 30 years.
But SoftBank Group, is it okay from SoftBank Group's perspective? Is there any solution, which I have been thinking about? I, myself, don't want to be a bottleneck of SoftBank's growth. SoftBank technology or SoftBank service or SoftBank product cannot see the limitation of growth.
So what's the solution? From my perspective, solution is to form a SoftBank synergy group so that we can sustain for 300 years. I want to build an organization model that keeps growing for 300 years. That's a solution from our perspective. There have been a lot of companies built in the world and the organization that may last for 300 years is unique. And maybe I can say that I invented an organization that create over 300 years of growth. And before I talk about that, let me show you some video clip.
This is about 20 years ago, in a very small room I made this presentation and this is the video clip.
[Presentation]
This happened about 20 years ago. Now we have a lot of group companies in SoftBank Group, Alibaba and so on and so on, ARM. So many has been added also in addition to mobile. But 20 years ago, there is no Alibaba for us. There was no Yahoo! BB. There was no SoftBank Mobile. Of course, Sprint, ARM, no -- none of them were there with us. So at that moment, yet SoftBank was very small company. I have already talked about 300 years plan and talked about the ideal web-based organization, synergy group organization.
So what I'm saying -- talking about is the SB synergy group. This is not the results that I am talking about but actually, from the beginning, intentionally, we start to design this synergy group. So over 20 years, we built this way. And what did we want it to create? What kind of synergy group that I wanted to create? In one word, group of the #1 companies. Easy to say, but difficult to execute. Very difficult.
So those companies, yellow, reds, greens, those companies in synergy group of SoftBank intentionally using different brand, they are not using SoftBank something or SB something. That's intentionally did that way. Strategically, intentionally, they are not using SoftBank brand. We don't want them to use it in principle, except for some exceptionals. But in principle, SoftBank brand is not used and we don't ask them to use it.
And the holding ratio, ownership ratio is, again, we're not aiming for 51 or 80 or 100 or something like that. We rather like to see 20% to 30% as our sweet spot.
Then it's easier for us to collect those #1 companies. Imagine, I talked to Jack Ma, and if I ask Jack Ma I would like to invest in Alibaba, I want you to use SBbaba for example. If I said that, if I have said that 15 years ago, 20 years ago to Jack, I wouldn't say that he's going to accept that. Asking for change of the brand, he would say no. If I ask him to -- for 51%, he would say no. If I ask him to change the management, of course, he's going to say no.
The reason that we were able to create such a #1 group of companies, we shouldn't ask too much. And if this company becomes #2 or #3, then we may want to exit from this company. But if we had SoftBank something company name, SB something company name, it's not easy to exit the company. Therefore, to create such a #1 group of companies, but still it's really difficult to create such an organization, you may happen to have one company with #1 industry, that is fortunate and lucky. But if you try to have a 50, 100, 200 companies of #1 in the segment or #1 in the country or #1 in the world, to create such an organization, to create such a company group, easy to say but really difficult to actually do that.
Actually, there is some organization similar, but not exactly the same of this synergy group, which is the Zaibatsu Japanese conglomerate-type of organization. So for example, banking, real estate, insurance, trading, chemicals, tradings. So in group, they have a -- they create a conglomerate that they can do lots of businesses in one umbrella. And it was okay back then because it was only the competition in domestic world. But now the competition is the world market, not domestic market anymore.
So as of today, so about 70 years, how are they doing? Are they #1 in the world? How many of the #1 companies do they have? Actually, most of the -- do they have #1s among -- under their umbrella? It's impossible. They cannot have #1 banking, they cannot have #1 real estate, #1 insurance. So as a result, what happened to them is that only the collection of #5 players, #10 players, something like that. But because they are the group companies so that they prioritize their group companies' products or they adopt group company service, then the weaker becomes weaker, so that even though the group companies' #8 player, but still because they are the group family, so that they have to use them instead of choosing the #1 player in outside of their group. So that's how they became. Then it's not a strong group anymore. They cannot sustain as a strong group anymore. They have to choose and adopt not the #1 players, product or service. And then they cannot really create a good synergy. Is that the strong organization? I don't think so.
SoftBank, on the other hand, we are the group of #1 players, so that I think the #1 Sigma is #1. Easy to say, and you may easily understand that, but really difficult to come up with such an idea. Actually, I don't really hear that. Imagine that. Group companies of #1s. Can you imagine anywhere else? I don't. I cannot think of any of it. Any of the companies amongst the world to some extent of the size of the business, I don't really recognize any of the company with the only #1 players group.
That's actually the synergy group is difficult to find such a synergy group. And to make that happen, I intentionally not to integrate brand amongst those companies, intentionally not aiming for 51-or-over percent of the ownership. It's not the result that was originally designed as a result 20 years later, we became the size of over JPY 20 trillion of these investments in the company -- in the group.
So it's not coincidental, it's not the results. It was from the beginning originally designed that way. So to -- against the synergy group, there is a concentration type of business. So only for pursue one product, one service, one business model.
This is also great model. I think that Steve Jobs pursued that way. And also there are lots of great companies like Intel, Microsoft is something similar to it. So major successful companies in the world actually taking a strategy of concentration. So only focus on their core business, then that's much safer and much efficient. Then you can grow so don't look other ways at all.
That's if you only like to compete in 30 years, only within 30 years to being that #1, then I think that would be best strategy, very efficient. You don't need to develop other things. You don't need to look for other business. You don't need to take other risks. So very efficient and very appropriate.
However, not the 30 years, but when it comes to 300 years, can that product sustain in the market?
For 300 years, will the business model sustain? For 300 years, will business model or your product remain #1 in the world? I don't think so. I doubt that. If you compete in the short track, the muscle you use or training you have to go through. So for example, Mr. Bolt who won in world competition. And even though he is very strong in track and field, 100-meter or short track, he's very strong. But when it comes to marathon, for example, I don't think he will be #1.
So I don't want to be #1 for 30 years of competition. I want to be #1 for as long as 300 years. That's the organization I want to have. And that idea I came up with 20 years ago. And on that video was proof showing that I had an idea 20 years ago. In fact, even before the presentation, I had come up with this idea because I wanted to figure out how we can survive and be successful for 300 years. It's not easy. And you may say that, how can you do that? But at least I tried to aim for that, and I tried to intentionally design the organization in such a way that that organization can sustain for 300 years.
And SoftBank Group is a strategic holding company, holding 20% or 30% or maybe 50% of 100% if it's a core business or core company. But other than core businesses, SoftBank Group has only 20% or 30% of the ownership of the group companies.
So with SB synergy group, SoftBank Group want to grow as a big tree to capture as many fruits as possible. And accordingly, SoftBank KK, which is domestic telco business in Japan, you may ask why you want to prepare for SBKK IPO. And why you should for parent subsidiary listing, isn't it against the rule? And isn't it against the world trend? Well, some people may find it risky or some people may be concerned about those aspects. But as far as I'm concerned, I don't want to pursue small benefit because the fundamentally, SoftBank SB synergy group is there and, SoftBank Group, which is a strategic holding company, should have operating companies that can run on their own. That's why we decided to start preparing for listing of SBKK. And SoftBank Group and SoftBank KK, we want to clearly show our roles and responsibilities of SoftBank Group. For example, SoftBank Group is a strategic holding company, where SBKK is self-driven. Flexible growth strategy can be promoted by SBKK. And also with the SBKK IPO, we can realize value of Domestic Telecom business.
And SBG, some people ask whether SBG will find it difficult to use SBKK's plenty of financial resources. But if you emphasize consideration of dividend policy, we may be able to enhance or improve a financial position and we may be able to invest in new opportunities by having dividends from SBKK. Because if it's dividend, we are equal to common stockholders because those stockholders can have a dividend like SB Group can have. So there should not be an issue of conflict of interest or unfair concern.
So SBG is looking at the world to deliver Information Revolution and investors who are interested in domestic business can directly invest in SoftBank KK. As a result, again, like I said earlier, SBG has a strategic long-term view from global perspective, and that's the focus of SoftBank Group. Whereas CEOs of operating companies of the group can focus on their own businesses.
Now talking about SoftBank KK, which is our domestic telco that we are preparing for IPO. Domestic Telecom EBIT, due to temporary upfront investment, we see some reduction in terms of EBIT. But we want to build customer base, because it's important to look at after IPO in order to continuously deliver results. Even after IPO, we need to invest first to build our customer base. So SoftBank KK has been evolving and SoftBank KK will continue to evolve.
So we acquired Vodafone K.K. And at that time, we had 1.5 million users. But now, we have 43 million. And Yahoo! Japan, 7 million to 90 million in terms of customer number. So beyond the carrier is a vision that SoftBank KK has to raise the level that in -- first wave was PC and second wave was mobile Internet and third wave should be IoT and AI. Those are the evolutions that we are looking at, we have been and we will continuously looking at.
So we want to get ready for the third wave, expand the customer base and generate new businesses. Those are the 2 reasons why we want to prepare for SBKK's IPO.
First, growth strategy or expand the customer base. So Ultra GIGA Monster and Hikari bundle and collaboration with Yahoo! comfortable online shopping experience. And Super Friday, we collaborate with Yoshinoya beef rice bowl fast-food chain and 31 Baskin-Robbins ice cream, we work with them to provide customer rewards. And customers are really satisfied. In fact, our net addition in smartphone has been growing steadily. In fact, we believe that we are the fastest grower of smartphone net addition and churn has been improving. SoftBank Mobile brand delivers large capacity in a stress-free experience, whereas Y! mobile brand delivers low-price smartphone debut for low traffic user service. So it's like 2 brands, UNIQLO and GU. So we have SoftBank and Yahoo! Mobile dual brand and both brands have seen growth of smartphone users, it's not just one of them. The fact of the matter is both SoftBank and Yahoo! Mobile have seen a growth in terms of user number.
Also we announced a strategic alliance with Line Mobile. So on top -- with that, also FTTH service is making a steady growth. So here, we have been providing a lot of promotion for the acquisition. So we are making a upfront investment for the acquisition of the customer base as for the preparation for the IPO. And with the customer base, we would like to have deep analysis with the cumulative generations of the new businesses.
So with the customer base that we have acquired, we would like to provide a lot of business models on top of that, and that's how we are preparing for.
Yahoo! Shopping number of buyers also increasing. And between SoftBank KK and Yahoo! Japan for the future, role-wise, what should they do?
For the growth, what do they do? Not only being defense, but also needs to make offense. That's the -- the answer is Vision Fund.
Like I mentioned earlier, only for past 1 year, already invested 26 unicorns by SoftBank Vision Fund and they became our group companies. So that can be 50 or 100. So the top companies, unicorns of the world, can be the group companies. Like we established Yahoo! Japan, we can create joint ventures. So that in the Yahoo! case, we made investment in Yahoo! Inc. in United States first. And right after that, immediately after that, we bring Yahoo!'s business models together with them to set up Yahoo! Japan as a joint venture. So likewise, put the monies in Vision Fund, but also, at the same time, like WeWork. We set up the WeWork Japan as a joint venture after we made the investment in Vision Fund. And the partner for those joint venture can be Yahoo! Japan or can be SoftBank KK.
So Yahoo! Japan who has the best -- biggest reach to the customer base in Japan and also the SoftBank KK who has a very good reach to the Japanese mobile customers, they can be the good partner for the joint venture with those investees. That can be the good strategy for the further growth of the business. So not being offense -- defense, but to be offense.
For example, like I mentioned, WeWork, we already have -- we have launched the office in Roppongi and we have already sold out, right? So we have sold out the office in Roppongi, which we just launched the 1st of this month. And we will have a consecutive launch one after another, such as Marunouchi, Shimbashi and GINZA SIX. And I believe that they will make a good start.
And with Brain Corp, we would like to expand their business in Japanese market. So this is just one example. But actually, we are making lots of seedings so that the investee that we would like to create the good business in Japan. So that means beyond the carrier.
So SoftBank, we are pursuing SB synergy group and I've been saying this about 20 years ago -- since 20 years ago. And it hasn't been fully understood and fully focused. But I believe, once again, I would like to remind you why we are setting the IPO for the -- preparing for the IPO for the SoftBank KK is because we need to complete the formation for the synergy group. So that even after I retire, we can create that organization, still keep growing. So not like Zaibatsu, the Japanese conglomerate, but we would like to create the organization, the new model, completely new model, which is similar but rather like to create such a synergy group in my -- is my intention, which can keep growing for 300 years. So that's my answers for the -- to create the company that keeps growing for 300 years.
So what is SoftBank once again? That was the very first question in the first page, is that strategic holding company that keeps growing for 300 years. So generating strategic synergies each other and execute the Information Revolution. That is SoftBank.
So I -- that's my conclusion. Thank you very much for your attention.
Thank you very much. We would like to open the floor for the question now. [Operator Instructions]
Before we start the question, Goto-san, Mr. Goto has one statement.
So we just said that the commencement of the preparation for the listing of SB Corp. and we haven't made a final decision whether to list SB share or not. So that at this moment, we cannot make any detail or comments or detailed explanations for this preparation, so that's what I would like to remind you before we start receiving your question.
So once again, we take 2 questions, up to 2 questions per person.
My name is Owada from Nikkei Computer. So you said that collecting the #1 players and create the company that keeps 300 year. But what is the management structure after IPO for SBKK? Because SoftBank Mobile is #3 player in the market, unfortunately, it's not the #1 player. And you ask Miyauchi-san, Mr. Miyauchi to lead the company. And because Mr. Son is the Founder, so I believe that you are leading the group. But actually, Mr. Miyauchi is 8 years older than Mr. Son and he may be tired or he may want to retire.
But Mr. Miyauchi is going to be CEO, and I will be Chairman, and I will be providing continuous support. But at the same time, that to create the autonomous -- autonomy of the company that in the past 2 -- 1, 2 years, Mr. Miyauchi has been leading the company to grow the business. Of course, I am not indefinite. Mr. Miyauchi is not indefinite so there are lots of senior executives below Mr. Miyauchi, so that we will be raising successors, and we would like to prepare the structures to be able to succeed the generations. But the leader of the business is definitely Mr. Miyauchi, so I would like to appoint it that way.
About Uber, JPY 800 billion power project you mentioned. But how are you going to use the proceeds from the IPO of SBKK, I would like to ask? About 2 years ago, when you sell the Supercell, you said that you didn't have any specific name for the investment. But the next month that you announced the ARM acquisition. So you have a very speedy decision-making process. So based on that experience, with this timing of IPO, I believe you already have a clear view on how you're going to use that money. How you think about that?
So improvement of balance sheet and also the improved growth strategy. So in the growth strategy, there are many projects. But Vision Fund, if the case is over JPY 10 billion, we first refer to SoftBank Vision Fund. And if the SoftBank Vision Fund LPs do not want to invest in this company because the size is too big or the business is too telecommunication side, then they will reject. And sometimes that we talk -- there are some consideration over -- from the market about the conflict of interest with Vision Fund. But we have a clear terms between SoftBank Group and SoftBank Vision Fund to make sure that we can avoid any of the conflict of interest and also turmoils. So anything that $100 million below that the SoftBank Group has a free hand to invest. But anything above $100 million, first, we refer to SoftBank Vision Fund all the time. And SoftBank Vision Fund, those partners, other than SoftBank, didn't like to invest because of the size is too big or is too strong relation with telecommunication, so that they may question about the yield and so on. Then that SoftBank Vision Fund may pass on this investment. So they have -- the [ lower ] major partners on Vision Fund have such a right. So based on that process, there are cases where that investment may not always coming from SoftBank Vision Fund. But we should mainly think that the main investment is coming from the SoftBank Vision Fund as a strategic point of view. Next question, please?
[ Nishioka ] from Sankei Newspaper. Question to Mr. Son, with regards to SB synergy group. We saw the video 20 years ago. So specifically, when and how you came up with the idea of SB synergy group? Do you have any episode or story?
Well, the video was shot 19 years ago by accident. But that synergy group idea was the one that I had since I launched SoftBank business. And people may say that, no, come on, you shouldn't -- you couldn't have had that idea. Well, in fact, when I was 19 years ago, I made my life plan for 50 years. So in 40 years -- sorry, in my age 40, I made a big bet. And in my 50, I will be successful. And in my 60s, hand my business over to my successor. So I am a Founder, so up until the day I die, I will be involved in SoftBank somehow. But at some point, I need to think about succession plan. Anyway, when I launched my business, I decided I will launch a business as a Founder. And once I launched a business, that business has to live longer than I live. That's how responsible you should be when you start a business. And when or if I want to start a business, I need to be responsible for the business continue for 100 years ago -- excuse me, 100 years, 200 years and 300 years. That's the idea I had, and I came up with about 40 businesses, and I won't go into detail. But when, again, I launched SoftBank business, I came up with the idea of synergy group. When I was 19 years ago -- old, I invented electronic translator, and I got a property right and sold the right to a shop. I want to have as many people as possible to invent as many things as possible and share. That's kind of platform that I should build as opposed to one person like me create something. So that's why I came with the name of my business bank because I want to build a platform for as many people as possible to create as many things as possible. And I have had this idea, synergy group idea, since the day I launched my service. So again, that's my intention from the beginning.
And when -- specifically, when did you come up with the idea? How?
Well, again, when I was 19 years old and I created something and I made a prototype and I made a product and I had stomach pains because of the difficulty of the process that I had to go through. And if you are lucky, you can probably commercialize the idea. But you can't be lucky 100%. So I thought maybe there should be a way whereby you can run business more safely and broadly, and that's why I came up with an idea of synergy group. When I was like 20 years ago -- 20 years old, like 30 years ago, I created 25 letters and one of the 25 letters I created was a Chinese character called [ goon ], like over 30 years ago. Any other question?
My name is [indiscernible]. So you mentioned about Line Mobile alliance, so having 51% of ownership. So it's not rather -- it's not really the alliance but rather the acquisitions. But how do you like to set the business with Line Mobile?
Mr. Miyauchi-san, please.
So as for Line Mobile, as you know, Line -- I've been daily -- I'm the daily user of Line service, it's very convenient, greatest in its service and great service in chattings and everything. From the Line's point of view, they would like to expand the customer base in the Internet. And in our point of view, we have devices, like we are providing Android ones in Y! mobile so that high quality, reasonable price, device can be provided. In marketing-wise, we can jointly work in various ways. So about 3 years ago, when we start Y!mobile, many people doubted that the customers from SoftBank can all go to the Y!mobile, but -- and I remember that correctly. But this time, Line Mobile and Y!mobile can have a clear positions, segregation of positions. So on top of that, we believe there are many kinds of users in the market so that we would like to create the third positions together with Line Mobile.
Can I have another question? I would like to ask you about the Rakuten entering the mobile business. So spectrum [ condition-wise ], they will be competitor. So how you see that Rakuten's entering into the market?
I mentioned SB synergy group and the Information Revolution. There are so many players playing their own roles in the Information Revolution, Meiji Restorations, there are [indiscernible] and other organizations. And from that sense, Rakuten is one of the great players to drive the Information Revolution. So I believe Rakuten has his own end goal to enter into the market and it will stimulate the market as well. Of course, we are the one that born from the Internet industry so that we would like to freshen up by ourselves and drive the market in the Information Revolution. Next question, please?
[indiscernible] from Nikkei Business. Two questions. First, regards to Sprint. CapEx specifically. Compared to FY '16, it seems that they had more CapEx. But compared to AT&T and Verizon, their CapEx was lower. But Mr. Son mentioned earlier that 2.5 GB band is something that Sprint has plenty for 5G. And unless you have capacity and CapEx, you can't utilize 2.5G band. So again, my question about Sprint CapEx is the first question.
Already, we have cell sites across the nation. And we are going to allocate 2.5 GB band on existing cell sites. And if those cell sites already have 2.5 GB band, with software upgrade or extra antenna, we can enhance the capacity of the cell sites. So we believe that we can build a 5G network within a certain amount of CapEx that we plan.
And the second question. You mentioned that automobile is just a part and umbrella is -- overarching umbrella is like application layer, ride-sharing service, for example. So if you want to start from upper layer, application layer, you may want to continuously hold the telecom platform -- telecom network both in Japan and U.S. And if you need a telecom network in Japan and U.S., not only U.S. and Japan, you may want to have a telecom layer in other countries.
So when it comes to telecommunications, telecommunications can be very important infrastructure for us to drive Information Revolution. And on infrastructure, there'll be a lot of Internet of Things running. So telecommunications should be the core business from our perspective. So how Sprint will evolve going forward, whether Sprint goes on their own or merge with somebody else, U.S. is the very important, biggest market in the world. And from SoftBank's perspective, regardless of how Sprint goes, SoftBank wants to continuously get involved in U.S. market.
What about Asia and European markets?
Well, when a good opportunity arises, we may act on that, but we will make a decision case-by-case and at an appropriate timing.
So thank you very much, but we are very sorry, due to the time constraint, we would like to end this session after taking one more question.
So my name is Tanaka from Nikkei Computer. So end of January, the former Vice President of Sharp, Mr. Sasaki, has passed away, and I understand that he has -- he is the great mentor for you. So what is your feelings after the pass away of Mr. Sasaki?
So right after the foundation of the business -- actually, before the foundation of the business, it was the first time in my life that having money from Sharp because of the electric translator that I have invented. And when we have a license agreement with Sharp, that was the first time I received the money. And the counterpart of that discussion was Mr. Sasaki and Sharp later on that he became Vice President of the company. And since then we have always have an opportunity. Every time that he visit in U.S., we always have lunch or dinner together once in 2, 3 months. And even after I found the business, whenever Mr. Sasaki have a chance to visit Tokyo, once in 2, 3 months, that he invited me for meal that he gave me lots of advice, great advice. When I was sick, he was the same. Even we were difficult time in SoftBank, he still kept the same way. So in a variety of the way, even he was not my relative, he was not an investor, he was not a direct client of our business, but still, he has been continuously a great mentor for me and provide a lot of advice to me and gave me a great instruction. There was no such a person. So he's a great, great mentor for me. So we have mentors days, the 6 mentors days once in a year. The 2nd of May is to appreciate such mentors of 6 in SoftBank, and we make it the company holiday. And actually, Mr. Sasaki is the first one, even before the foundation of the business, he's been supporting me. And he passed away with his age of 102. And down to the last moment, he always have an interest over the latest-edge technology and always keep the great minds and ambitions. So he is -- I have great respect and he's a great mentor. The last question, please?
[ Matsumi ] from [ Nomura ] Securities. Two questions. First about Line Mobile. I'm sure that you can do a lot of things with Line Mobile. For example, if MVNO and your own network service can be authorized, maybe you can use Line Mobile for different ways. So maybe you can leverage Line Mobile in your own network?
Well, of course, we want to enhance Line Mobile going forward. And with [indiscernible], CEO, we want to utilize Line Mobile as a brand that we can be aggressive and offensive.
The second with regards to the future of transportation, DiDi. In China, they want to be the king of transportation. So again, the future of transportation, how do you think?
Well, from DiDi's perspective, that's a new initiative in the business. Not really being profitable, DiDi, together with local government, deliver traffic signal services in China. And with that, traffic jam has been reduced by 20%. So that's the fact. That means a lot of people can be saved by reducing a traffic jam. That means relationship between DiDi and the local government can be better. And with that better relationship, directly or indirectly, you can get benefit somehow eventually. So first, you want to be helpful, useful to the general public. And once people find you helpful, you can monetize from that good relationship with the community and the local government. that's how I view in China in transportation.
Thank you very much for joining us today. Thank you.
And finally, again, SB synergy group, that is the real thing that SoftBank Group wants to pursue. So let me emphasize that once again. Thank you very much.
Thank you very much. Thank you for joining the SoftBank Group Corporation earnings results announcement for the 9-month period ended December 31, 2017.