KDDI Corporation
Q4 2024 Earnings Call Transcript

Published: 11 May 2024

[Unidentified Company Representative:]

Thank you for waiting. We now would like to start the meeting of KDDI Financial Results of the fiscal year ended in March 28, 2024 followed by the Q&A session. Thank you for joining us out of your busy schedules. I am your [indiscernible] from IR department. This meeting is broadcast live on the Internet with Japanese and English simultaneous interpretation. Please be advised that the meeting will be later made available on our IR website for on-demand distribution. Let me introduce today’s attendees, President, Representative Director, CEO, Takahashi; Senior Managing Executive Officer, Executive Director, Business Solutions Sector, Kuwahara; Managing Executive Officer, Director CDU, Executive Director, Advancing Business Technology Sector, Matsuda; Managing Executive Officer, Executive Director, Personal Business Sector, Takizawa; Managing Executive Officer, CFO, Executive Director, Corporate Sector, Saishoji; Executive Officer, Executive Director, Corporate Management Division, Corporate Sector, Aketa. Three items related to business results and two TSC disclosed items, in total, five items uploaded on our IR website. Please read the disclaimer in each document about what’s listed in the material and our performance including what will be shared during the Q&A and subscription targets. CEO, Takahashi will brief you on the summary of the business results, followed by the questions and answer session. Mr. Takahashi, the floor is yours.

[Makoto Takahashi:]

Thank you. Let me share with you the results of the fiscal year ended in March 2024. Highlights of the consolidated results for the fiscal year March 2024, operating revenue increased while the operating income decreased in the consolidated results. There was a temporary impact from lease receivables provision for Myanmar Telecom business and the impairment and provision for removal of lower utilization telecom equipment. Other than those, the progress was on track. The left shows the operating revenues ¥5.754 trillion, up 1.5% year-on-year. The center shows the operating income which was ¥961.6 billion. Without the temporary impact, it was ¥1.0806 trillion. The right shows the net income attributable to the owners of the parent, which was ¥637.9 billion. Next, let me explain about the factors for change for the consolidated operating income, ARPU revenues for multi-brand communications rebounded and were up ¥5 billion. About the growth areas, one of which is DX area, which was ¥20.4 billion. Financial business was ¥14.2 billion. Energy business was ¥16 billion, growing steadily. Including a decrease in Rakuten Roaming revenue and an impact from accounting treatment of financial business, the substantive operating income was ¥1.0806 trillion and we were able to achieve the forecast made at the beginning of the term. With provisions for Myanmar Telecom business and other temporary impact, which was minus ¥119 billion, the operating income was ¥961.6 billion for the fiscal year ended March 2024. Next, on EPS progress, which is one of the important targets in the mid-term management strategy. In addition to key measures already described, we have been promoting businesses to raise EPS towards the target of 1.5x increase by the FY March 2025 versus FY March 2019. As shown on the right, we have been steadily working to achieve sustainable growth and return to our shareholders. As the graph shows, however, we are behind in the progress due to unexpected factors. Regarding this target, we won’t adhere to the target and by extending the period for the mid-term management strategy by 1 year, we will update the strategy and aim to achieve 1.5x increase in EPS by FY March 2026. To enhance strategies for communication plus added values as an update, we have formulated new satellite growth strategy. At its core, we have communication and data-driven and generative AI. And we have defined growth areas that have added values when coupled with communications as Orbit1 and future growth pillar at Orbit2. Here is a summary of the business portfolio of the new satellite growth strategy. We aim to achieve sustainable growth in core output revenues. In our focused areas defined as. Orbit1, we aim to have a double-digit growth in CAGA in all the areas of DX finance under energy businesses. And LX in life transformation, LX in Orbit2 will be the Growth Foundation for future. On the bottom we will accelerate business growth of both companies through synergies by partnering with LAWSON. So let me explain the synergies with LAWSON. We will support LAWSON’s DX with the keyword real tech convenience. And we will create new added values starting from Real Tech Convenience Stores. As a bottom in addition to au shops which are physical contact points, about 2000 shops and digital contact points such as Smart Pass and au PAY. New contact points of remote customer service with about 14,600 lots on stores nationwide will expand significantly. As you can see at the top, include the smartphone procedure and finance, consultation, quick commerce. We’ll be able to realize through REAL TECH. We believe that we can provide a new services utilizing the store locations in addition to the conventional services described in the upper part by enhancing the functions and value of these multi contract points with our partners. As a platform business education of a right, lots of stores could be used as Base Stations or EDGE AI or stations for Drones or EV stations to prevent crime. And in this way platform business can be expanded. Which are defined as creation of value added? Next is the future expansion of upon the economic zone. With this investment, we will strengthen our relationship with loyalty marketing. And work with Mitsubishi Corporation and partner companies to expand upon their Punta Economic Zone. Over right, you use Smart Pass premium will be rebranded as Ponta Pass with the aim of expanding the current 50 million member base for Smart Pass to 20 million members. Through improved services as Ponta Pass through these efforts, in addition to the loss of organic growth. We will accelerate losses growth by promoting sales growth and efficiency through the realization of REAL TECH Convenience. In the addition by utilizing stores as multi contact points and expanding economic zone centered on the Ponta Pass, KDDI will maximize its synergies through value added income, DX growth, enhanced retention and cost efficiency. We will promote the optimization of a balance between investment and cost levels from a medium-to long-term perspective in order to realize the physical and digital initiatives that I’ve explained at the top of level, control, CapEx and OpEx levels by improving the efficiency of core technologies, such as infrastructure sharing. And reviewing low utilization facilities in the middle, so that we can aggressively invest in advanced technologies to build a digital infrastructure. Regarding infrastructure sharing, we have established 5G Japan with SoftBank to promote collaboration. We will further accelerate those efforts aiming to build a cumulative total of 100,000 base stations by FY 2030 and reduce CapEx by ¥120 billion. Consolidated financial forecast for the fiscal year ending March 2025, of the left operating revenue ¥5.770 trillion up 0.3% year-on-year. In the middle operating income ¥1.110 trillion up 15.4% year-on-year. Over rate, net income is targeted at ¥690 billion, a 8.2% increase year-on-year. Also, lead financial highlights for FY March 2025. We aim to increase income through an increase in communications ARPU, revenue and double-digit growth in focus areas. The communications ARPU revenue, organic growth is expected to increase year-on-year by ¥14 billion. And ARPU revenue is expected to decrease by ¥14 billion because of the impact of the revision of access charge. But the impact on profits will be limited due to decreasing cost. Next is the cash allocation policy. We will strive to achieve both expansion of operating cash flow and shareholder returns through investments in growth. At our top, operating cash flow excluding financial business is targeted at a ¥3 trillion over 2 years from the fiscal year ending March 2025 to March 2026. In the middle, we will allocate the generated operating cash flow to CapEx, of ¥1.3 trillion in strategic business investment of ¥200 billion. At the bottom, shareholder returns, we aim for sustainable dividend increase and achieve a dividend payout ratio of over 40%. In addition, we will conduct share buybacks in a flexible manner. Lastly is today’s summary towards KDDI vision 2030 will promote the digital twin and create a new value using AI and data. In addition, we will promote optimization of balance between CapEx and OpEx levels, through profit structural reform for technology. We have not revised our midterm management strategy extended period by one year and announced a new satellite growth strategy. EPS is targeted to increase 1.5x FY March 26 compared to FY March 2019. In addition, we aim to achieve the both are increase in operating cash flow through growth investments and shareholder returns, as well as sustainable growth of ARPU revenue and double-digit growth of operating income in focus areas. For fiscal year ending March 31, 2025, we aim to increase consolidated operating incomes through increasing communications ARPU revenues and double-digit growth in focus areas. With regard to shareholder returns, the company resolved to achieve DPS growth for 23 consecutive years and acquire up to ¥300 billion of treasures of stock of which up to ¥213.4 billion will be purchased through a tender offer. We will continue to promote our growth strategy. Thank you very much for your attention.

[Q - Unidentified Analyst:]

Thank you. Mr. Takahashi, thank you. Now we would like to entertain questions from you. If you have a question, kindly state your name and affiliation to give the floor to as many of you as possible. Limit your questions to two questions purpose and if have two questions after hearing the answer to your first question, give us the second question. Please raise your hand if you have a question. Nominee Securities, my name is Maisano. Question number one, EPS target ¥380 one year extension March 2026. That level of EPS, I think is achievable. I’ve been having that assumption. But ¥300 billion share buyback and 300 billion that, I think that’s the premise. I don’t think I’m so off. But operating income plan as I look at it, I think you’re a little bit short of that achieving the target ¥30 billion difference from what I assume it’s a 2-year gap that means quite a gap. So, how do you plan to achieve ¥388? You have this year’s plan, but looking at the next year, regardless of the numbers, what kind of things are you planning to do? So once again, please elaborate on those.

[Unidentified Company Representative:]

Thank you for your question. I think that’s the major point. We believe that and, as you said, the increase of EPS by 1.5x, ¥340, for this year and in the final analysis increase it by 1.5x. That means we have to increase it to ¥388 that our scenario. First of all, operating income increased this year. Communications ARPU revenues, that’s ¥14 billion as I said, and our focus areas, DX financial energy ¥20 billion – ¥30 billion, ¥10 billion for each. So in total ¥33 billion, if you totaling that a little less than ¥50 billion. March 2026, in the next fiscal year, will continue to do this. That’s the big assumption. In addition to this Rakuten roaming revenues concerning those this time ¥17 billion compared with the previous term. The revenues decrease and March 2026 fiscal year. It would be the degrees of just the double digit to ¥100 million level. So there will be some difference from there from the previous term. So that’s one next concern to LX. We need to build up numbers in LX as Orbit 2. We are making preparation. So the tens of billions of yen, somehow we would like to do that and also income from Lawson. By this acquisition, ¥10 billion or so for this year’s forecast. Actually, concerning the TV, it has been completed early 41.1%. The, we have that result, first quarter and likely we are able to cover that with the equity accounted method. So compared with the current forecast about ¥8 billion, we would be able to do it better compared with what we have already announced to. ¥1 trillion, ¥110 billion that we would be able to add that much. And there’s another technological cost to efficiency enhancement. We have been talking about profit structure reform ¥18 billion in the previous term, this year ¥18 billion and the next term about ¥18 billion, will be doing. This is concerning 4G facilities, which will be retired. But in the following years after the retirement of the facilities, they will have an impact on OpEx. So they’re about 50% will fill the effect to March 2026. This will be done for 2 years. So ¥30 billion or ¥35 billion, a little less than ¥40 billion. Compared with that, about 50% of those numbers will be felt. If you total all of these, we – I believe it we can achieve the target, yes, there might be a little bit of shortage. But I think this is doable. So company as a whole. I mean we still have 2 years, so in the next 2 years, how can we raise the CPS? What kind of items we should actually do cover? We are focusing on that. We are working on this and we somehow would like to achieve this, ¥30 billion short for this fiscal year. You mentioned that in this profit structure reform a little less than ¥20 billion, will be done and some latitude was given. But with Lawson the acquisition cost equity account method. Somehow, from your account, I think we can explain that this lack of gap of ¥30 billion. ¥1 trillion and ¥11 billion the that’s the guidance, but we need to do better. So the including the acquired, the profits from acquisition, we would like to somehow manage to achieve this.

[Unidentified Analyst:]

Thank you. I didn’t expect such detailed factors for increase and decrease, very easy to understand follow-up question, Lawson 41% percent ¥8 billion upward revision.

[Nanae Saishoji:]

You are talking about this term right, after squeezing out after squeeze out, ¥20 billion for the income and then first quarter we will be equity accounted and we will be able to get the income from them. LX several billions of yen. What’s the level? Well, Starlink drones in those areas. We are looking at businesses, especially to rural areas very steady progress. So we believe, we can achieve numbers from them. Makoto-son anything?

[Makoto Takahashi:]

Thank you. From an early stage, we have been doing this to be drones, Starlink or even look at Metaverse to be, we are receiving a lot of inquiries. Last fiscal year and in this fiscal year, those are factors to increase top line. And as an income, it will make a contribution starting from the next fiscal year. That’s why we had those numbers. So in drones, if you can generate profits. I’ve never heard of that unless you have certain operating revenues, yeah. I don’t really think you can generate such profit and services. The revenues will be able to list that, right? Several – It’s a combination of some businesses and tens of billions of yen, but one of them is drone business. The revenues from them. Yes, is increasing steadily.

[Unidentified Analyst:]

Understood. The last follow-up question, Mr. Takahashi, said a little less than ¥20 billion for profit structure reform for technology. I think you’re talking about this fiscal year. Normally for structural reform, and you usually have a task force. So, it’s already incorporated in the business plan, but in your case, that’s not how you make the plan, am I right?

[Unidentified Company Representative:]

So this is ¥60 billion for 3 years regarding the structural reform from started in the year, that fiscal year that ended. So your question is that it’s already been incorporated a little less than ¥20 billion is up for the next fiscal year. Last fiscal year, this fiscal year and the next fiscal year for each year about ¥20 billion. That’s the level we are looking at too. So this fiscal year ¥20 billion that’s already in this plan, yes, yes. And the next fiscal year, another ¥20 billion, right? But previous year, about ¥20 billion this fiscal year. We do ¥20 billion, but if we retire this much on OpEx. It will have an effect for about half of them. That’s how we count them, next to fiscal year for 2 years or 50% of 2 years OpEx. So the half of the ¥40 billion, that’s ¥20 billion, am I right? That’s what we are looking at.

[Unidentified Analyst:]

I see. Just for clarification on OpEx for this fiscal year’s contribution, what’s the contribution for this fiscal year [indiscernible] how much? Thank you.

[Unidentified Company Representative:]

This fiscal year’s contribution, several billions of yen. But, that will be biased towards the end of the year, so it’s not the fully reflected.

[Unidentified Analyst:]

My last question, this fiscal year – next fiscal year for 2-year cash allocation has been made available, new ¥3 trillion. The ¥1.3 trillion CapEx business ¥200 billion. So that’s the ¥100 billion and there is a dividend. ¥300 billion, so that we make it ¥600 billion. You have still have ¥900 billion this year. The share buyback ¥300 billion. So you have ¥600 billion. I don’t think you will use all of them. So ¥600 billion, cash available next year, how much you will do that share buyback, that’s another thing.

[Unidentified Company Representative:]

You still have some available. If I make a computation, am I correct? Let’s see, this year, next year. So, about the share buyback, that ¥300 billion, ¥300 billion, that’s the assumption this year share buyback, if you look at it carefully end of October – by end of October, it will be completed. That’s what it says. So after that there will be some room or latitude regarding the target, we are trying to clarify internally. So EPS increased by 1.5x to realize this EPS target. So the total payout ratio with 100% as a cap. The Altius, including the Altius share buyback, if it make/mix such responses. You mentioned that there is still a little bit of gap you mentioned it. And there are many things that we can think about too. That’s how we design this.

[Unidentified Analyst:]

So in principle, this year, ¥300 billion next year you mentioned ¥300 billion. So that’s ¥600 billion, if it’s ¥300 billion, the total payout ratio is a little less than the 80%. So you can still do maximum 20% more.

[Unidentified Company Representative:]

That’s maximum.

[Unidentified Analyst:]

Yes, understood. Thank you.

[Unidentified Company Representative:]

Thank you very much. Any other questions?

[Operator:]

Yes, from SMBC Nikko Securities, Satoru Kikuchi-son.

[Satoru Kikuchi:]

Thank you. I’m Kikuchi. Thank you very much. I also have two questions. As – was mentioned, under Mr. Masuno’s question, total payout ratio of 100% and to go beyond 100% as a one-time measure, based on the intentions of large shareholders. Is it possible to go beyond 100%? If upper limit is 100%? Am I writing under Saishoji as you mentioned is the upper limit right now?

[Nanae Saishoji:]

Well, 100% I mentioned, I want to make 100% as a upper limit and what is your question?

[Satoru Kikuchi:]

This year only. What usually? You cannot continue to go beyond 100%, but as a special measure. Only this year to exceed 100% or next year. Would that be possible?

[Nanae Saishoji:]

Well, I don’t assume that so far. If that such social happens, we may consider, but our basic existence is to set 100% as upper limit for the next 3 years. This year ¥200 billion TOB is going to take place as mentioned by a Toyota. And with that I think it’s about 10%. And they’re saying they will continue to hold, if something happens, we may take measures. But, I think it is possible to limit the level to 100%.

[Satoru Kikuchi:]

I understood, I was not able to read the whole material but 10% you mentioned that was mentioned by Toyota. Is that right?

[Nanae Saishoji:]

Yes, and the amounts to execute amounts that they offered. Then, our shareholding would be just 10%. It is describing the materials that we have made public. They are saying that we will continue to hold at the moment. And I agree with our stance is that we want them to continue to hold. Where can we enjoy synergy? With Toyota or to sell, we are having continuous meetings about it. In case of Toyota, we are working a lot in the area connectivity. So if they continue to hold, we would appreciate that very much.

[Satoru Kikuchi:]

Thank you very much. My second question, next fiscal year EPS target to be achieved NTT. It seemed they had some leisure, but they were able to achieve EPS by selling assets. In your case, do you have such an option? Selling assets or your case among a budget of ¥200 billion, You may be able to exceed that level, but through inorganic growth or selling assets. Do you have an option of achieving the target?

[Makoto Takahashi:]

Through this message, yes, that may be one option, but we are not thinking about it so far. As I have said, the M&A that you mentioned or sell – increase the percentage of shares we hold there are many candidates. EPS growth by 1.5x is our company wide target. Not consolidate the P&L, but how to increase net income, the candidates to achieve that, there are many candidates available and one of that could be selling assets. But they are not yet included as one of our candidates at a moment. That is all. Thank you very much.

[Operator:]

Thank you. Please raise your hand if you have a question. Daiwa Securities, Tokunaga san.

[Kazuki Tokunaga:]

Thank you for giving me this opportunity. Tokunaga with Daiwa Securities. I have two questions. Page 33 please, as I look at this communications of revenues this term, it increased under the next fiscal year. It’s likely – it’s going to increase even more numbers rather than subscriptions increase the ARPU up-sale will be effective now. This fiscal term decrease of access charge and then this seems to be the picture about communications ARPU as assumptions number of IDs, ARPU forecasts. That’s my question number one.

[Makoto Takahashi:]

Toshitake will address your questions.

[Toshitake Amamiya:]

Right. Thank you for your questions. First ID, March 2024 fiscal year initially 31 million, that’s what we are talking about 31 million, but over all 31.15 million. So, we cleared the target and partly because of that regarding ARPU, ARPU revenues, the ¥5 billion, we had the rebound. But if you look at the unit price, why the fewer by ¥20, so we need to really shift focus on the growth. One of the factors is the acquisition of IDs centering on the UQ, it has been brisk and that has an effect on ARPU number. Having said that, centering on AU, if you look at the price plan, the max plan ratio has been pretty brisk, so that’s one. And churn, AU churn rate, the overall churn rate increased slightly. But if you look at the AU Churn rate 0.8%, that’s the level. So, AU churn rate, we have it stabilizes part because of the brand mix, ARPU will become healthier, so that’s another factor. On the party, it has relation to IT. We can’t put light on the UQ. But finally if you look at the UQ, the mid capacity, large capacity price plan for the new plan, from 40% to 70%, mid capacity and high capacity customers are now choosing those price menus. So, with this combination, the ARPU revenues and ARPU, we intend to increase them and that’s the plan and that’s the current situation. March 2026, it looks like it’s going to jump, have a huge jump on any factors. All of those elements that I talked about, if we continue them, if we continue the operation, it’s possible to achieve that under the current situation. Thank you.

[Kazuki Tokunaga:]

The second question from the same page, value added ARPU, CAGR double digit growth is what you intend to have and with the synergies with loss and you can accelerate growth. The value added ARPU, double digit growth. This is from the electricity payment, product support contest, which part. And Lawson synergy, which will see the effect of the synergies with Lawson.

[Makoto Takahashi:]

Thank you for your question. First value added ARPU, high margin finance and payment and product support, they are the big drivers. About the finance business, financial business, mortgage loans, credit card settlement payments, those of risk and product support. How to use and also such support is provided to customers and those businesses are pretty brisk. Concerning those, the value added ARPU revenues will feel the effect. And secondly about Lawson, previously as was mentioned in the presentation, AU Smart Pass, we have that subscription. And then as point of us, we will be rebranding them. And together with Lawson, we want to provide this service to our customers, so 15 million to 20 million. So, it’s going to be the increase of 5 million. This is really about how many years do we spend. We want to do it as early as possible, so that customers will join them. We want to make services available in such a way. The increase by 5 million and this is about ¥500. And in 5 years, we will make that calculation, so ¥75 billion in 5 years. I mean it’s not going to go up immediately, gradually, ¥75 billion. That’s the calculation we have to do together with Lawson and Mitsubishi Corporation, we need to work steadily and also we need to work firmly with loyalty, marketing and the value added up, they will see the results.

[Kazuki Tokunaga:]

Thank you.

[Operator:]

Thank you. Any other questions? From Citigroup Securities, Mr. Tsuruo.

[Mitsunobu Tsuruo:]

Thank you for giving me this opportunity. I have two questions. One question is for confirmation. And there are two items about capital allocation, you mentioned 100% total payout ratio. Then would be about ¥800 billion of treasury stock repurchase in 2 years, if average is ¥400 billion per year, is that right?

[Makoto Takahashi:]

Yes, if it is 100%, I think we – that is possible. So, ¥200 billion this year, we have announced that figure. We want to conclude by October and depending on the situations of the time, we would like to think of the measures that we are going to take. To increase EPS, the usual method is to carried forward, we have not decided, but that is one option.

[Mitsunobu Tsuruo:]

And on top of that I have another question. ¥200 billion, how is that going to be used? You mentioned strategic investments and Lawson partnership, also was mentioned. There may be many strategic options available. How are you going to use that money? In what sectors are you going to use?

[Makoto Takahashi:]

This time, the Personal segment, we made a big investment in Lawson, so that will be the center, but ¥200 billion will be mainly in the Business segment and make investments there. So, Business segment and this time as segments investing in business, business creation, our Life Transformation segment is included by Business segment. So, these will be the main areas for investment.

[Mitsunobu Tsuruo:]

Thank you very much.

[Makoto Takahashi:]

And also finance may be another sector.

[Mitsunobu Tsuruo:]

Thank you very much. My second question is about the personal business. Competition environment seems to be becoming more fierce. At NTT, you are placing focus on getting more subscribers. The expenses to acquire subscribers, what is your assumption in your case this year?

[Makoto Takahashi:]

Look at the environment on my desk, because I will talk about the details. But looking at the financial results of individual companies, churn rate is getting higher and they say competition is getting more severe. But looking at our situation, AU’s churn rate is clearly declining. Our service max is functioning and the money activity service is also going well, churn rate is getting higher. Well, there is SIM increase in the churn rate in UQ, in particular SIM individual contract may be affecting. People calculate momentum based on volume, so SIM itself contracts without bundling with the smartphone, everyone is trying to buy that contract, then that commission is ¥20,000, that is included, the volume, the number will increase and the trend in very short time that is affecting the churn rate. From April, under [indiscernible], we must put more emphasis on ID and ARPU. If we add ¥20,000 incentive for SIM itself, volume will increase, but instead to set with the telephone, with the smartphone itself, like in case of UQ or AU, maybe they can join UQ and then go to AU, we went over here to this method. We have started to do so. So, we don’t think that competition is getting more severe. I think the SIM itself is having a bad impact of MNP with rocketing, May is very stable, not in April, but May is very stable. So, I don’t have impressions of competition is getting more severe. That is my impression.

[Mitsunobu Tsuruo:]

Thank you very much.

[Operator:]

Thank you. We are running out of time. So, the next will be the last question. Please raise your hand if you have a question. Okasan Securities, Okumura San, please.

[Yusuke Okumura:]

Thank you. Okasan Securities, my name is Okumura. Just one qualitative question about Lawson’s TOB, there are various kinds of information. Initially three companies are to do so, but at the very end, the loss on share price increased. So, compared with what you felt – what you were planning to spend as an investment. I think it actually increased, if it’s not the participation cost at the 11th hour, you made the decision, what was the trigger, I would like to know that and what was the financial expectation to make that decision? You have been talking about synergies, but in terms of the impact on your P&L, which one will have the highest impact?

[Makoto Takahashi:]

As you rightly said, three companies and then one company left. So, at that stage whether we are going to do this or not, still yes, we have to think hard about this. But, if we reorganize this, then it is going to take a lot of time. Regarding the synergy, DX convenience value added Ponta economic zone. Especially about the Ponta economic zone, by cooperating with Mitsubishi Corporation, there is going to be a lot of possibilities. That’s what we thought and the Mitsubishi Corporation and KDDI, there our businesses are not really overlapping. We are strong in DX, Mitsubishi is strong in other areas. So, when we wanted to have a sense of speed with 50-50 leads to this operation. I think we first thought that it’s worth doing. And about investment efficiency, this time for six months regarding our income from them, we already shared the numbers. In terms of investment efficiency, it’s about 5% to begin with. In terms of this year’s revenues started with a level 6.5% is the investment efficiency we are looking at, we will start with 5%. But look at Lawson’s plan, about – in 2026, just a moment – in around 2026, let’s see, around 7% and that’s 2027, likely to reach the level of 7%. Without synergies, the capital cost can be taken care of and that’s why we made the decision to invest. How to look at this work, our hardware rate is pretty high, higher than 6.5, so with the simple calculation 3% to 4%, we believe that the investment can be recovered, that’s one. And in addition to this synergies that I already talked about by incorporating DX, Lawson’s plan can be implemented early, that’s one. Also Smartpass, we now call it Ponta Pass. So, we can also acquire the income from those. And then, so it’s worth that making the investment that was worth the decision in this fiscal term, ¥18 billion or so will be felt. In the next fiscal term, about ¥20 billion can be expected from there. And then making a direct contribution to the EPS and that’s why we made this decision. Did I answer your question?

[Yusuke Okumura:]

Thank you so much. Just one supplementary question, in the deck, synergies from your side, financial business was not really mentioned. Lawson bank financial holdings, will they exist as separate entities, anything?

[Makoto Takahashi:]

We would like to think about them, but at this juncture, direct synergies at this juncture, we haven’t been able to find them. Now, Lawson sides bank, as we look at their profitability, I don’t really think they are no optimum situation, not many number of accounts. So, after the V, we would like to have a discussion, but direct big synergy is not expected here. Thank you so much for a very detailed explanation. Thank you.

[Operator:]

Thank you very much. Now it is time. So, I would like to conclude the KDDI financial results presentation for the year ending March 2024. Thank you very much for your attendance.