Earnings Results for the Six-month Period Ended September 30, 2008 (FY2008/H1) Analyst Meeting

Transcription

1 Earnings Results for the Six-month Period Ended September 3, 28 (FY28/H1) Analyst Meeting November 6, 28 SOFTBANK CORP. 1 Dec 11, 28 Version

2 Disclaimer This material is made based on information available at the time of writing. Statements in this material that are not historical facts including, without limitation, our plans, forecasts and strategies are Forward-Looking Statements. Forward-Looking Statements are subject to various risks and uncertainties, including, without limitation, continuing decline in the general economic conditions, general market conditions, customer demand for products and services, increased competition, inherent risk in international operations and other important factors, which may cause actual results to differ materially from those expressed or implied in any Forward-Looking Statement. Information contained herein regarding companies other than SOFTBANK CORP. and other companies of the SOFTBANK Group is quoted from public sources and others, and we have not verified and we are not responsible for the accuracy of the information. SOFTBANK CORP. expressly disclaims any obligation or responsibility to update or revise or supplement any Forward-Looking Statement in any presentation material or generally to any extent. Use of or reliance on the information in this material is at your own risk.

3 Content Accounting Consolidated P/L Analysis 4 Consolidated B/S Analysis 13 Consolidated CF Analysis 21 Finance Repayment Resources & Cash Position 28 Reduce Interest-bearing Debt 37 Improve Various Financial Indices 45 Impact From Financial Market Deterioration Operating 51 Broadband Infrastructure Segment 59 Fixed-line Telecommunications Segment 63 Mobile Communications Segment 67 2

4 Accounting Kazuko Kimiwada General Manager Accounting, Internal Control SOFTBANK CORP. 3

5 Consolidated P/L Analysis Consolidated B/S Analysis Consolidated CF Analysis 4

6 Scope of Consolidation/Scope of Equity Method <P/L-1> No. of Comp. Core Companies Consolidated subsidiaries 16 SOFTBANK MOBILE, SOFTBANK BB, SOFTBANK TELECOM, Yahoo Japan, SOFTBANK TECHNOLOGY, ITmedia, etc. Newly consolidated companies 7 SOFTBANK TELECOM PARTNERS CORP. (*1), Alibaba.com Japan, etc. Subsidiaries excluded from consolidation 1 Broadmedia, etc. Non-consolidated subsidiaries (=1+2) 73 Insignificant companies Non-consolidated subsidiaries under the equity method (1) 4 Entities newly accounted under the equity method 1 Affiliated companies under the equity method 73 Gung Ho Online Entertainment, MySpace Japan, Alibaba Group Holding Limited, etc. Entities newly accounted under the equity method 12 Broadmedia, etc. Entities no longer accounted under the equity method 3 Non-consolidated subsidiaries not under the equity method (2) 69 Insignificant companies Affiliated companies not under the equity method 2 Insignificant companies Consolidated subsidiaries Companies under equity method Core group companies Main business activities Mobile Communications 6 2 SOFTBANK MOBILE (SBM) - Mobile phone service - Sales of mobile phone handsets Broadband Infrastructure 4 3 SOFTBANK BB (SBB) - ADSL and fiber-optic high-speed Internet connection services Fixed-line Telecommunications 4 - SOFTBANK TELECOM (SBTM) - Fixed-line telecommunications service - Data center service Internet Culture Yahoo Japan - Online advertisement e-commerce 7 4 SOFTBANK BB, Vector, Carview - Distribution of PC, software, and PC accessories - e-commerce towards businesses and consumers Others 7 49 SOFTBANK TECHNOLOGY, ITmedia -Technology service business - Media marketing business - Overseas fund business Total *1 Changed its company name from JAPAN TELECOM INVOICE Co., Ltd. on July 1, 28. *2 SOFTBANK BB Corp. SOFTBANK TELECOM Corp., and Yahoo Japan Corporation are included in the consolidated subsidiaries of the Broadband Infrastructure, Fixed-line Telecommunications, and Internet Culture segments respectively, while SOFTBANK BB Corp., SOFTBANK TELECOM Corp., and Yahoo Japan Corporation operate multiple business and their operating results are allocated to multiple business segments. 5

7 Consolidated P/L Summary <P/L-2> <bn JPY> Net Sales Operating Income Ordinary Income Net Income 3, 2, , % +7% H , , % 1, 71.6 Q FY7/H FY8/H FY7/H FY8/H FY7/H1 FY8/H % FY7/H1 FY8/H1 6

8 Consolidated Net Sales <P/L-3> 1, (-3%) 1, <bn JPY> Mobile Communications Mobile Communications (-4.5bn) - Increase in sales of telecommunications service (+1.2bn) Increase in subscribers (+13.1bn) Decrease in ARPU (-13.8bn) Others (+2.bn) - Decrease in sales of mobile handsets and accessories (-36.8bn) Broadband Infrastructure (-9.7bn) - Decrease in the number of ADSL charged users (-6.9bn) - Decrease in ADSL ARPU (-.7bn) - Decrease in ODN (-1.8bn) FY7/H1 FY8/H1 Broadband Infrastructure Fixed-line Telecommunications Internet Culture e-commerce Elimination Fixed-line Telecommunications (-3.bn) - Increase in OTOKU Line (+6.7bn) - Increase in corporate data traffic (+2.3bn) - Decrease in MYLINE (-6.6bn) - Decrease in international traffic (-4.6bn) Internet Culture (+15.1bn) - Increase in advertising business (+26.5bn) (gross basis) - Effect of changing part of sales from gross to net basis (-14.2bn) 7

9 Consolidated Operating Income (loss) <P/L-4> (+7%) Fixed-line Telecommunications e-commerce <bn JPY> Mobile Communications Broadband Infrastructure Fixed-line Telecommunications Internet Culture e-commerce Mobile Communications (-6.bn) - Decrease in net sales (-4.5bn) - Decrease in cost of sales due to the reduction of number of devices shipped (+2.5bn) - Decrease in SGA Decrease in sales promotion expense (+16.bn) Decrease in sales commission (+13.1bn) Allowance for debt of account (-8.3bn) Broadband Infrastructure (+3.2bn) -Decrease in net sales (-9.7bn) -Decrease in communication service lines and depreciation and cost of sales (+6.2bn) -Decrease in SGA Decrease in sales commission (+3.bn) Decrease in sales promotion expense (+1.3bn) Fixed-line Telecommunications (+5.2bn) - Decrease in net sales (-3.bn) - Decrease in usage fees for communications equipment such as access charge (+7.8) - Decrease in sales commission (+2.8bn) Internet Culture (+6.2bn) -Increase in net sales (+15.1bn) -Increase in cost of sales due to Overture K.K newly consolidated since FY7/. (-8.8bn) -Increase in personnel costs (-2.7bn) FY7/H1 FY8/H1 8

10 Non-operating Income/Loss and Ordinary Income Non-operating Income/Loss Ordinary Income <P/L-5> <bn JPY> Other non-operating expense Interest expense Other non-operating income Equity in earning (loss) of affiliated companies foreign exchange gain Interest income Non-operating income/ loss (net) /H1 Ordinary income Increase in operating income Net of decrease in non-operating income/loss /H1 Ordinary income (+5%) FY27/H1 FY28/H1 9

11 Special Income/Loss and Income Before Income Taxes and Minority Interests <P/L-6> < bn JPY> Special Income/Loss Income Before Income Taxes and Minority Interests Other special loss Unrealized loss on valuation of investments at subsidiaries in the U.S., net* Valuation loss on investment securities Other special income Dilution gain from changes in equity interest Gain on sale of investment securities Special income/loss(net) Increase in ordinary income 7/H1 Income before income taxes & minority interests /H Net of decrease in special income/loss Income before income taxes & minority interests (13.8) (6%) FY27/H1 FY28/H1 *Unrealized loss on valuation of investments and gain on sale of investments at subsidiaries in the U.S, net. 1

12 Tax and Other Adjustments, Difference in Tax Rate <P/L-7> <bn JPY> Tax and Other Adjustments Income Taxes: Current & Deferred 1 1 Yahoo Japan Corporation 25.7 BBM group consolidated taxation Income before income taxes & minority interests Income taxes; current Income taxes; deferred 17.4 Mainly Yahoo Japan Corporation Minority interests in net income 22.2 Net income BBM use of loss carryforwards 16.3 SBM depreciation and amortization on adjustments 6.5 SBM temporary difference -4.1 SBB deferred tax assets -2.6 Total tax expenses (1+2) Primary Factors of Tax Rate Difference Income before income taxes & minority interests % Amount Statutory income tax rate 4.7% 46.8 (Primary factors of tax rate differences) Amortization of goodwill (Mainly SBM) Change in valuation allowance (Mainly SBB) +1.6% -5.6% Other -.7% -.9 Effective income tax rate 45.%

13 Loss Carryforwards (e/o Sep 28) <P/L-8> < bn JPY> Balance (tax income based) Balance (tax based) Valuation allowance Deferred tax assets on B/S Total Company Name BB Mobile Balance (tax income based) 68. Expiry date Mar 29-Mar 215 SOFTBANK TELECOM 87.1 Mar 213-Mar 215 SOFTBANK IDC 65.3 Mar 29-Mar 213 SOFTBANK BB Others Total Mar 212-Mar 213 Mar 29-Mar

14 Consolidated P/L Analysis Consolidated B/S Analysis Consolidated CF Analysis 13

15 Consolidated B/S Summary Current Assets SBM Others Current Liabilities <B/S-1> <bn JPY> 1, , ,24.7 1, ,5.1 1, Mar 28 Sep 28 Fixed Assets Mar 28 Sep 28 Long-term Liabilities 2, ,929. 2, , ,986. 1, , , Mar 28 Sep 28 Mar 28 Sep 28 14

16 Consolidated B/S (1) Current Assets Assets e/o Mar 28 e/o Sep 28 Variance Outline <B/S-2> <bn JPY> Current assets 1, , SBM 1,5.1 1, Others Cash and deposits Increase provided by operating activities (+115.2) Securitization of installment sales receivables (procured +12.6, paid -9.7) SBM Sales and lease back of equipment newly acquired (received +55.1, paid -36.2) Purchase of fixed assets (-113.3) Repayment of SBM loan (-37.2) SB stand-alone: e/o Mar 8 (57.8) >> e/o Sep 8 (35.6) Breakdown: borrowings (+35.9), redemption 2 th series Unsecured SB (-12.5), redemption 21 st series Unsecured SB (-2.) Others OPI stock acquisition (-12.9), dividend payment (-2.6) Yahoo Japan: e/o 8/3 (97.2) >> e/o Sep 8 (56.2) Breakdown: (+34.2) increase provided by operating activities after income tax of (28.1), stock buyback (-51.9), repayment of borrowings (-1.), dividend payment (-6.2) Notes and accounts receivable-trade SBM Others Merchandise Mobile handset installment sales receivables e/o Mar 8 (479.5) >> e/o Jun 8 (525.5) SBB: e/o Mar 8 (89.1) >> e/o Sep 8 (77.1) SBTM: e/o Mar 8/3 (66.8) >> e/o Sep 8 (47.) SBM Mobile handsets etc. Other Deferred tax assets SBM Others Other SBM Accounts receivable-other e/o Mar 8 (24.1) >> e/o Sep 8 (31.2) -8.7 Allowance for doubtful accounts e/o Mar 8 (-6.1) >> e/o Sep 8 (-8.9) Others

17 Consolidated B/S (2) Tangible Assets Assets e/o Mar 28 e/o Sep 28 Variance Outline <B/S-3> <bn JPY> Fixed assets 2, , SBM 1,986. 1, Others Property and equipment, net SBM , , Others Building and structures Telecommunications equipment Telecommunications service lines Land SBM Others SBTM: e/o Mar 8 (7.1) >> e/o Sep 8 (6.2), SBIDC (5.) Construction-inprogress Other SBM Others SBM SBM Others Network center etc. SBTM: e/o Mar 8 (28.9) >> e/o Sep 8 (27.2) Others SBTM: e/o Mar 8 (14.9) >> e/o Sep 8 (12.6) SBB: e/o Mar 8 (44.5) >> e/o Sep 8 (41.6) SBM Others SBM Others SBTM: e/o Mar 8 (76.6) >> e/o Sep 8 (73.6) 16

18 Consolidated B/S (3) Intangible Assets Assets e/o Mar 28 e/o Sep 28 Variance Outline Intangible assets, net 1, , SBM 1, , Others Goodwill SBM Decrease due to amortization Others SOFTBANK TELECOM PARTNERS (+23.4), Yahoo Japan (+19.3) Software SBM Others Other SBM Others Investments and other assets SBM Others Investment securities and investment in partnership Deferred tax assets Others Other SBM Deferred charges SBM Amount at acquisition in April 28 : 24.6bn amortization period: 1 years SBM Others Decline in share price of Yahoo! Inc. SBM Others SBH: derivative assets (+28.4) Others <B/S-4> <bn JPY> Recorded due to buyback of treasury stock by Yahoo Japan Amount: 19.6bn amortization period: 2 years 17

19 Consolidated B/S (4) Current Liabilities Liabilities e/o Mar 28 e/o Sep 28 Variance Outline <B/S-5> <bn JPY> Current liabilities 1,24.7 1, SBM Others Accounts payable-trade SBM Mobile handsets costs payable etc. Others SBB: e/o Mar 8 (45.2) >> e/o Sep 8 (33.8) -19. SBTM: e/o Mar 8 (8.5) >>e/o Sep 8 (3.9) Short-term borrowings SBM Short-term borrowings from installment sales receivables securitization 25.5 structure (+25.5) SB stand-alone: e/o Mar 8 (218.) >> e/o Sep 8 (281.) Others SBTM: e/o Mar 8 (32.) >> e/o Sep 8 (4.) Yahoo Japan: e/o Mar 8 (2.) >> e/o Sep 8 (2.) Commercial paper SBM Others SB stand-alone: (+2.) Current position of corporate bonds SBM Others SB stand-alone: redemption 2th series Unsecured SB (-12.5), redemption 21th series Unsecured SB (-2.) Accounts payable-other SBM Mainly payable for capital expenditure, operating expenses, etc. Others SBB: e/o Mar 8 (3.7) >> e/o Sep 8 (17.9) SBTM: e/o Mar 8 (37.4) >> e/o Sep 8 (36.9) Current portion of lease obligations SBM Transferred from the long-term (+48.9), lease paid (-36.3) Others.1.1 Others SBM Others Accounting treatment under new accounting standard for lease transactions. Leases contracted before April 1, 28 are continuously accounted for as operating lease transactions with footnote disclosure. 18

20 Consolidated B/S (5) Long-term Liabilities <B/S-6> <bn JPY> Liabilities e/o Mar 28 e/o Sep 28 Variance Outline Long-term liabilities 2, , ,31.1 SBM 1, , Others Corporate bonds SBM Others SB stand-alone: redemption (-2.8) Long-term debt 1, , SBM loan e/o Mar 8 (1,276.4) >> e/o Sep 8 (1,239.2) SBM 1, , Vodafone subordinate loan e/o Mar 8 (84.5) >> e/o Sep 8 (84.5) Installment sales receivables structure borrowings e/o Mar 8 (53.1) >> e/o Sep 8 (39.4) Others SB stand-alone: e/o Mar 8 (2.) >> e/o Sep 8 () Yahoo Japan: e/o Mar 8 (3.) >> e/o Sep 8 (2.) Deferred tax liabilities SBM Others Allowance for point mileage SBM Allowance for point mileage Others Lease obligations SBM Newly procured (+61.1), transferred to short-term (-48.9) Others.7.7 Other Please refer to P18 for lease transactions SBM Others SBH: derivative liabilities (-2.5) SBB: deferred revenue (mainly modem rental business securitization advanced royalty balance etc.) e/o Mar 8 (15.9) e/o Sep 8 (8.8) 19

21 Consolidated B/S (6) Equity <B/S-7> <bn JPY> Net Assets e/o Mar 28 e/o Sep 28 Variance Outline Equity Shareholders equity Common stock Cash receipts for new stock subscriptions Additional pain-in capital Accumulated deficit Net income (41.1), dividend payment (-2.7) Treasury stock Valuation and translation adjustments Unrealized gain on available-for-sale securities (-32.6), deferred gain/loss on derivatives under hedge accounting (+28.1), foreign currency translation adjustments (-3.9) Stock acquisition rights.1.2 Minority interests BBM e/o Sep 8 (3.) *Issued preferred stock to Vodafone International Holdings B.V. Yahoo Japan e/o Mar 8 (149.1) >> e/o Sep 8 (13.5) * Related to treasury stock buyback of Yahoo Japan 2

22 Consolidated P/L Analysis Consolidated B/S Analysis Consolidated CF Analysis 21

23 <CF> Consolidated Cash Flow Main Breakdown <bn JPY> Financing CF (81.9) Investing CF (165.1) Operating CF e/o Mar 28 e/o Sep Cash and cash equivalents at the end of the period Repayment of lease obligations Proceeds from sale and lease back of equipment newly acquired Purchase of treasury stock of subsidiaries in consolidation Redemption of bonds Repayment of long-term debt Proceeds from long-term debt Increase in short-term borrowings Proceeds from sale of marketable and investment securities Purchase of marketable and investment securities Purchase of property & equipment & intangibles Income taxes paid Decrease in payables-trade Decrease in notes & accounts receivable trade (noninstallment) Increase in mobile handset installment receivables Amortization of goodwill Depreciation & amortization Income before income taxes and minority interests (six month period) Cash and cash equivalents at the beginning of the period 22 * Significant items from the consolidated CF statement are shown here.

24 Operating Cash Flow Operating Cash Flow: Quarterly Trend <CF> Operating Cash Flow: Six Month Trend <bn JPY> Operating cash flow excluding effect of increase in installment receivables Increase of installment sales receivables (shown as minus) Operating cash flow <bn JPY> Operating cash flow excluding effect of increase in installment receivables Increase of installment sales receivables (shown as minus) Operating cash flow /Q1 7/Q1 8/Q1-2 6/H1 6/H2 7/H1 7/H2 8/H1 23

25 24

26 Finance Yoshimitsu Goto General Manager Finance, Group Management SOFTBANK CORP. 25

27 FY28 Financial Strategies Towards appropriate level of leverage Maximize FCF in each segment and decrease interest-bearing debt Improve various financial indices and equity ratio Improve credit rating as a result of the above Respond to market trends flexibly Minimize financial risks in each of the markets Secure diverse procurement methods selectively depending on market conditions Improve procurement costs by business segment and objective IR activities up to speed as business expands IR activities up to speed as business expands Sustain proactive quarterly domestic and overseas IR meetings Approach all layers of investors Satisfy requests from debt and equity markets thoroughly 26

28 Major Financial Activities of FY8/H1 Date Content Amount April 28 Investment in Oak Pacific Interactive Investment in SOFTBANK TELECOM PARTNERS (*) JPY 1.2bn JPY 25.5bn June 28 Redemption of 2 th series Unsecured Straight Bond Securitization of installment receivables (fifth) JPY12.5bn JPY 45.3bn Redemption of 21 th series Unsecured Straight Bond JPY 2.bn September 28 Renewal of credit line facility JPY 21.bn Securitization of installment receivables (sixth) JPY 57.2bn * Changed its company name from JAPAN TELECOM INVOICE Co., Ltd. on July 1,

29 Repayment Resources & Cash Position Reduce Debt Improve Various Financial Indices 28

30 Consolidated EBITDA and EBITDA Margin Cash flow from operations increasing steadily <bn JPY> Consolidated EBITDA 3% Consolidated EBITDA Margin % 25% 21% % % % 5% Q % -2.7 FY3 FY4 FY5 FY6 FY7 8/H1 FY4 Yearly Interim Yearly Interim FY5 FY6 FY7 8/H1 29

31 EBITDA and EBITDA Margin (by segment) EBITDA of each segment is increasing steadily <bn JPY> 7 Consolidated EBITDA Elimination Other Internet Culture e-commerce BB Infrastructure Fixed-line Telecommunications Mobile Communications % 5% 53% 52% EBITDA Margin 55% 51% 52% Internet Culture FY4 FY5 FY6 FY7 8/H1 4% 3% 2% 1% % 18% 6% Broadband Infrastructure 27% 28% 22% 24% 26% Mobile Communications 21% 16% 11% 13% Fixed-line Telecommunications FY4 FY5 FY6 FY7 FY8/H1 Yearly Interim Yearly Interim 3

32 CAPEX (acquisition and forecast) Completed a cycle of CAPEX for BB, Fixed-line, 3G base stations for Mobile <bn JPY> CAPEX (Yearly plan) (Interim actual) 15.6 FY26 FY27 8/H1 Yearly Interim Mobile Communications BB Infrastructure Fixed-line Telecommunications Internet Culture e-commerce Other *CAPEX on acquisition basis 31

33 EBITDA-CAPEX Steady increase due to expansion of EBITDA and completion of first of CAPEX cycle 8 <bn JPY> EBITDA-CAPEX EBITDA: actual FY8/H1 X 2 EBITDA CAPEX EBITDA-CAPEX (FY8 Plan) FY5 FY6 FY7 FY8 *CAPEX on acquisition basis 32

34 EBITDA-CAPEX (by segment) <bn JPY> EBITDA & CAPEX (FY8/H1 actual) <bn JPY> EBITDA-CAPEX (FY8/H1 actual) 2 EBITDA CAPEX Mobile BB Infra Fixed-line Internet Culture Others -1 Mobile BB Infra Fixedline Internet Culture Others -4 *CAPEX on acquisition basis 33

35 Cash Flow Consolidated Cash Flow: Quarterly Trend <bn JPY> 25 Operating CF Investing CF Financing CF FCF / 7/Q1 8/Q1 Free Cash Flow (FCF) = cash flows from operating activities + cash flows from investing activities 34

36 Cash Position <bn JPY> Cash Position Unused portion of credit line facility Cash&cash equivalents e/o Jun 7 e/o Sep 7 e/o Dec 7 e/o Mar 8 e/o Jun 8 e/o Sep 8 Definition: cash position = cash&cash deposits, marketable securities unused portion of credit line facility = credit line facility size - credit line borrowings 35

37 Securitization of Installment Receivables Continue securitization of installment receivables going forwards <bn JPY> Securitization of Installment Receivables Institutional investors Repaid Individual investors Balance /Q1 8/Q1 36

38 Repayment Resources & Cash Position Reduce Debt Improve Various Financial Indices 37

39 Interest-bearing debt Status (by item) <bn JPY> 3, Interest-bearing Debt Securitization of installment sales receivables obligations SBM Loan Vodafone subordinate loan 2, Yahoo Japan Corporation borrow ings Borrow ings from other financial institutions, etc. Bonds & CP 1, Breakdown of borrowings from other financial institutions, etc. < bn JPY > SOFTBANK credit line SOFTBANK other bank loans e/o Jun 7 e/o Sep 7 e/o Dec 7 e/o Mar 8 e/o Jun 8 e/o Sep 8 SOFTBANK cash receipts as collateral 13. SOFTBANKTELECOM syndicated loan 4. Major overseas subsidiaries loans from financial institutions 18.8 Others 6. Total * Interest-bearing debt before FY27 is calculated with retroactive adjustments by adding the cash receipts as collateral relating to marketable security lending transactions. * Lease obligations are not included in interest-bearing debt. Please refer to the next page for details on lease obligations. 38

40 Balance of Lease Obligations <bn JPY> Balance of Lease Obligations 3, Finance leases (off balance) Finance leases (on balance) 2, 1, e/o Jun 7 e/o Sep 7 e/o Dec 7 e/o Mar 8 e/o Jun 8 e/o Sep 8 39

41 Net Interest-bearing Debt Balance 3, <bn JPY> Net Interest-bearing Debt Securitization of installment sales receivables obligations Net interest-bearing debt (excl. installments) 2, 2, , ,88.3 2, , , , 2,53.1 1, , , , ,843.9 e/o Jun 7 e/o Sep 7 e/o Dec 7 e/o Mar 8 e/o Jun 8 e/o Sep 8 Definition: net interest-bearing debt = interest-bearing debt cash position * Interest-bearing debt before FY27 is calculated with retroactive adjustments by adding the cash receipts as collateral relating to marketable security lending transactions. 4

42 Reduce Debt: SBM Loan SBM loan repayment exceeds forecast <bn JPY> SBM Loan Cumulative Repayment Amount Mobile Communications leverage ratio* x3.9 (FY8/H1) 23.8 e/o Jun 27 e/o Sep 27 e/o Dec 27 e/o Mar 28 e/o Jun 28 e/o Sep 28 e/o Oct 28 *Leverage ratio = interest-bearing debt / EBITDA (annualized) 41

43 Reduce Debt: Debt Balance After Mobile Business Acquisition Repayment exceeds forecast 1,4 <bn JPY> 1,2 1, 8 Forecast Steadily repaying 6 4 Minimum 2 * Loan started: Nov 26 * WBS balance borrowed by SBM Beginning balance FY29 FY21 FY211 FY212 FY213 FY214 FY215 FY216 FY217 FY218 42

44 Reduce Debt: Bond Redemption Schedule Secure sufficient cash position in accordance with the redemption schedule <bn JPY> 1, Repayment Resources Bond Redemption Schedule 8 SB Straight Bond SBTM Straight Bond SB CB(*2) CB Holding shares Cash position EBITDA FY9 Q1 e/o Sep 8 e/o Sep 8 (FY27) *1 Market cap of SOFTBANK held listed shares is calculated based on the share price of investment securities (listed&public companies only). Shares as collateral and others are excluded. *2 Concerning CB due 213, 214, 215, under certain conditions early redemption of these bonds due to the holders' or companies request is possible respectively after 27, 28, and 29. The above chart assumes the case where bond holders exercise their put options. FY1 Q1 FY11Q1 43

45 Reduce Debt: Corporate Bond Details (m JPY) Company name Bond Issue date Maturity date Interest rate (%/year) Collateral Mar 8 balance Jun 8 balance Sep 8 balance Change 19th series Unsecured Straight Bond 25/1/31 21/1/ None 19, 19, 19, - 2th series Unsecured Straight Bond (1st Fukuoka SoftBank HAWKS bond) 25/6/9 28/6/ None 12, st series Unsecured Straight Bond 25/9/14 28/9/ None 2, 2, - (2,) 22nd series Unsecured Straight Bond 25/9/14 21/9/ None 36,4 36,4 36,4-23rd series Unsecured Straight Bond (2nd Fukuoka SoftBank HAWKS bond) 25/11/29 28/11/ None 2, 2, 2, - SOFTBANK 24th series Unsecured Straight Bond (3rd Fukuoka SoftBank HAWKS bond) 27/4/26 21/4/ None 2, 2, 2, - 25th series Unsecured Straight Bond 27/6/19 211/6/ None 55, 55, 55, - 26th series Unsecured Straight Bond 27/6/19 214/6/ None 15, 15, 15, - Convertible Bond due 213 (*1) 23/12/3 213/3/ None 5, 5, 5, - Convertible Bond due 214 (*1) 23/12/3 214/3/ None 5, 5, 5, - Convertible Bond due 215 (*1) 23/12/3 215/3/31 2. None 5, 5, 5, - Euro-denominated Senior Notes due 213 (*2) 26/1/12 213/1/ None 57,311 57,799 54,457 (425m Euro) (415m Euro) (48m Euro) (1,342) SOFTBANK TELECOM 1st series Unsecured Straight Bond 24/12/7 29/12/7 2. None 45, 45, 45, - 2nd series Unsecured Straight Bond 24/12/7 211/12/ None 15, 15, 15, - Phoenix JT Subordinated Notes Due /12/24 216/12/ None 32,4 32,4 32,4 - Other corporate bonds (4) Total , , ,357 (35,394) (*1) Concerning CB due 213, 214, 215, under certain conditions early redemption of these bonds due to the holders' or companies request is possible respectively after 27, 28, and 29. (*2) 92m EUR of the Euro-denominated Senior Notes Due 213 was redeemed during FY27. (*3) The above table does not include straight bonds issued by SOFTBANK MOBILE, on which a debt assumption was executed. 44

46 Repayment Resources & Cash Position Reduce Debt Improve Various Financial Indices 45

47 Improve Indices: (1) Interest-bearing Debt/EBITDA Multiple Combine reduction of interest-bearing debt and expansion of EBITDA Interest-bearing Debt/EBITDA Multiple (Ref.) Net Interest-bearing Debt/EBITDA Multiple (times) (times) FY5 FY6 FY7 FY8/H1. FY5 FY6 FY7 FY8/H1 Yearly Interim Yearly Interim *1 Interest-bearing debt before FY26 is calculated with retroactive adjustments by adding the cash receipts as collateral relating to marketable security lending transactions. *2 Lease obligations are not included in interest-bearing debt. *3 FY8/H1 has been annualized by multiplying the FY8/H1 EBITDA by 2. 46

48 Improve Indices: (2) Equity Ratio Improve equity ratio through steady build up of profit (bn JPY) 2, 1,5 Actual Basis Shareholders' equity* Equity ratio 3% (bn JPY) 2, (Ref.) Considering Unrealized Gain Shareholders' equity (considering unrealized gain) Equity ratio (considering unrealized gain) 6% 2% 1,5 4% 1, 5 7.1% 7.9% 8.7% 8.4% 9.% 9.4% 1% 1, % 24.5% 26.% 1,29.5 1, , % 23.8% 22.% 1, ,26. 1, % FY7/Q1 FY8/Q1 * Shareholders equity includes valuation and translation adjustments % FY7/Q1 FY8/Q1 *Refer to the page 7 of the supplemental data for calculation basis. % 47

49 Improve Indices: (3) Debt/Equity Ratio Ratio improving steadily (times) 14. Debt/Equity Ratio D/E ratio (times) 14. Net Debt/Equity Ratio D/E ratio (excl. Mobile) 12. Net D/E ratio Net D/E ratio (excl. Mobile) FY6/H1 FY6/H2 FY7/H1 FY7/H2 FY8/H1 FY6/H1 FY6/H2 FY7/H1 FY7/H2 FY8/H1 *1 Interest-bearing debt and net interest-bearing debt before e/o Dec 27 are calculated with retroactive adjustments by adding the cash receipts as collateral relating to marketable security lending transactions. *2 Lease obligations are not included in interest-bearing debt. *3 Excluding Mobile: SOFTBANK MOBILE and BB Mobile s balance has been deducted from consolidated interest-bearing debt and net interest-bearing debt balance respectively. 48

50 Improve Indices: (4) Interest Coverage Ratio Maintain stable trend (times) 14. Quarterly Interest Coverage Ratio (*) Yearly Interest Coverage Ratio (*) (times) Interest coverage ratio 12. Interest coverage ratio FY7/Q1 FY8/Q1 * Interest coverage ratio = EBITDA/interest expenses * Interest expense in or before FY27/ include retroactively adjusted stock bailment fees relating to marketable security lending transactions.. FY5 FY6 FY7 FY8/H1 49

51 Credit Rating AA-/AA3 A+/A A/A A-/A3 BBB+/Baa1 BBB/Baa2 JCR(AA-) S&P (A) Moody s s (A3) JCR (BBB) Mobile Communications credit rating (WBS structured rating (senior portion)) BBB-/Baa3 BB+/Ba1 BB/Ba2 BB-/Ba3 Moody s s (Ba2) S&P (BB) Long term rating B+/B Acquisition of JAPAN TELECOM Acquisition of Vodafone K.K. 5

52 Impact From Financial Market Deterioration 51

53 Background of In-Substance Redemption Before Maturity of Former Vodafone K.K. Corporate Bond (in-substance defeasance) and Possibility of Special Loss Former Vodafone K.K. B/S Outstanding corp. bond JPY75.bn (current balance) 16 reference entities portfolio Requirement for the refinancing of the acquisition of Vodafone K.K.: redemption before maturity of outstanding bonds Collateralized Debt Obligation (rating at the time AA) Buyback of all bonds: outstanding balance large, extremely difficult In-substance defeasance, insubstance redemption before maturity Senior Bonds held as collateral Cash Outstanding corp. bond JPY75.bn Up to 6 defaults covered Mezzanine Subordinated CDS contract (Credit risk transfer/ Premium receipt) Rating of Japanese government bonds at the time: S&P: AA- Moody s: A2 Due to deterioration of financial market, financial sector entities defaulting one after the other (as of Oct 29, 6 entities) 52

54 Impact on Consolidated Results <Current: 6 defaults> No loss to be realized <In case of 7 th default> Special loss Impact on net income after tax effect Approx. JPY 45.6bn Approx. JPY 27.1bn <In case of default of 8 or more entities> Special loss Approx. JPY 75.bn Impact on net income after tax effect Approx. JPY 44.4bn <Impact on redemption of former Vodafone K.K. corporate bonds > Redemption of former Vodafone K.K. corporate bonds due 2 years from now (Aug/Sep 21) Funds for redemption have been secured by credit enhancement through Mizuho Corporate Bank, Ltd. 53

55 Credit Enhancement for Redemption of Former Vodafone K.K. Bonds Principal of the bonds (total amount: JPY 75bn) will be paid upon maturity in 2 years as scheduled. Funds for the principal payments have been backed by a credit line facility provided by Mizuho Corporate Bank, Ltd. and the SOFTBANK. <Effect> Credit enhancement through Mizuho CB s credit capability Maintaining in-substance defeasance (necessary to maintain structure of the WBS scheme and SBM bond rating) Trust account CDO Cash trust Credit Support SBM SOFTBANK 1% subsidiary Debt assumption entity Credit line Mizuho CB SOFTBANK Bond investors Rating: Aa2 (Moody s) 54

56 In-Substance Redemption Before Maturity of Former Vodafone K.K. Corporate Bonds (in-substance defeasance) 1. No extraordinary loss to be incurred up to the 6 th default 2. There are no other similar types of transactions 3. This loss is a one-time loss if at all 55

57 56

58 Operation Kazuhiko Fujihara Senior Vice President, CFO, Director SOFTBANK MOBILE Corp. Senior Vice President & CFO, Director SOFTBANK BB Corp. Director SOFTBANK TELECOM Corp. 57

59 Overview of 3 Telecommunications Businesses All 3 telecommunications businesses maintain profitability <bn JPY> BB Infrastructure Fixed-line Telecommunications Mobile Communications Operating income EBITDA Operating income EBITDA Operating income 7/H1 8/H1 7/H1 8/H1 7/H1 8/H1 7/H18/H1 7/H1 8/H1 7/H1 8/H11 EBITDA 58

60 Broadband Infrastructure Business Broadband Infrastructure Business Fixed-line Telecommunications Business Mobile Communications Business 59

61 Operating Income, EBITDA (BB Business) Maintain trend of revenue increase through cost reductions <BB-1> <bn JPY> Operating Income EBITDA H1 Q H Q1 H Q1 FY6/H1 FY7/H1 FY8/H1 4 Q H H1 Q H Q1 FY6/H1 FY7/H1 FY8/H1 6

62 Yahoo! BB ADSL Lines and ARPU (k lines) 6, 5, 4, 3, Number of ADSL lines are decreasing. Slight decrease in ARPU. 4,889 4,9725,7 5,49 5,89 5,146 5,1615,164 5,134 5,42 4,9434,894,6534,551 4,381 4,26 Number of Lines and Full Charged Users 4,436 4,4624,474 4,534 4,575 4,524 4,45 4,423 4,344,261 Cumulative lines installed Full charged users 4,127 4,57 (JPY) 5, 4, 3, Basic charge ARPU Modem rental revenue WLAN BB Phone <BB-2> BB Security Yahoo! ISP 4,279 2, 2, 1, 1, 5/Q1 6/Q1 7/Q1 8/Q1 5/Q1 6/Q1 7/Q1 8/Q1 *ARPU is based on user s payment. The impact of the modem rental business sale is not reflected. From F7/Q1 part of Yahoo! ISP revenue recorded as basic charge (no impact on user s charge). 61

63 CAPEX (BB Business) CAPEX stabilized within range of depreciation <BB-3> <bn JPY> 25 CAPEX and Depreciation & Amortization (quarterly trend) 1 CAPEX yearly trend CAPEX 15 Depreciation&amortization (forecast amount) /Q1 8/Q FY24 FY25 FY26 FY27 FY28 Q1 H1 62

64 Broadband Infrastructure Business Fixed-line Telecommunications Mobile Communications 63

65 Operating Income, EBITDA (Fixed-line Telecommunications Business) Trend of revenue increase through enhancement of corporate lines and efficient management Operating Income/Loss EBITDA <Fixed-1> <bn JPY> 2 Operating income/loss(interim period) Operating income/loss(full year) (*) Q Q FY6/H1 FY7/H1 FY8/H1 *FY6/Q1: including reversal of JPY 2.5bn for retirement benefits. Q H H H Q1 Q1 Q FY6/H1 FY7/H1 FY8/H1 64

66 Number of Lines and ARPU for OTOKU Line <Fixed-2> Number of lines and ARPU improving due to enhancement of corporate lines (k lines) 1,6 1,4 Heisei Denden Large Corp. SME (SBTP) SME (excl. SBTP) Consumer Number of Lines 1,49 (JPY) 12, 1, ARPU Large Corp. Total 1,2 1, 8, 8 6, 6 4, 4 2 2, 5/Q1 6/Q1 7/Q1 *SBTP SOFTBANK TELECOM PARTNERS 8/Q1 5/Q1 6/Q1 7/Q1 8/Q1 8/ 65

67 CAPEX (Fixed-line Telecommunications Business) <Fixed-3> CAPEX stabilized within the range of depreciation 5 CAPEX and Depreciation & Amortization (quarterly trend) CAPEX (yearly trend) <bn JPY> 4 CAPEX Depreciation&amortization months (Oct Mar) /Q1 8/Q Q1 (forecast amount) 27.8 H FY24 FY25 FY26 FY27 FY28 66

68 Broadband Infrastructure Business Fixed-line Telecommunications Mobile Communications 67

69 Net Sales (SBM consolidated) Decrease in revenue due to decrease in handsets. Telecom service revenue increased 9 8 SBM Consolidated Net Sales Interim Comparison Telecom service income Sales of mobile handsets and accessories (35.6) , 8 SBM Consolidated Net Sales Quarterly Comparison <Mobile-1> <bn JPY> Telecom service income (36.8) H H H Q Q Q1 FY7/H1 FY8/H1 FY6/H1 FY7/H1 FY8/H1 68

70 Operating Income (SB consolidated, SBM consolidated) <Mobile-2> <bn JPY> SB Consolidated Mobile Communications Segment SBM Consolidated H H H H H H months (May-Jun) Q Q Q FY6/H1 FY7/H1 FY8/H1 Q Q Q FY6/H1 FY7/H1 FY8/H1 69

71 EBITDA (SB Consolidated, SBM Consolidated) Achieved revenue increase YoY. Favorable trend sustained. <Mobile-3> <bn JPY> SB Consolidated Mobile Communications Segment H SBM Consolidated H H H1 2 1 H months (May-Jun) Q1 Q Q FY6/H1 FY7/H1 FY8/H1 Q1 Q Q FY6/H1 FY7/H1 FY8/H1 7

72 Quarterly Net Additions <Mobile-4> No.1 in net additions for 17 consecutive months 1, <k lines> FY8/ net additions 521k <Breakdown> Postpaid +571k Prepaid -49k FY8/H1 net additions /Q1-74 Vodafone 6/Q1 7/Q1 8/Q1 8/ [FY] Others 5% (Ref.) FY7/H1 share in net additions 46% 71

73 Total Subscribers, 3G Subscribers <Mobile-5> Number of total subscribers is growing steadily. 3G subscribers increase rapidly (over 8%). 2, 15, 1, 3G 2G e/o Sep 27 3G subscribers: 1,917k 3G ratio: 64.% e/o Sep 28 cumulative subscribers 19,633k e/o Sep 28 16,321k 3G subscribers: 16,321k 3G ratio: 83.1% <k lines> 5, e/o Sep 26 3G subscribers: 4,562k 3G ratio: 29.8% Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Vodafone 72

74 Churn Rate <Mobile-6> Churn rate lower than 1% maintained due to penetration of installment sales Churn Rate (comp. to other operators Churn Rate (3G postpaid) 2.% SOFTBANK MOBILE NTT DoCoMo au 2.% SOFTBANK MOBILE SOFTBANK MOBILE (3G postpaid) 1.5% 1.42% 1.27% 1.%.98% 1.% 1.5%.76%.% 6/Q1 7/Q1 8/Q1.% 6/Q1 7/Q1 8/Q1 73

75 Churn Rate & Upgrade Rate <Mobile-7> Upgrade rate maintains trend lower than 2% Upgrade Rate Churn & Upgrade Rate Churn 3.% 2.53% 2.67% 1.6% 1.4% 7/Q1 7/ 2.% 1.93% 1.91% 1.2% 1.% 7/ 7/.8% 8/Q1 8/ 1.% 1.27%.6%.4%.2%.% 6/Q1 7/Q1 8/Q1.%.% 1.% 2.% 3.% 4.% Upgrade rate 74

76 Installment Sales Receivables and Super Bonus Ratio <Mobile-8> Maintain high Super Bonus subscription ratio Super Bonus Subscription Ratio Installment Sales Receivables Balance 1% 8% 6% 71% Acquisitions (new+upgrades) installment ratio (*1) Cumulativ e installment user ratio (*2 to total postpaid subscribers) Cumulativ e installment user ratio (*3 to total subscribers) 77% 86% 87% 86% 86% 82% 56% 63% 68% 87% 73% Installment sales receivables procurement Amount of increase Amount of increase <bn JPY> % % 2% 1% 1% 13% 25% 36% First securitization 88.1 Second securitization Fifth Sixth Fourth securitization securitization securitization Third securitization % 6/ 7/Q1 8/Q1 6/ 7/Q1 8/Q1 *1 Acquisitions installment ratio: ratio of installment sales subscribers to postpaid subscribers (new/upgrade) *2 Cumulative installment ratio to postpaid subscribers: ratio of installment sales subscribers to total postpaid subscribers *3 Cumulative installment ratio: ratio of installment sales subscribers to total subscribers

77 ARPU <Mobile-9> Voice ARPU: Alleviated the decreasing trend Data ARPU: Increased growth rate (JPY) 7, 6, 5,93 5,7 5, 4,8 4,18 4,17 4, 4,54 4,32 3, 3,34 2,53 2,46 Voice 2, 1, 1,39 1,38 1,47 1,65 1,71 Data 5/Q1 6/Q1 7/Q1 8/Q1 76

78 <Reference> ARPU + Installment Payments <Mobile-1> ARPU on the previous page & installment payment trend improved 7, (JPY) 6, 5,93 5,7 5,53 5,57 5,72 5, 73 1,39 1,54 Installment 4, 4,54 4,32 3, 3,34 2,46 Voice 2, 1, 1,39 1,38 1,47 1,71 Data 5/Q1 6/Q1 7/Q1 8/Q1 77

79 CAPEX (Mobile Communications Business) <Mobile-11> Continue effective CAPEX 1 CAPEX and Depreciation & Amortization (quarterly trend) 4 CAPEX (yearly trend) <bn JPY> CAPEX Depreciation&amortization 1 month (Apr 6) months (May 6-Mar 7) (forecast amount) /Q1 8/Q1 1 H Q1 Q FY26 FY27 FY28 78

80 * The names of other companies, other logos, product names, service names, brands, etc., mentioned in this material are registered trademarks or trademarks of SOFTBANK CORP. or the applicable companies. * Unauthorized copying of this material and use of the information or the data in this material in whole or in part are not permitted. 79