Earnings Transcript for 9433.T - Q4 Fiscal Year 2024

Unknown Executive: Thank you for waiting. We now would like to start a meeting on KDDI financial results of the fiscal year ended in March 2024 followed by the Q&A session. Thank you for joining us out of your busy schedules. I'm [indiscernible] from IR department. This meeting is broadcast live on the Internet with Japanese and English simultaneous interpretation. Please be advised that 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, CDO, 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 business results and 2 TSE disclosed items in total 5 items uploaded on our IR website. Please read the disclaimer in each document about what's listed into material underperformance, 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 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 low utilization telecom equipment. Other than those, the progress was on track, the left shows the operating revenue, JPY 5,754 billion, up 1.5% year-on-year. The center shows the operating income, which was JPY 961.6 billion. Without the temporary impact, it was JPY 1,080.6 billion. The right shows the net income attributable to the owners of the parent, which was JPY 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 JPY 5 billion. About the growth areas, one of which is DX area, which was JPY 20.4 billion, financial business was JPY 14.2 billion. Energy business was JPY 16 billion, growing steadily, including a decrease in Rakuten roaming revenue and an impact accounting treatment of financial business, the substantive operating income was JPY 1,080.6 billion, and we were able to achieve the forecast made at the beginning of the term. With provisions from Myanmar telecom business and other temporary impact, which was minus JPY 119 billion, the operating income was JPY 961.6 billion for the fiscal year ended March 2024.:

Next, on EPS progress, which is one of the important targets in the midterm 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 these targets, we wanted here to the target. And by extending the period for the midterm management strategy by 1 year, we'll 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 a new satellite growth strategy. At this call, we have communication and data-driven and generative AI. And we have defined growth areas that have added values when coupled with communications as orbit 1 and future growth pillar as orbit 2. :

Here is a summary of the business portfolio of the new satellite growth strategy. We aim to achieve sustainable growth in core ARPU revenues. In our focus areas defined as orbit 1 on we aim to have a double-digit growth in CAGR in all the areas of DX finance under energy businesses. And LX in life transformation. LX and orbit 2 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 value starting from real tech convenience stores. :

At the bottom, in addition to au shops, which are physical contact points, about 2,000 shops and digital contact points such as Smart Pass and au PAY, new contact points of remote customer service with about 14,600 Lawson's stores nationwide will expand significantly. As you can see at the top, including smartphone procedure and finance, consultation, quick commerce, we'll be able to realize through real tech. :

We believe that we can provide new services, utilizing the store locations in addition to the conventional services described in the upper part by enhancing functions and value of these multi-contact points with our partners. As a platform business, as you can see over right, Lawson's stores could be used as base stations or HAI 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 first expansion of Ponta Economic Zone. With this investment, we will strengthen our relationship with loyalty marketing and work with Mitsubishi Corporation and partner companies to expand the Ponta Economic Zone. Over right, au Smart Pass Premium will be rebranded as Ponta Pass with the aim of expanding the current 15 million member base for Smart Pass, to 20 million members through improved services as Ponta Pass through these efforts. In addition to Lawson's organic growth, we will accelerate Lawson's growth by promoting sales growth and efficiencies through the realization of real tech convenience. :

In the addition, by utilizing stores as multi-contact points and expanding the economic zone center of Ponta Pass, KDDI will maximize synergies through value-added income, DX growth, enhanced retention and cost efficiency. We will promote 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, we will 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 reduced CapEx by JPY 120 billion. :

Consolidated financial forecast for the fiscal year ending March 2025. On the left, operating revenue, JPY 5,770 billion, up 0.3% year-on-year. In the middle operating income, JPY 1,110 billion, up 15.4% year-on-year. On the right, net income is targeted at JPY 690 billion, a 8.2% increase year-on-year. Consolidated 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 JPY 14 billion and ARPU revenue is expected to decrease by JPY 14 billion because of the impact of a revision of access charge, but the impact on profit will be limited due to decrease in 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 the top, operating cash flow, excluding financial business is targeted at JPY 3 trillion over 2 years for the fiscal year ending March 2025 to March 2026. In the middle, we will allocate the generated operating cash flow to CapEx of JPY 1.3 trillion in strategic business investment of JPY 200 billion. :

At the bottom, shareholder returns, we aim for a 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 we 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 structure reform for technology. We have now revised our midterm management strategy, extending the period by 1 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 both 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 income through increase in communications ARPU revenues and double-digit growth in focus areas.:

With regard to shareholder returns, the company resolved to achieve EPS growth 23 consecutive years and acquire up to JPY 300 billion of treasury stock, of which up to JPY 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. Thank you. :

Unknown Executive: Mr. Takahashi, thank you. Now we would like to entertain questions from you. [Operator Instructions] Nomura Securities, Masuno-san, please.

Daisaku Masuno: Nomura Securities, my name is Masuno. Question number one, EPS target JPY 380 1-year extension, March 2026, that level of EPS, I think, is achievable. I've been having that assumption. But JPY 300 billion share buyback and JPY 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 achieving the target JPY 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 JPY 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?

Makoto Takahashi: Thank you for your question. I think that's the major point. We believe that. And as you said, increase of EPS by 1.5x, JPY 340 for this year. And in the final analysis, increased it by 1.5x. That means we have to increase it to JPY 388, that's our scenario.

First of all, operating income increased this year. Communications up revenues, that's JPY 14 billion, as I said. And our focus areas DX, financial energy, JPY 20 billion, JPY 30 billion, JPY 10 billion for each so in total JPY 33 billion. If you're totaling that a little less than JPY 50 billion. March 2026, next fiscal year, we'll continue to do this. That's the big assumption. In addition to these, Rakuten roaming revenues concerning those this time, JPY 17 billion compared with the previous term, the revenues decreased. At March 2026 fiscal year, it will be the decrease of just double digit to JPY 100 million level. So there will be some difference from there -- from the previous term. So that's one. :

Next concerns 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, JPY 10 billion or so for this year's forecast. Actually, concerning the TOB, it has been completed early. 41.1%, the -- we have that result. First quarter, likely, we were able to cover that with the equity accounted method. So compared with the current forecast, about JPY 8 billion, we'd be able to do it better compared with what we have already announced. :

JPY 1,110 billion, we'd be able to add that much. And there's another technological cost efficiency enhancement. We have been talking about profit structure reform, JPY 18 billion in the previous term, this year, JPY 18 billion and next term, about JPY 18 billion. We'll 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 about 50% will feel the effect to March 2026. This will be down for 2 years. So JPY 30 billion or JPY 35 billion -- a little less than JPY 40 billion. Compared with that, about 50% of those numbers will be felt. If you total all of this, I believe 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. :

JPY 30 billion short for this fiscal year, you mentioned that in this profit structure reform, a little less than JPY 20 billion will be done and some latitude was given. But with Lawson, the acquisition cost, equity account method. Somehow, from your content, I think we can explain this lack of gap of JPY 30 billion, [ JPY 1,110 billion ], that's the guidance, but we need to do better. So including the acquired -- the profits from our acquisition, we would like to somehow manage to achieve this. :

Daisaku Masuno: I didn't expect such detailed factors for increase and decrease, very easy to understand. The follow-up question, Lawson. 41%, JPY 8 billion upward revision. You are talking about this term, right? After squeezing out -- after squeeze out, JPY 20 billion for the income and then first quarter, we will be -- that 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 trends in those areas, we are looking at businesses, especially to drone areas, very steady progress. So we believe we can achieve numbers from them. Matsuda-san, anything?

Hiromichi Matsuda: Thank you. From an early stage, we have been doing this to be drones, Starlink or if you look at metaverse, to be -- we are receiving a lot of inquiries last fiscal year. And in this fiscal year, those are the factors to increase top line. And as the income will make a contribution starting from the next fiscal year. That's why we had those numbers. So in drone, if you can generate profits, I've never heard of that unless you have certain operating revenues, I don't really think you can generate such profits. I mean services, the revenues you will be able to list start, 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.

Daisaku Masuno: Understood. The last follow-up question. As Mr. Taka said, a little less than JPY 20 billion for profit structure reform for technology. I think you are talking about this fiscal year. Normally for structure reform, 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?

Makoto Takahashi: So this is JPY 60 billion for 3 years regarding the structure reform started in the year that fiscal year that ended. So your question is that it's already been incorporated a little less than JPY 20 billion. Is that for the next fiscal year? Last fiscal year, this fiscal year and the next fiscal year for each year, about JPY 20 billion. That's the level we are looking at. So this fiscal year, JPY 20 billion, that's already in this plan. Yes, yes. In the next fiscal year, another JPY 20 billion, right? But previous year, about JPY 20 billion. This fiscal year, we do JPY 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 fiscal year for 2 years -- or 50% of 2 years OpEx. So the half of JPY 40 billion, that's JPY 20 billion. Am I right? That's what we are looking at.

Daisaku Masuno: I see. Just for clarification, OpEx for this fiscal year's contribution, what's the contribution for this fiscal year?

Makoto Takahashi: Aketa-san, how much?

Kenji Aketa: This fiscal year's contribution, several billions of yen. But it will be biased towards the end of the year. So it's not fully reflected.

Daisaku Masuno: My last question this fiscal year, next fiscal year for 2 year, cash allocation has been made available, JPY 3 trillion, the JPY 1.3 trillion CapEx business to 100 billion. So that's the JPY 100 billion, and there is a dividend JPY 300 billion, so that will make it JPY 600 billion. You still have JPY 900 billion this year, the -- share buybuck JPY 300 billion. So you have JPY 600 billion. I don't think you will use all of them. So JPY 600 billion cash available. Next year, how much you will do the share buyback, that's another thing. You still have some available. If I make a computation, am I correct? Let's see, this year, next year, about the share buyback, that's JPY 300 billion, JPY 300 billion. That's the assumption. This year's 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 the EPS target. So the total payout ratio with 100% as a cap, the agile -- including the agile share buyback, if we make such responses, you mentioned that there is still a little bit of a gap you mentioned, and there are many things that we can think about. That's how we designed this. So in principle, this year, JPY 300 billion -- next year, you mentioned JPY 300 billion, so that's JPY 600 billion. If it's JPY 30 billion. The total payout ratio is a little less than 80%. So you can still do a maximum 20% more. That's maximum, yes. :

Unknown Executive: Any other questions? Yes, from SMBC Nikko Securities, Kikuchi-san.

Satoru Kikuchi: I'm Kikuchi. I also have 2 questions. As was mentioned under Mr. Masuno's question, total payout ratio up to 100% and to go beyond 100% as a onetime measure based on intentions of large shareholders, is it possible to go beyond 100%? If upper limit is 100%, am I right in understanding that you mentioned the upper limit right now?

Makoto Takahashi: Well, 100%, I mentioned I want to make 100% as an upper limit. And what was your question?

Satoru Kikuchi: This year only -- well, usually, you cannot continue to go beyond 100%, but as a special measure only this year to exceed 100% for next year. Would that be possible?

Makoto Takahashi: Well, I don't assume that so far. If that such a [indiscernible] happens, we may consider, but our basic stance is to settle 100% as ARPU limit for the next 3 years. This year JPY 200 billion TOB is going to take place as was mentioned by 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: Understood. I was not able to read the whole material. But 10% you mentioned that was mentioned by Toyota. Is that right?

Makoto Takahashi: Yes. And the amount is that to execute amount that they offered, then our shareholding will be just 10%. It is described in the materials that we have made public they are seeing that we will continue to hold at the moment. And [indiscernible]. Our stance is that we want them to continue to hold, where can we enjoy synergy with Toyota or -- [indiscernible], we are having continuous meetings about it. In case of Toyota, we are working a lot in area connectivity. So if it continue to hold, we would appreciate that very much.

Satoru Kikuchi: My second question next fiscal year EPS target to be achieved. NTT, it seems 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 in your case, M&A [indiscernible] JPY 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 through this message.

Makoto Takahashi: 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 -- so increase the percentage of shares we hold, there are many candidates. EPS growth by 1.5x is our company-wide target. Not consolidated 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 the candidates at the moment. That is all. Thank you very much.

Unknown Executive: [Operator Instructions] Daiwa Securities, Tokunaga-san.

Unknown Analyst: Tokunaga with Daiwa Securities. I have 2 questions. Page 33, please. As I look at this, communications ARPU revenues this term, this it increased under the next fiscal year, it's likely it's going to increase even more numbers rather than subscriptions increase, the ARPU upsell will be effective. Now this fiscal term decrease of access charge and then this seems to be the picture, but communications ARPU are assumptions, number of IDs, the ARPU forecast? That's my question number one.

Makoto Takahashi: Takizawa will address your questions.

Unknown Executive: Right. Thank you for your questions. First, ID March 2024 fiscal year, initially JPY 31 million. That's why we are talking about JPY 31 million but overall JPY 31.15 million, so we cleared the target and partly because of that, regarding ARPU/ARPU revenues, the JPY 5 billion, we had a rebound. But if you look at the unit price, why -- fewer by JPY 2 billion -- JPY 20. So we need to really shift focus on the growth.

One of the factors is the acquisition of ID 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 EBIT stabilizes because of the brand mix, ARPU will become healthier. So that's another factor. :

And about the -- it has relation to ID. We can't put little on the UQ. But finally, if you look at the UQ, the mid capacity, large capacity price plan for the new plants from 40% to 70%, mid-capacity and high-capacity customers are now choosing those price menus. So by -- 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 or any factors. All 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. :

Unknown Analyst: The second question from the same page. Value-added ARPU CAGR, double-digit growth is what you intend to have. And whether the synergies with loss you can accelerate growth. The value-added ARPU double-digit growth -- this is [indiscernible] from the electricity payment product support contest, which part? And Lawson's 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 settlements, payments, those are brisk and product support, how to use and the also such support is provided to customers and those businesses are pretty brisk.

Concerning those, the value-added ARPU revenues will field effects. And secondly, about Lawson. Previously, as was mentioned in the presentation, au Smart Pass, we have that subscription. And then as Ponta Pass, 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. So increased by 5 million, and this is about JPY 500. And in 5 years, we will make the calculation. So JPY 75 billion in 5 years. I mean it's not going to go up immediately gradually, JPY 75 billion. That's the calculation we have to do so together with Lawson and on Mitsubishi Corporation, we need to work steadily and also we need to work firmly with loyalty marketing and the value-added ARPU, there will see the results. :

Unknown Executive: Any other questions? From Citigroup Securities, Mr. Tsuruo.

Mitsunobu Tsuruo: I have 2 questions. So one question is for confirmation. And there are 2 items. About capital allocation, you mentioned 100% total payout ratio, then we're about JPY 800 billion of treasury stock repurchase in 2 years if average is JPY 400 million per year. Is that right?

Makoto Takahashi: Yes. If it 100%, I think we -- that is possible. So JPY 200 billion this year, we have announced that figure. We want to conclude by October. And depending on the situation of the time, we would like to think of the measures that we're going to take. To increase EPS the usual method is to carry it forward. We have not decided, but that is one option.

Mitsunobu Tsuruo: And on top of that, I have another question. JPY 200 billion, how is that going to be used? You mentioned strategic investments, LX 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 JPY 200 billion will be mainly in the business segment and make investments there. So business segment. And this time, as segments investing business, business creation of life transformation segment is included by business segment. So these will be the main areas for investment. And also finance may be another sector.

Mitsunobu Tsuruo: My second question is about the personal business. Competition environment seems to becoming more fierce as the entity you're placing focus on getting more subscribers. The expenses to acquire subscribers, what is your assumption in your case this year?

Makoto Takahashi: Looking at the environment -- I'd like to ask Takizawa to talk about the details, but looking at our financial results of individual companies churn rate is getting higher, and they say competition is getting more severe. But looking at our situation, au churn rate is clearly declining. Service max is functioning and the money activity service is also going well. Churn rate is getting higher.

Well, there is some increase in churn rate in UQ in particular, SIM individual contract may be affecting. People calculate momentum based on volume. So SIM itself contract without bundling with the smartphone. Everyone is trying to buy that contract, then that commission is JPY 20,000. That is included the volume, the number will increase. And the churn in very short time, that is affecting the churn rate. :

From April, under Mr. Takizawa, we must put more emphasis on ID and ARPU. If we add JPY 20,000 incentive for SIM itself, the volume will increase. But instead, to set with a telephone the smartphone itself, like in case of UQ or au, maybe they can join UQ and then go to au. We want other hear to this message. We have started to do so. So we don't think that competition is getting more severe. I think that SIM itself is having a bad impact. :

The MNP with Rakuten May resolution is very stable, not in April, but May is very stable. So I don't have impressions that competition is getting more severe. That is my impression. :

Unknown Executive: We are running out of time. So the next will be the last question. [Operator Instructions] Okasan Securities of Okumura-san.

Yusuke Okumura: Okasan Securities, my name is Okumura. Just one qualitative question about Lawson's TOB, there are various kinds of information initially 3 companies did you so. But at the very end, the Lawson share price increased. So compared with what you felt, what you were planning to spend as an investment, I think it's actually increased. If it's not the participation cost at the 11th hour, you made a decision. What was the trigger? What was the trigger? I would like to know that. And what was the financial expectation to make that decision? You've been talking about the synergies. But in terms of the impact on our P&L, which one will have the highest impact?

Makoto Takahashi: As you rightly said, 3 companies and then 1 company left. So at that stage, whether we are going to do this or not still yes, we had to think hard about this. But we reorganize this, then it's going to take a lot of time. Regarding the synergies, the DX convenience value-added, Ponta Economic Zone, especially about the Ponta Economic Zone by cooperating with the Mitsubishi Corporation, there is going to be a lot of possibilities. That's what we thought. And the Mitsubishi Corporation and KDDI, our businesses are not really overlapping we are strong in DX. Mitsubishi is strong in other areas. So when we wanted to have a sensitive speed with 50-50 led to this operation, I think we first thought that it's worth doing. And about investment efficiency, this time. For 6 months regarding our income from them, I already shared the numbers.

In terms of investment efficiency, it's about 5% to begin with. In terms of this year's of revenues that we leveled 6.5% is the investment efficiency we are looking at. We start with 5%. But I look at Lawson's plan, about in 2026, just a moment -- in around 2026, let's see -- around 7% -- that's 2027 likely to reach the level of 7% without synergies, the capital cost can be taken care of. That's why we made the decision to invest. :

How to look at this WACC? Our hurdle rate is pretty high, higher than 6.5%. So with a simple calculation 3% to 4%, we believe that the investment can be recovered. That's not one. And in addition to the synergies that I already talked about, by incorporating DX Lawson's plan can be implemented early. That's one. Also, Smart Pass, we now call this Ponta Pass. So we can also acquire the income from those. And then so it's the worth that making the investment. That was the decision in this fiscal term JPY 18 billion or so will be felt in the next fiscal term, but JPY 20 billion can be expected from then making a direct contribution to the EPS, and that's why we made this decision. Did I answer your question? :

Yusuke Okumura: 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 sites bank, as we look at the profitability, I don't really think there are no optimum situation, not many number of accounts. So after the TOB, we would like to have a discussion, but direct big synergies not expected here. Thank you so much for a very detailed explanation.

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

[Statements in English on this transcript were spoken by an interpreter present on the live call.]: