Nippon Telegraph and Telephone Management Discusses Nine Months 2014 Results - Earnings Call Transcript

Feb. 6.14 | About: Nippon Telegraph (NTT)

Nippon Telegraph and Telephone (NYSE:NTT)

Nine Months 2014 Earnings Call

February 06, 2014 3:00 am ET

Executives

Hiroki Watanabe - Chief Financial Officer, Chief Compliance Officer, Senior Executive Vice President and Representative Director

Yoshikiyo Sakai - Senior Vice President, Director of Finance & Accounting and Director

Analysts

Daisaku Masuno - Nomura Securities Co. Ltd., Research Division

Ikuo Matsuhashi - Goldman Sachs Group Inc., Research Division

Tetsuro Tsusaka - Morgan Stanley, Research Division

Hitoshi Hayakawa - Crédit Suisse AG, Research Division

Operator

Ladies and gentlemen, we would like to begin the presentation of the financial results for the 9 months ended December 31, 2013 by NTT Nippon Telegraph and Telephone Corporation. Ladies and gentlemen, thank you for joining us. [indiscernible]. Allow me to introduce myself. My name is Nakayama, the Investor Relations officer of NTT. I would like to, first of all, introduce participants from my side. Senior Executive Vice President, Mr. Watanabe; Director and Senior Vice President, Director of Corporate Strategy Planning Department, Mr. Tsujigami; and Mr. Sakai, Senior Vice President and Director of Finance and Accounting Department. These are the participants from our corporate strategic planning department, financial accounting department, as well as from NTT East/West and NTT Communications. [indiscernible] will also take part during the Q&A. [indiscernible] materials on hand. During this presentation, we will be using further additional materials which are [indiscernible] uploaded on our Investor Relations website. Also, with regard to forward-looking statements and projected figures contained in the presentation material [indiscernible] please refer to the disclaimer on Page 1, on Page 1 of the presentation material. Also this meeting is being distributed on a real-time basis through NTT's Investor Relations website. Also this meeting will be available on an on-demand basis subsequently with the procedure [indiscernible] understanding. And for today's program, we will first [indiscernible] our Senior Vice President, Mr. Watanabe, to give you the highlights of the financial results. After which, we would like to take your questions. And without further ado, we'd like to invite Mr. Watanabe to explain to you the third quarter results. Mr. Watanabe, please.

Hiroki Watanabe

Thank you, my name is Watanabe, the Senior Executive Vice President. Thank you for your kind participation. Allow me to share with you the financial results for the 9 months ended December 31, 2013. Please refer to Page 2 of your materials. As for the third quarter results, the amount of[ph] communication segment under DoCoMo was [indiscernible] by a separate operating income declines. However, the Data Communications segment, which were sent[ph] during the second quarter due unprofitable results, their profits expanded -- improved as results expanded. And so therefore, on a consolidated basis, operating income was JPY 985.1 billion, which represents JPY 8.1 billion in decline on a year-on-year basis. So therefore, operating income remain unchanged from the previous fiscal year. Well, as far as income is concerned, it increased 8% on a year-on-year basis, reaching JPY 484.3 billion and due to the contributions from nonoperating profit. So therefore, this actually is the highest third quarter results in terms of net income for the past 5 years.

Let me now turn to global cloud service. As far as the global cloud service is concerned, we continue to pursue acquisitions and also, after the announcement of our second quarter results, we also completed acquisitions of a company called NextiraOne, a European ICT service provider, and also Optimal Solutions Integration, a U.S. system integration operator. And we are enhancing our business operation and foundation with regard to global cross selling after the second quarter [indiscernible] will continue to expand and on a cumulated basis, we have already accumulated USD 550 million worth of cross-selling. So it's doing fantastic, the expansion. As a result, our overseas have increased by JPY 159.4 billion up to JPY 161 billion, representing very strong growth. Another pillar is enhanced competitiveness of network services. As far as network services are concerned, they continue to expand our user base in a fast[ph] manner. And also with regard to cost reduction pertaining to fixed and mobile access, we added JPY 100 million after the second quarter results. Back to our cost reduction target of [indiscernible] yen and against the [indiscernible] target progress to plan is already 70%. The cost reduction which are ongoing in a very strong manner.

As far as shareholder return is concerned, we have already completed share repurchase of JPY 250 billion. And in November, we canceled 187 million shares. At the board meeting today, we authorized additional share repurchase of up to JPY 200 billion, which is in response to scheduled sale of government-owned entity shares to the extent of JPY 153.3 billion, which is already inked-in because of mid-term[ph] budget.

Please turn to Page 3. As far as this page is concerned, I think I have already covered the highlights on a consolidated basis in earlier slides, so therefore, I would talk about contributing factors by segment on the following slide. So please turn to Page 4 of the material. This relates to the contributing factors by segment. Starting with the regional communications. Continuing on from the first half, we expanded the sales of [indiscernible] to discount services and also made efforts to contain churn. And as a result of cost control, operating income improved by JPY 22.6 billion on a year-on-year basis. In terms of long-distance and international communication segment, they declined JPY 3.1 billion on a year-on-year basis. However, this group continues to improve its efficiency as we already talked about after first half. If we excluded onetime factors such as amortization of intangible assets of JPY 2.9 billion, the operating income is actually comparable to the previous year.

Turning to Dimension Data, in the segment, their non-core business [indiscernible] which is a construction company in South Africa and also Australian IT equipment sales company called Express Data. We see the non-core business face challenges and operating income declined by JPY 1.4 billion. However, as far as [indiscernible] is concerned, it actually increased JPY 76.3[ph] billion on a year-on-year basis. So in terms of local currency basis, it enjoyed 7%[ph] growth. Dimension Data is a [indiscernible] company carrying out activities in various regions around the world, so against the dollar as the local currencies are actually weakening. So performance-wise, I think it's best that you take a look at the local currency-based performance, which has enjoyed 7%[ph] growth. Turning to mobile communications and data communications segment, the respective companies have already announced the financial results and you are probably familiar, however, let me just share with you the highlights. As for mobile communication segment, from September, the call[ph] began to launch and offer iPhone product. However, because of the lack of inventory, similarly because of the aggressive marketing by the competition in relation

to old iPhone 5 model, it suffered JPY 17.1 billion decline in operating income. As for data communication segment in the first half, because of unprofitable transactions, it suffered JPY 25 billion decline in operating income. However, in third quarter extended[ph] and also because of the improved efficiency in terms of cost of sales and SG&A, operating income improved. So on a cumulative basis the operating income decline was kept to JPY 15.5 billion.

As far as the year, full year plan of JPY 1.23 trillion operating income is concerned, there are some positive factors. For example in the fourth quarter, we will no longer have to experience the write-downs of the former [indiscernible] NTT America. And also there are no earthquake-related costs for the fourth quarter this fiscal year. And also the biggest factor is that DoCoMo will be facing the most biggest sales season, the spring season. And they will make efforts to maximize their sales. At the same time, they will also work to reduce cost. And so such improved profitability. Achieving that, I believe, will be the greatest point.

Now in terms of our overall business. In line with the [indiscernible] management strategy, group [indiscernible] company start aggressively expanding the business. So on top of expanded global cloud services, enhanced competitiveness of our network services and also shareholder return, we enjoyed continuous [indiscernible] to achieve our target. That is our formal presentation. Thank you very much.

Unknown Executive

We would Now like to take your questions. [Operator Instructions]

Operator

[Operator Instructions] Daisaku Masuno from Nomura Securities.

Daisaku Masuno - Nomura Securities Co. Ltd., Research Division

Masuno from Nomura Securities, I have several questions. First, in the 3 months from October through December, if you take a look at the respect on an unconsolidated segment basis, data communication operating income declined by JPY 2.7 billion and the long-distance of JPY 1.6[ph] billion improvement. Mobile, it declined JPY 13 billion, and then a JPY 9.4[ph] billion increase in others. So altogether, there's an increase of JPY 1.8 billion on a non-consolidated basis. If we take a look at the segment operating income with regard to each segment, can you share with us the trends for each of the segments just for the 3 months from October through December?

Hiroki Watanabe

Thank you. How many questions do you have, Mr. Masuno, May I confirm?

Daisaku Masuno - Nomura Securities Co. Ltd., Research Division

Actually, I have another question, if I may. It's about traffic. If you take a look at the 9 months CapEx, I think your full year plan was to reduce this by JPY 100 billion. But the CapEx reduction today is only JPY 30[ph] billion. So therefore, from January through March, do you believe that you'll be able to reduce CapEx sufficiently against the previous year to realize your full year plan? So my second question is about the CapEx trend. My third question is about the share repurchase. In the supplementary budget, I understand that the government has already inked-in the sales of government-owned NTT shares. But you have already authorized up to JPY 200 billion. If your share price increases beyond a certain point [indiscernible] JPY 260[ph] , what is going to be the impact? That's my third question. Thank you. So these are the 3 questions, which I'd like to share with you.

Hiroki Watanabe

This is Watanabe. I think you asked 3 questions. I would like to respond to your second question and third question first. And this first question will be answered later. Now CapEx has really[ph] a reduction target. CapEx has a JPY 100 billion reduction target. Up until the third quarter, it's only in JPY 33 billion to date. I think that was your point. Look, we are focused on CapEx to sales. We want to bring this down to 15%. We want to challenge again this CapEx-to-sales target of 15%. So we envision that the access[ph] for the infrastructure investment should be made more efficient. So that was the top priority for the target. From that perspective, JPY 33 billion reduction. DoCoMo the NTT East/West, if you look at these 3 companies, the investments have been reduced by as much as JPY 70 billion. But on the other hand, there are some areas where CapEx is increasing. For example, NTT urban development, a lot of new[ph] buildings for lease. They have to acquire land. It begins[ph] of NTT data. Facilities services, in other words data own the[ph] facilities and then charging usage fee on a monthly basis. These investments have actually expanded. So at the end of the day, original intent was to reduce CapEx in relation to access network infrastructure. So that has been achieved. However, gradually, the [indiscernible] structure of NTT group is shifting towards cloud. And also there's [indiscernible] group companies are now tackling new initiatives. So that is why there is some increase in investment. So therefore, we will focus on capital sales ratio. [indiscernible] of course, we'll continue to manage both CapEx and [indiscernible], but I hope you will focus on initiatives and improvement in relation to our access network infrastructure related to investment. We're hoping that this could be communicated to you in a more straightforward manner. So -- but please understand that this is the intent behind our initiative. Now with regard to share repurchase. It's authorized up to JPY 200 billion. As you mentioned, this may not be enough to cover the offer by the government [indiscernible] the shares. Of course, if non-government owners are to sell their shares, we'll be able to repurchase that. So that's how we are authorized up to JPY 200 billion. So them [ph] our shares and you multiply that by stock price, unit share price. So 37.3 million shares available. Can we really address that? I think that is your concern. In principle, JPY 200 billion or the number of shares, let's say, 38 million shares. So each of -- either of these will serve as a cap. So I do not believe that the scenario that seems to concern you will actually be realized. So that's my response to your first question. And also earlier, I think you talked about Page 18 of the finance results releases. If you refer to Page 18, so you're talking about the annual[ph] for each segment, right? Yes, so depreciate[ph] , yes. The second related situation. Look, with regard to regional communication business, NTT West, that's begun to worsen. So I think there's some impact from that. But in terms of long-distance international communication business, I think it is actually comparable to the previous year. As for mobile communications, I think the impact of DoCoMo's performance is soft. With regard to data communication business, in this third quarter, because of impact of the unprofitable business in the first half of the year, data [indiscernible] and also to improve their cost of sales and as their contributions or their efforts [indiscernible] are being soft[ph] . But as for other business, for this particular third quarter, NTT urban development, they had very large major transaction relation to condominiums. And [indiscernible] facilities, they have seen progress in terms of various power generation projects. I think those are the factors.

Daisaku Masuno - Nomura Securities Co. Ltd., Research Division

With regard to non-major segments, from October through December, just these 3 months alone, it seems that the return on benefits, that pension liabilities has improved compared against previous periods. Is my understanding correct?

Yoshikiyo Sakai

On a full year basis, yes, actuarial GAAP. For this third quarter alone, on a temporary basis, there has been the impact of the migration to defined contribution and pension, so yes, in terms of actuarial GAAP, there has been improvement as a result of that as well.

Hiroki Watanabe

I have the answer to your question. If I may, with regard to share repurchase, so as far as the number of shares are concerned, if you actually -- so [indiscernible] share, I think fee required to repurchase the shares could actually exceed JPY 200 billion. The government [indiscernible] JPY 153.3 billion worth of shares. In the case of [indiscernible], we're the only buyer. However, the sellers could be actually -- could theoretically include non-government sellers as well. So that's a theoretical possibility. So that's why they decide to take a strong authorization, but I think the government-owned shares for this offering will be JPY 153.3 billion. I cannot believe that, theoretically speaking, if third parties offer NTT shares for sale, I think theoretically it might be possible, I cannot think that will actually be an actual scenario. The government has [indiscernible] the number of shares. I think we have discounted their unit stock price. So the actual stock price, I believe, the actual amount involved could actually vary. The government has actually inked-in JPY 153.3 billion for the price, so therefore, so that's the basis, that's the basis contained in the budget.

Operator

Next from Goldman Sachs, Mr. Ikuo Matsuhashi.

Ikuo Matsuhashi - Goldman Sachs Group Inc., Research Division

I have several questions, if I may. My first question. This is something that's routinely asked, with regard to bundling involving the fixed client services. Just the other day, maybe just a few days ago, [indiscernible] advisory consul has begun its separation in fixed mobile bundling. That's the topic of the discussion in order to create an environment which is more conducive for fixed mobile convergence.

Hiroki Watanabe

Now DoCoMo has delivered iPhone and when you consider the competitive landscape, maybe. There's a possibility.

Ikuo Matsuhashi - Goldman Sachs Group Inc., Research Division

What are your thoughts about the option of providing fixed mobile converged services in a not-so-straightforward manner?

I understand that DoCoMo has begun to consider such possibly on fixed mobile bundled services, but what is NTT's stance towards fixed mobile services? If you could clarify or if there's a timeline for you to make your position more clear, what would that timeline be? When can you actually elaborate on your position on fixed mobile bundling services. [indiscernible] relates to cost reductions.

Why don't you ask about DoCoMo's contribution to cost reduction. You have set the target of JPY 500 billion cost reduction. But if you pursue this, well actually, after you pursue this target, what will NTT be like once you have achieved your cost-reduction target?

It's an indirect way of asking, I realize that. But inclusive of DoCoMo, NTT Group may be your [indiscernible] services. But after the cost reduction is achieved, are you going to review your very excessive way of providing services to your customers? For example, saving physical billing paper, billing sheets to customers, are you going to reduce that? Are you going to stop that? Maybe. [indiscernible] of the customers may not want paper-based billing to be sent to them. So if you're able to reduce some of your services and service portfolio. So I appreciate your explanation on this point.

Hiroki Watanabe

I'd like to respond to your 2 questions. First, about the bundled services. Compared against the second quarter, what change has taken place? After the second quarter, KDDI has been pursuing this smart value program. And around December, and by the way we're already into February, but around December, Softpak[ph] launched smart discount or a program under such a name, in other words combining smartphones and fixed-line and broadband services. They're providing discounted. And I understand that they began test marketing for discount services combining both smartphones and fixed-line services. As far us bundled services are concerned, the overall basic trend we have repeatedly mentioned, we want to [indiscernible] for the best mix between fixed-line and wireless services and we believe that this is going to stretch further. That has been our view. The issue is to what extent is there such user demand, then how can we actually have those services take root. So the other [indiscernible], the 2 other competition being able to provide this. But since NTT is still not able offer these services, if we are disadvantaged. Again, I think we need to be able to respond to customer requests and demands. So therefore, I think DoCoMo needs to take a look at the changes in the marketplace and also try to come out with a scenario for the future and then address this matter. From that perspective, we do not choose to pursue discussions on this topic. Our second question about NTT after the cost-reduction target is achieved. And just mentioned by Mr. Matsuhashi, I have found[ph] that. The cost-reduction is a professional charge[ph] right? So we target to be ultimately competitive. So no matter what the business is, there are always challenges and issues. So therefore, we don't want to actually fix it, fix something beforehand. And for this cost-reduction is something that covers all aspects of our business. So we've carried consolidation. We have also carried out outsourcing of our businesses. But at the same time, we have also, in relation to management resources, we have made sure that they can be used. For example, DoCoMo can use Internet offer for NTT so that rather than purchase something from outside the group. In terms of procurement efforts, they're made to reduce cost. So there is additional efforts made already. So what you refer to simply is small part of this overall menu of cost reduction that they're carrying out. Naturally, we have to meet the customer demands or requirements. And even as we speak, in the case of landline or fixed-line telephony services, we already provide so-called [indiscernible] billing service, which is a web-based billing service. Although the usage rate is still low, we believe that service can be viable and also our various group companies are considering the possibility of further cost reduction.

Operator

Morgan Stanley Securities Mr. Tetsuro Tsusaka.

Tetsuro Tsusaka - Morgan Stanley, Research Division

I am Tsusaka from Morgan Stanley. First of all, from the global business perspective, at the beginning of the year, presentation materials, year-on-year basis, the increase of the revenue amount was written. I believe it was about JPY 150 billion.

Hiroki Watanabe

We are near. It was JPY 159.4 billion.

Tetsuro Tsusaka - Morgan Stanley, Research Division

I do understand that top line increasing. But the impact to the profit?

I believe that it is the timing. If you re-do the timing that, that will have an impact in the profit. Or the profit still cannot be generated. So now onwards, if the profit is not still being generated, around what timing will the profit be able to contribute to the business?

So the cloud service and the global business, and with that, there is another revenue from overseas business, overseas business sales.

When will you be able to emphasize the growth area? Can you tell me your perspective on that? And the second question is regarding capital investment. Previously, you said various things happen and various things happen so that the original plan of JPY 100 billion capital investment and reduction. We are not in line with that yet. The price[ph] that CapEx still stands[ph] at 15%. If there are various things that occurs that may become a risk, it's the confirmation I wanted to make with you. The reason being in the previous days, that was a signature item of the major management plan. However, that still it was easily withdrawn in the past result. So I'm a bit concerned about the tone of what you are explaining. And the third point -- question is that in terms of profit contribution like the[ph] NTT DoCoMo from the holding company, how do you view NTT DoCoMo? The other day, the results announcement and the meeting with the top management next fiscal year have -- fiscal year '14 performance, there seems to be many concerned elements was my impression. But as the managing of the group perspective, the company NTT DoCoMo then decreasing their profit, is that acceptable? It's what I'd like to know. Or as a group, and company NTT DoCoMo, they had a decline in profit on a consolidated basis as a group. Are there any metric that can absorb that decline? What happened with the volatility is high next fiscal year, what are you planning to do? Those 3 questions, please.

Hiroki Watanabe

I'd like to answer the first question regarding the global business. And you said the net sale for global business indiscernible] M&A and cross-selling, it is going up where there is a profit. Is telling that or not[ph] , it was your question. [indiscernible] March 2017. The reason why we had a longer time period for the global business is we have a [indiscernible] in sales. The M&As that we're conducting right now is trying to line up the necessary entities to provide as global cloud services. But if you look at the area by area or the coverage area there or services, we are -- we still have some points to improve. So we do not have a specific plan regarding margins that I can share with you. The managing data support[ph] , and we have not changed our moved from that percentage. So what are we going to do from now on? The operating margin of global. So instead of going up linearly, every year, probably, it's now going to increase in the latter half. So that's one reason. And because investment necessary for our global cloud and M&A is required, so it's not that year-over-year it's going to increase, but it's the latter part that is going to show the increase. Well, of course, the other question is, is that acceptable. [indiscernible] is a company that we have acquired, clearly, to provide NTT Communications network services globally and try to improve the cost competitiveness. And we are of course moving in the direction of improving the cost and also using the resources offshore, as I mentioned, will be implemented. While we are doing that overall, how the profit is generated [indiscernible] regarding the capital investment. Maybe the way I said it was too much emphasized. The conventional overall net sales, the CapEx against the net sales, of course, that is going to be well managed. What I wanted to convey is that the characteristics of the capital investment has been changing. For the data communications services [indiscernible] we will be able to collect the investment that we have made. So we need to make a certain level of investment. And in the data segment, compared to several years ago, the demand is increasing so there will be more of the capital investment that will be allocated there. Therefore, there's a standard[ph] element with the numerator and denominator, if you look at those numbers, we will look at the percentage, we look at the percentage and that's the percentage I have told you. This CapEx to sale, [indiscernible] instead of changing that, I would like to just look at the new elements that are occurring and I would just wanted to share with you what I'm feeling. So I don't want you to have any misunderstanding of what I have said. Regarding the third question, which is the DoCoMo situation or the profit for next year. As I mentioned at the beginning of my explanation, the fourth quarter DoCoMo's [indiscernible] for sales activities and cost reductions will be the major point. Therefore, these activities if they are able to realize in a timely manner, that will be at the foundation that will lead us to next fiscal year. Therefore, the consolidated -- in terms of consolidated profit, they consist of 70%. It's a very important company. So I want them to focus their efforts in Japan, and I would like to look forward to the results of their efforts. Regarding the [indiscernible] for next fiscal year, how the effort is going to change, things will change also. And after the first quarter -- fourth quarter results in the April season, we would like to comment about that once again when we are proceeding the major management plan. In a total view, we are not going to change the plan. But we'd like to see the results of the fourth quarter and come up with a picture for fiscal year '14. How we're going to -- I just wanted to clarify how we're going to proceed to answer your question. That's all.

Operator

Next from Crédit Suisse, Mr. Hitoshi Hayakawa.

Hitoshi Hayakawa - Crédit Suisse AG, Research Division

Hitoshi Hayakawa from Crédit Suisse. Thank you for the explanation. With regard to shareholder return, I have 2 questions. Earlier, Mr. Sakai, you mentioned that JPY 153.3 billion comes first. So therefore, 60[ph] million shares were up for sale by the government, so half will be covered by this fiscal year in the JPY 153.3 billion. And the remainder, I think, the budget they are setting is JPY 100 billion. So of the remaining 62 million shares, the remaining 30 million or thereabout is likely to be offered for sale by the Japanese government in the coming fiscal year. Is that a scenario that we should be prepared for? That's my first question. And with regards to dividend. After the second -- after the first half here, [indiscernible] increase in dividend per share. But as far as the full year dividend is concerned, I think it's still JPY 170 per share. As we go towards the next fiscal year and by adding the impact of the share repurchase program, in terms of the JPY 170 dividend per share for the fiscal year, what is going to be your position for the dividend for the coming fiscal year to the extent possible to get your thoughts.

Hiroki Watanabe

Thank you. Watanabe speaking. Let me respond to your first question. The [indiscernible] government is going to see offered for sale, government own shares above the 1/3 obligations. And they will be dividing the sales into this fiscal year and the coming fiscal year. So I understand, my understanding is the remainder of the government-owned shares will be available in the coming in the fiscal year. Now according to reports, [indiscernible] just at the upper half. And there are projections that this will pass through by the end of this week. Instead of, okay,[ph] it will simply [indiscernible] proceed with the procedure. And the remainder of the shares should become available for sale in the budget for the coming fiscal year. With regard to dividend. As for the projected dividend for the coming fiscal year, as was already mentioned, we're now going to [indiscernible] business plan. This will [indiscernible] for the upcoming fiscal year and this will have to be considered in that context. Our position is to enrich shareholder return over the medium term and also, since we've carried out the scale of share repurchase program then we actually have greater available resources to be paid out as dividend as a result of a share repurchase program. So that being the case, as we compile the business operating plan for the next fiscal year, we will give thoughts to this matter in this context. Thank you.

Operator

[Operator Instructions] Mr. Masuno, Nomura Securities.

Daisaku Masuno - Nomura Securities Co. Ltd., Research Division

I apologize for asking the question once again. It's about bundled services and also your thoughts about DoCoMo for the coming fiscal year. Let me ask these questions. Under this scheme, [indiscernible] fiber and smartphone efficiency [indiscernible] for NTT under the regulatory framework, there are 20 million fiber users. And if DoCoMo still has market share of 50%, it means there is large user base, they're about to offer discount to this large user base. Then this could represent significant potential downward pressure on your revenue. So just because it's possible for you to pursue this bundled services under this scheme, it's questionable [indiscernible] that you'll be able to generate sufficient revenues growth. Can you respond to that? And second question. We have this question within the current[ph] team in DoCoMo since the previous week. With regards to smartphones sales and net app[ph] . They mentioned that they want to confirm that. However, in the 1st week of April, I believe we talked that this will become very tangible. So is that the timeline for you to make addition[ph] about DoCoMo. And afterwards I think we -- is that the timeline for assessing DoCoMo's performance, is there anything or a strategy that you're able to think on your part in relation to DoCoMo's performance? And that's my question.

Hiroki Watanabe

The question was about the bundled discount. If DoCoMo were to offer a comparable bundled discount as the 2 competitors, wouldn't there; be downward pressure on revenue because DoCoMo has the largest user base, that was the question. And I think, his point was maybe such a discount was not advantageous for DoCoMo. And actually, [indiscernible] I think it's up to DoCoMo to decide on this matter. Now at that juncture, the fundamental issue is this. What about the users needs towards these bundled services? And as [indiscernible] mentioned, price-based bundling is simply something that is -- that takes place in the [indiscernible] phase because it's the services that should be bundled in order to attract customer needs. So inclusive of that. How do we respond to that?

We do not have the luxury of time. We will not [indiscernible] a lot of time to decide on this matter, but this is something that will be considered. And the second question, our position [indiscernible] DoCoMo's performance in fiscal year 2014. I mentioned that after the fourth quarter results are clear, DoCoMo will consider the decision[ph] . I mentioned that. I'm not saying that that's something that will take place only after the final week of March. Naturally, the final results will only come out at that time. However, those changes will be tangible, and there could be some unexpected consequences. And I'm sure that this will be visible from January through March. So we will continue to take this into consideration as we go through this quarter. So of course, the finalization will take place at the end of March, but naturally, consideration will take as required. So that's the timeline that we have in mind.

Operator

[Operator Instructions] It seems that there are no other people who would like to ask a question. With this, we would like to conclude the explanation of the NTT's full year 2013.

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