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DraftMedium Term Business StrategyMedium Term Business Strategy
DraftMedium Term Business StrategyMedium Term Business Strategy
FY3/2012 FY3/2012 -- FY3/2015FY3/2015
Febr ar 2012February 2012
Medium Term Business Target
Growth Strategy 2015
g
Growth Strategy 2015
Investment Summary
2
Medium Term Business Targetg
3
Previous 3Previous 3--Year Financials Review Year Financials Review
Revenue increased by 65% to over 200 billion yen
AchievementsAchievements
Transformation to positive recurring profit Reducing revenue and EBITDA dependence on fixed business
FY3/2009(pro-forma)
FY3/2012(estimates)
Revenue 122.9 billion122.9 billion yenyen 203.0 billion203.0 billion yenyenMobile (% share)Fixed (% share)
61.4 billion yen (50%)61.5 billion yen (50%)
161.0 billion yen (79%)42.0 billion yen(21%)
EBITDA 2.2 billion2.2 billion yenyen 63.0 billion63.0 billion yenyen
( ) y ( ) y ( )
44 0 billion en (70%)Mobile (% share)Fixed (% share)
- 18.5 billion yen20.6 billion yen
44.0 billion yen (70%)19.0 billion yen (30%)
Recurring profit -- 31.4 billion31.4 billion yenyen 12.5 billion12.5 billion yenyen
4
ecu g p o 31.4 billion31.4 billion yenyen yy
Revenue Growth ComparisonRevenue Growth Comparison((33--Year) Year)
Highest 3-Year revenue growth of 65.2% during FY3/2009 to FY3/2012EHighest 3-Year revenue CAGR of 18.2% during FY3/2009 to FY3/2012EHighest 3 Year revenue CAGR of 18.2% during FY3/2009 to FY3/2012E
Absolute 3-Year Revenue Growth 3-Year Revenue CAGRAbsolute 3-Year Revenue GrowthFY3/2009 - FY3/2012E
3-Year Revenue CAGRFY3/2009-FY3/2012E
A
20.6%
65.2%
6.4%
18.2%eAccess
Company A
eAccess
Company A
4.4% 1.5%Average Average
-4.7%
1.5%
-1.6%
0.4%Company B
Company C
Company B
Company C
5
-10% 0% 10% 20% 30% 40% 50% 60% 70% -5% 0% 5% 10% 15% 20% 25%
Source: public information
EBITDA Growth Comparison (3EBITDA Growth Comparison (3--Year) Year)
EBITDA 3-Year growth increased over 28X during FY3/2009 to FY3/2012EEBITDA 3-Year CAGR also increased over 200% during FY3/2009 to
Absolute 3-Year EBITDA Growth 3-Year EBITDA CAGR
FY3/2012E
Absolute 3-Year EBITDA GrowthFY3/2009-FY3/2012E
3-Year EBITDA CAGRFY3/2009-FY3/2012E
28 6X
14.0%
205.9%
48.0%
2763.6%eAccess eAccess
Company A
28.6X
Company A
3.1%9.4%Average Average
C B
-2.0%
0.7%
-5.8%
2.1%Company B
Company C
Company B
Company C
6
-40% 10% 60% 110% 160% 210%-500% 0% 500% 1000% 1500% 2000% 2500% 3000%
Source: public information
Medium Term Business Target (3Medium Term Business Target (3--Year)Year)
Growth FocusGrowth FocusIncrease revenue to 350 0 billion yen from 203 0 billion yen (up 72%)Increase revenue to 350.0 billion yen from 203.0 billion yen (up 72%)EBITDA growth to be driven by mobile businessRecurring profit to 3x to 40.0 yen billion from 12.5 billion yen
FY3/2012(estimates)
FY3/2015(estimates)
Revenue 203.0 billion203.0 billion yenyen
Mobile (% share) 161.0 billion yen (79%)
350.0 billion350.0 billion yenyen
325.0 billion yen (93%)
EBITDA 63.0 billion63.0 billion yenyen
Fixed (% share) 42.0 billion yen (21%)
90.0 billion yen90.0 billion yen
25.0 billion yen (7%)
Mobile (% share)Fixed (% share)
44.0 billion yen (70%)19.0 billion yen (30%)
R i fit 12 5 billi12 5 billi 40 0 billi40 0 billi
80.0 billion yen (89%)10.0 billion yen (11%)
7
Recurring profit 12.5 billion12.5 billion yenyen 40.0 billion40.0 billion yenyen
Subscriber Acquisition Target Subscriber Acquisition Target
FY3/2009 FY3/2012E FY3/2015E
Mobile 1.4 million1.4 million 4.0 million4.0 million 6.6 million6.6 million
Net Addition: +2.6 million Net Addition: +2.6 million
Fixed 2.6 million2.6 million 1.6 million1.6 million 0.9 million0.9 million
Total 4.0 million4.0 million 5.6 million5.6 million 7.5 million7.5 million
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Capital Spending Plan Capital Spending Plan
FY3/2010 ~ FY3/2012E
FY3/2013E ~ FY3/2015E
Accumulated 3-Year capex plan 130.0 billion130.0 billion yenyen 100.0 billion yen *100.0 billion yen *
Complete area expansion to 93% population coverage
Network upgrade to LTE to 75Mbps & 112Mbps
Complete underground & subway station coverage
Backhaul upgrade to 100% all IP
100% d dCapex focus
Network speed upgrade to 42Mbps (DC-HSPA)
100% underground subway tunnel investment
Area coverage to expand g pto over 95% population coverage
* C t fi d t i l d* C t fi d t i l d
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* Current capex figures do not include* Current capex figures do not includeplatinum band & migration capexplatinum band & migration capex* Capex figures to be revised after * Capex figures to be revised after
platinum band allocationplatinum band allocation
ProPro--forma Summaryforma SummaryExpect revenue to increase 72% to 350 0 billion yen from 203 0 billion yenExpect revenue to increase 72% to 350.0 billion yen from 203.0 billion yenOperating profit to increase 2x to 50.0 billion yen from 25.0 billion yenRecurring profit to increase 3x to 40.0 billion yen from 12.5 billion yen
S i
FY3/2009(pro-forma)
FY3/2012EFY3/2010(pro-forma)
FY3/2011(pro-forma) FY3/2015EUnit:
million usersbillion yen
Subscribers 4.04.0 4.74.7Mobile (% share)Fixed (% share)
1.4 (35%)2.6 (65%)
5.05.0 5.65.6 7.57.52.4 (51%)2.3 (49%)
3.1 (62%)1.9 (38%)
4.0 (71%)1.6 (29%)
6.6 (88%)0.9 (12%)
Revenue 122.9122.9 176.5176.5 195.6195.6 203.0203.0 350.0350.0Mobile (% share)Fixed (% share)
113.6 (64%)62.9 (36%)
139.1 (71%)56.5 (29%)
161.0 (79%)42.0 (21%)
325.0 (93%)25.0 (7%)
61.4 (50%)61.5 (50%)
EBITDA 2.22.2 44.544.5 64.564.5 63.063.0 90.090.0-18.520 6
Mobile (% share)Fi ed (% share)
18.2 (41%)26 3 (59%)
40.3 (62%)24 2 (38%)
44.0 (70%)19 0 (30%)
80.0 (89%)10 0 (11%)20.6Fixed (% share) 26.3 (59%) 24.2 (38%) 19.0 (30%) 10.0 (11%)
Operating Profit -- 2222..44 11.811.8 19.219.2 25.025.0 50.050.0
10
Recurring profit -- 31.4 31.4 0.60.6 8.98.9 12.512.5 40.040.0
Growth Strategy 2015gy
11
Growth StrategyGrowth Strategy
S 3
Subscribers/Revenue
Step 3Main Stream Carrier
Growth Strategy 2015
Step 22015~
Area coverage 99%Ch ll bil
Step 1
Smart phone Strategy Challenge mobile mainstream market
Step 1Strengthen Mobile Broadband Position
2013~2015ShopsHandset
2012~2013 LTERetentionBranding
HandsetMarketing
12
2012~2013 2013~2015 2015~
Addressing Existing Challenges Addressing Existing Challenges
Capacity issues due to increasing t ffi S d titi
Network
ARPU Price competition & increase in
traffic. Speed competition
ARPUdilution
Price competition & increase in MVNO subscribers
Churn Rising churn
13
Strengthen Mobile Broadband Position
LTERetentionRetention Marketing
14
LTE Strategy LTE Strategy
112112 MbpsMbpsLTE
1st
DC-HSPA 75 Mb
112112 MbpsMbps
42 Mbps
1st
HSPA+
HSPA 75 Mbps
21 Mbps
1st
HSUPA
7.2 Mbps
1st
flat rate Mobile broadband
3.6 Mbpsnetwork leader
15
HSPA HSUPA HSPA+ DC-HSPA LTE2009/11 2011/1 2011/3 2012/3
LTE Area Coverage Plan
Pl t l h LTE i M h 2012
Speed
Plan to launch LTE in March 2012Expand area coverage to 70% by March 2013
75/112Mbps
LTE
75/112Mbps
42Mb
HSPA+/DC HSDPA 70%
42Mbps~21Mbps
HSPA+/DC-HSDPA 70%
HSPA 93%14Mbps HSPAp
16
100% IP Backbone •EMOBILE G4 area is compliant area to downlink speed Max 42Mbps. (Some areas:Max 21Mbps or Max 14.4Mbps)** Nation-wide around 70%, Metropolis and government-decreed city: around 99%, Underground: 100% (end of 2012)
Mobile Broadband Market GrowthMobile Broadband Market Growth
15.0 millionMobile Broadband Users
8.0 million1) Speed upgrade
Target Customers
) p pgMigrate low/medium speed MBB users to high speed users (7 2/42Mbps⇒75Mbps)(7.2/42Mbps⇒75Mbps)
2) New customersAttract new MBB customers from new entry users fixed
4.0 million6.6 million
from new entry users, fixed broadband & FMC
17
FY3/2012 FY3/2015
ARPU andARPU and Churn ImprovementChurn ImprovementTarget to red ce monthl ch rn to belo 1 5% le elTarget to reduce monthly churn to below 1.5% levelTarget to recover ARPU back to around 3,000 yen level
4,000(ARPU: yen)
Churn improvement target ARPU recovery target
3,4003,250
3,100
3,500around 3,000 yenaround 3,000 yen
3,1002,950
2,8602,730 2,730
2 500
3,000
1.37%1.40%
1.54%1.44%
1.50%
1 4 %
2,000
2,5001.29% 1.45%
below 1.5%below 1.5%
1,500
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1,0001Q
FY3/112Q
FY3/113Q
FY3/114Q
FY3/111Q
FY3/122Q
FY3/123Q
FY3/12FY3/15
1QFY3/11
2QFY3/11
3QFY3/11
4QFY3/11
1QFY3/12
2QFY3/12
3QFY3/12
FY3/15
Churn Analysis and Retention PlanChurn Analysis and Retention PlanReduce churn (below 1.5%) with initiatives targeting threemain causes (speed, coverage and price)
R t ti Pl
(%)100
N t l
1.5%
Others
1.0%
Retention Plan80
Naturalchurn
Tariffs 4,980 yen(7.2Mbps)
3,880 yen(42Mbps)
40
60
Churn to Area 93% 95%improve indoor
20
other carriers
Speed 7.2Mbps
improve indoortunnel coverage
42Mbps/
EM churn0
Churn reasons t th i
LTE
19Source: EMOBILE former user survey (n = 400 people who churned in the last 18months)
to other carriers
Smart phone Re-entry Strategyp y gy
20
Smart phone Market GrowthSmart phone Market Growth
Expect smart phone market to reach over 50% penetration in Japan’s mobile market
(million)120 60%
80
100
40%
50%
60
80
30%
40%
40 20%
20 10%
21Source: MM Souken
0FY3/2009 FY3/2010 FY3/2011 FY3/2012 FY3/2013 FY3/2014 FY3/2015 FY3/2016
0%
Smartphone user Featurephone user Smartphone user ratio
Smart phone ReSmart phone Re--entry Strategyentry Strategy
Shops Plan to expand EMOBILE shopsShops Plan to expand EMOBILE shops
Preparation of LTE smartphoneHandset
Strengthen branding and marketingMarketing
Focus and target specific customer segments to expand smartphone subscriber base
22
expand smartphone subscriber base
Marketing andMarketing and Sales Channels Strategy Sales Channels Strategy
FY3/2009 ~ FY3/2013E ~ FY3/2012E FY3/2015E
Complete coverage of major electronics retailers nationwide
Investment in EMOBILE carrier shops & multi-carrier shopsM k ti nationwide
Product awareness marketing of Pocket Wifi
carrier shops
Marketing investment in preparation for LTE
Marketingand
channelsinvestment focus
Small investment in corporate brand
Strengthen branding & product marketing
23
Shop StrategyShop Strategy
Increase EMOBILE h
Primarily lti i h EMOBILE shopsmulti-carrier shops
800 t800 stores
Multi-carrier shops
EMOBILE shops
24
End of FY2012
End of FY2013
End of FY2014
End of FY2011
Franchise Shop and EMOBILE Shop Images
L t ’ k
Merits of franchise shops
Leverage partner’s know-how of store operation
Low initial cost for store developmentdevelopment
L i tLow running cost
25
Investing in Marketing and BrandingInvesting in Marketing and Branding
Marketing Strategy
Increase company’s brand recognition
Strengthen product brand position as “No. 1 Wi-Fi”
Marketing preparation forMarketing preparation for LTE & smart phone launch
26
Investment SummaryInvestment Summary
27
Investment Summary Investment Summary
Strong commitment to Medium Term Business Target
Target to achieve 6 6 million mobile subscribers in 2015Target to achieve 6.6 million mobile subscribers in 2015
Aim to increase operating profit 2x and recurring profit 3x
Strengthen mobile broadband position & marketing
Enter smart phone market with target customer segments
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p g g
This presentation has been prepared by eAccess Ltd (“the Company”) ThisThis presentation has been prepared by eAccess Ltd (“the Company”) ThisThis presentation has been prepared by eAccess Ltd. ( the Company ). This This presentation has been prepared by eAccess Ltd. ( the Company ). This presentation contains forwardpresentation contains forward--looking statements, which are subject to risks, looking statements, which are subject to risks, uncertainties, and assumptions. This presentation is being presented solely for uncertainties, and assumptions. This presentation is being presented solely for your information and is subject to change without notice. No representation or your information and is subject to change without notice. No representation or warranty, expressed or implied, is made and no reliance should be placed on the warranty, expressed or implied, is made and no reliance should be placed on the accuracy, actuality, fairness, or completeness of the information presented. The accuracy, actuality, fairness, or completeness of the information presented. The CompanyCompany accept no liability whatsoever for any losses arising from any accept no liability whatsoever for any losses arising from any information contained in the presentation.information contained in the presentation.This presentation does not constitute an offer or invitation to purchase orThis presentation does not constitute an offer or invitation to purchase orThis presentation does not constitute an offer or invitation to purchase or This presentation does not constitute an offer or invitation to purchase or subscribe for any shares of the Company, and no part of this presentation shall subscribe for any shares of the Company, and no part of this presentation shall form the basis of or be relied upon in connection with any contract or form the basis of or be relied upon in connection with any contract or
it tit tcommitment.commitment.
29
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