NTT DOCOMO : FY2020 1Q Analyst Meeting Material

FY2020/1Q

Results Presentation

August 3, 2020

1. FY2020/1Q Results Highlights
2. FY2020 Guidance and Principal Actions

1

FY2020/1Q Results Highlights

(Billions of yen)

IFRS

	FY2019/1Q	FY2020/1Q	Changes	Changes
	(1)	(2)	(2) － (1)	(%)
Operating revenues	1,159.3	1,098.2	‐61.1	‐5.3%
Operating profit	278.7	280.5	+1.8	+0.7%
Profit attributable to shareholders	192.3	195.3	+3.0	+1.5%
of NTT DOCOMO, INC.
Adjusted free cash flow	174.8	‐54.0	‐228.8	ー
Capital expenditures	97.9	90.8	‐7.1	‐7.2%

◆ Consolidated financial statements in this document are unaudited.

◆ Adjusted free cash flow is calculated excluding the effects of changes in investment derived from purchases, redemption at maturity and disposals of financial instruments held for cash management purposes with original maturities of longer than three months.

2

Results by Segment

				IFRS
		FY2019/1Q	FY2020/1Q
		Changes
(Billions of yen)		(1)	(2)	(2) -(1)
Telecommunications	Operating revenues	945.1	851.8	‐93.3
business	Operating profit	231.2	219.4	‐11.8

Smart life	Operating revenues	111.3	145.0	+33.8
business	Operating profit	18.8	28.3	+9.5
Other	Operating revenues	109.5	110.4	+0.9
businesses	Operating profit	28.7	32.8	+4.2
Smart life	Operating revenues	220.8	255.5	+34.7
business and		47.5	61.2	+13.6
Other businesses	Operating profit

• Certain services that had been included in Smart life business were reclassified to Other businesses to reflect the change in its internal organizational structure effective as of July 1,

2019. In connection with this realignment, segment information for the fiscal year ended Mar. 31, 2020 has been restated to conform to the presentation for the fiscal year ending	3
March 31, 2021.

Key Factors behind Changes

in Operating Profit

IFRS

(Billions of yen)

Mobile	Other	Selling	Selling	Other
operating	expenses:	operating
communications	revenues:	revenues:	expenses:
services revenues:	Up 23.2	Down 77.7	Down 84.9	Up 8.9	280.5
278.7 Down 18.7			Network‐related
			expenses
Optical‐fiber broadband		(including optical‐
	fiber broadband
service revenues, etc. :		service‐related
Up 12.0			expenses):
			Up 13.0
		Selling revenues
		and expenses:
		Up 7.2
Operating revenues		Operating expenses
	－61.1		－63.0

FY19/1Q
					FY20/1Q

◆ Selling expenses represent the sum of cost of equipment sold and commissions to agent resellers.	4
◆ Network‐related expenses represent the sum of depreciation/amortization, loss on disposal of property, plant and equipment and intangible assets, and communication network charges.

"d POINT CLUB"

"d POINT CLUB" members

"d POINTs" used

(Million)

Topped 76 million	(Billion points)

71.31

76.57

Up 22%

57.1

Up 7%

Up 24%	"d POINT CARD"
36.16	registrants
44.72

FY19/1QFY20/1Q

46.9

Up 55%

26.0

FY19/1Q

Points used

at

partners'

stores, etc.

40.3

FY20/1Q

• "d POINT CARD" registrants indicate the no. of users who can earn and use "d POINTs" at participating stores by registering their personal information.

5

Telecommunications Business

Operational Performance (1)

Mobile telecommunications	Churn rate
service subscriptions

(Million subs)

78.9080.61

Up 2%	0.58%
	0.45%	0.42%
		Handset churn rate:

0.34%

FY19/1Q FY20/1Q

◆ Handset churn rate indicates the combined churn rate for smartphones and feature phones.

6

Telecommunications Business

Operational Performance (2)

Total smartphone/	"docomo Hikari"
tablet users	optical‐fiber broadband subs
(Million)	(Million subs)

40.87	42.15	6.66

5.99

Up 3％

Up 11％

FY19/1Q.

FY20/1Q.

FY19/1Q.

FY20/1Q.

7

ARPU

モバイルARPU			ドコモ光ARPU		割引適⽤額
Mobile			docomo Hikari ARPU		Impact of discounts

(Yen)

4,770	4,740	4,710	4,760	4,800
530
550	570	580	590

5,250

5,140

4,970

4,890

4,820

(1,010)	(950)	(830)	(710)	(610)
FY19/1Q.	9/.	FY19/3Q.	19.4Q	FY20/1Q.
	FY1 2Q		FY1 /4

◆ For an explanation of ARPU, please see the Appendix.	8
◆ Mobile ARPU and docomo Hikari ARPU exclude the impact of discounts.
◆ The impact of discounts include those from "Monthly Support," "docomo with" and "docomo Hikari set discount."

Smart Life Business & Other Businesses:

Operating Profit

(Billions of yen)

Principal services

61.2

47.5

Up 29％

Smart life business

Content/Lifestyle Finance/Payment

Other businesses

475	Support services for
customers' peace of mind

Enterprise solutions

FY19/1QFY20/1Q

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Finance/Payment Services (1)

Finance/Payment	"d CARD" members
Transactions handled	Topped 13 million
(Billions of yen)	(Million members)

1,500.0

Up 32％	11.71	13.18
1,130.0		Up 13%
Up 26％	d CARD
	transactions
910.0	1,140.0	Up 25% d CARD GOLD
	5.62	7.04

FY19/1Q

FY20/1Q

FY19/1Q

FY20/1Q

• The amount of transactions handled represent the cumulative amount for FY20/1Q, which includes the transactions handled with "d CARD", "iD," "d Payment," direct carrier billing and "DOCOMO Mobile Payment Service," etc.

◆	The following changes have been made in association with the integration of "d CARD mini" into "d Payment" service on Nov. 19, 2019: (i) Transactions handled with "d CARD mini" were excluded from the amount of	10

transactions handled with "d CARD" and recorded as "d Payment" transactions; and (ii) "d CARD mini" members were excluded from "d CARD" members.

Finance/Payment Services (2)

Transactions processed	"d Payment" users	Locations where payment/
with "d Payment"		point service can be used
(Billions of yen)	(Millions)	(Million locations)

Topped 27 million

153.0	1.94

27.27

1.11

1.7‐fold

14.96

54.0

1.8‐fold

2.8‐fold

FY19/1Q

FY20/1Q

FY19/1Q

FY19/1Q

FY20/1Q

FY20/1Q

◆ The amount of transactions processed with "d Payment" represents the

of payments

with "d Payment" (code and online payment) and "d

cumulative amount

Payment (iD)".

made in FY20/1Q

◆ The number of "d Payment" users represents the sum of total number of "d Payment" app downloads and "d Payment (iD)" members.

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◆ Locations where payment/point service can be used represent the combined no. of locations where "d POINT," "iD" and "d Payment" (code and online payment) services can be used.

Expansion of

partners

No. of

partners increased 1.4‐fold

Expansion of "d POINT" participating stores

1,312

925	Developed new photo sales service
that utilizes image recognition engine

Contributed to advancement of fishing industry with ICT‐based new mackerel farming model

FY19/1Q		FY20/1Q
				12
◆ No. of "+d" partners: The no. of partners that have jointly created new value by integrating DOCOMO's business assets with their own assets.

Medium‐Term Strategy "Declaration beyond": Actions Taken (1)

Value & excitement to customers

Declaration 1

Market

leader

Declaration 2

Style

innovation

Declaration 3

Peace of mind and comfort support

Launch of "Disney+" official video streaming service

Exclusive provider* in Japan. Also made available bundle discount with DOCOMO's "Giga" plans and limited‐edition "d POINT CARD". (Launched Jun. 11, 2020) *: As of Aug.3, 2020.

Support of "Mainapoint" on "d Payment" and "d CARD"

Award of 500 "d POINTS" to "d CARD" users applying for "Mainapoint." (Announced Jun. 30, 2020). Execution of "d Payment" campaign offering up to 2,500 points (Announced Jul. 17, 2020)

Launched new plan of "docomo Hikari" that offers transmission speeds of up to 10Gbps

Aim to expand the new experience brought about by large‐capacity communications. (Launched Apr. 1, 2020*). *: Service coverage, which is currently limited to certain

geographies, is planned to be broadened over time.

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Medium‐Term Strategy "Declaration beyond": Actions Taken (2)

Value co‐creation with partners

Declaration 4

Industry creation

Further enrichment of "docomo Open Innovation Cloud (dOIC)"

Declaration 5

Solution

co‐creation

Declaration 6

Partner business

expansion

Opened three new locations (Osaka, Kanagawa and Oita) in addition to Tokyo (Launched May 29, 2020). Launched "Cloud Direct" service (Launched June 30, 2020).

Launched "d Healthcare for Biz" health and productivity management support service for enterprises

Promote enterprises' health and productivity management leveraging smartphone apps and AI (Launched Apr. 13, 2020).

Launched "DOCOMO Image Recognition Platform"

Started providing a platform for AI‐based image recognition solution on "docomo Open Innovation Cloud." Also used for "Easy Pass powered by SAFR" (Launched May 29, 2020).

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Response to July 2020 Torrential Rain

Responded swiftly to minimize impact on service

Established nationwide support structure

and mobilized companywide efforts for restoration activities

Emergency recovery of

Automatic rerouting using

transmission lines

multi‐route transmission lines

Main route

︓

本ルート

Alternative route

︓迂回ルート

Coverage restoration through	Deployment of satellite
satellite base stations	mobile base stations

Implemented various support measures for

customers in disaster‐stricken areas

Provision of free‐of‐charge battery charging and Wi‐Fi services at shelters, etc., in stricken areas

Operation of "Disaster Data Unlimited Mode"

Operation of "disaster data unlimited mode"

Support measures provided through Aug. 31.

to over 1.4 million customers in areas applied with Disaster Relief Act (9 prefectures, 98 municipalities)

◆ No. of users applied with "disaster data unlimited mode" is as of Jul. 29.

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1. FY2020/1Q Results Highlights
2. FY2020 Guidance and Principal Actions

16

FY2020 Guidance

			IFRS
(Billions of yen)	FY2019	FY2020	Changes
	full year (1)	full year (2)	(2) － (1)
Operating revenues	4,651.3	4,570.0	‐81.3

Operating profit

854.7 880.0 +25.4

Smart life business & Other businesses

148.1

160.0

+11.9

Adjusted free cash flow

893.3 730.0 ‐163.3

Capital expenditure

572.8 570.0 ‐2.8

• Adjusted free cash flow is calculated excluding the effects of changes in investment derived from purchases, redemption at maturity and disposals of financial instruments held for cash management

purposes with original maturities of longer than three months.	17

FY2020 Guidance (2)

Aim for profit growth properly dealing with COVID‐19 impacts

		・Decline in mobile communications services revenues resulting from
Operating	DOWN	expanded customer return measures, e.g., "Gigaho/Gigalight" plans.
revenues	・Significant drop in international roaming and equipment sales
		revenues due to COVID‐19.
		・Operating profit from Smart life and Other businesses projected to
Operating		grow driven by Smart life business and enterprise solutions.
UP
profit	・Reduction of sales‐related expenses and thorough cost efficiency
		improvement to offset decline in international roaming revenues
		caused by COVID‐19 and rise in COVID‐19 countermeasure expenses.
	Reinforce/	・ Concentrate resources on reinforcement of 5G business, and
CAPEX	Improve	maintain annual CAPEX comparable to the level of last fiscal year by
	efficiency	making more efficient use of expenditures for 3G/LTE, etc.
		18

FY2020 Principal Actions

Further reinforcement

of customer base

Full‐scale execution of a business foundation centered on our membership base

New value creation for the 5G era

Structural reform

underpinning the new era

• Further refine customers' experience at shopfront and online, and enhance the attractiveness of "d POINT" program.
• Compelling rate plans and early roll out of 5G coverage.
• Build strong customer touchpoints for members and advance digital marketing.
• Reinforce growth areas, e.g., finance/payment, marketing solutions, etc.
• Full‐scale deployment of new solutions through co‐creation with partners.
• Deliver new sensory services and experiences primarily through video.
• Improve efficiency of operational processes through DX and reallocate resources to growth areas.
• Streamline business operations by stepping up efforts for 3G subscriber migration.

19

Strategic Business Alliance with

Mercari/Merpay

Strengthen collaboration with strategic partner to further enhance attractiveness of "d POINT" and "d Payment"

Enable use of "d POINT" on "Mercari"

Enable use of "d Payment" and "Merpay" with a single code

Federation between one of Japan's largest marketplace and one of Japan's largest loyalty point membership club, "d POINT"

Over 2.00 million federations

×

◆ No. of member federations is as of Jul 27, 2020.

◆ Support of "d POINT" on "Mercari" started from Jun. 11, 2020.

◆ Payment using common QR code between "d Payment" and "Merpay" to start from early September, 2020.	20

5G Subscriptions/Coverage

Making steady progress toward full‐year target

5G subscriptions

5G coverage

(Subs)	(Cities)

Release of	500 cities
standard models 2.5 mil	including all government‐
designated cities

5G service started in 47 prefectures

92 cities

0.15 mil

FY20/1Q

・・・

FY20 (target)

FY20/1Q

・・・

FY20 (target)

21

5G Services

Expand initiatives for

delivery of 5G era services

Introduced 5G "multi‐streaming function"

on "Hikari TV for docomo"

Main view screen

Multi‐streaming

view screen

• Les Films du Cap ©BBC (c)ORF/Ali Schafler
• Igo & Shogi Channel （C）Hiroshi Kaneko

Accelerate joint initiative with

new partners

Creation of new experienced value

inside and outside stadiums and arenas

◆Agreement to explore cooperation in digital services for Hanshin Koshien Stadium and Hanshin Tigers ( Jun. 18)

• Conclusion of capital alliance agreement and official sponsor agreement with Kawasaki Brave Thunders (Jun. 29)

"Shintaikan Live CONNECT"	Future communication experience
Southern All Stars Special Live 2020	in 5G areas

JR Takanawa Gateway Station

22

5G Solutions (1)

Solve social issues based on strong demand identified through 5G pre‐commercial service

Solution technologies

Others

AI

Video

IoT transmission

High‐resolution video transmission solution

Secure environment/High‐resolution video transmission

■ Remote education using

multi‐angle video

■ Remote medical treatment support

Robotics

Industry sectors

Others

using high‐resolution video

Virtual space

(XR)Medical

Manufacturing/ IT/services construction

Municipalities/

Transport/ education, tourism infrastructure

Media

• Analysis result of 5G pre‐commercial service use cases provided from Sept. 2019

Virtual space/XR solutions

Remote operational support suited for remote‐style society

■ Remote tourism support using AR ■ Joint designing of industrial products

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5G Solutions (2)

Expand high‐security, low‐latency solutions

to deliver "5G x DX"

Launch of "Cloud Direct"

High security	Low latency
Installed inside	Shortened transmission distance
carrier network	(Shortest path routing)

【Examples of compatible solutions】

High‐resolution

video transmission

Smart‐telecaster

Carrier network

Zao‐SH

Streamways

Virtual space/XR

AceReal	Virtual Design
for docomo	Atelier

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Response to COVID‐19 (1)

Social contribution through mobile solutions and data utilization business

Telework and remote education

realization support

Free provision of products and services that help realize telework and remote education Applications from over 600 companies

in a short period of time

"Mobile Spatial Statistics®"

population map

Limited‐time offer of

real‐time

demographics data

for free

docomo map navi "Congestion Map"

Limited‐time offer of

"Congestion Map" for free

25

Response to COVID‐19 (2)

Support measures for users under 25

years old

Encouragement of web procedures

and shop visit reservation

Measures for preventing spread of infections upon customers' shop visit

Provision of "docomo Smartphone

classes" online version

Provision of population dynamics

analysis using

"Mobile Spatial Statistics®"

Free‐of‐charge provision of "Additional 1GB Option" and "Speed Mode" for up to Ongoing 50GB to users under 25 years old during the period between April and August

2020.

Encouraging use of web channel for various procedures and shop visit reservation Ongoing to avoid "3Cs" (Closed spaces, Crowded places, Close‐contact settings).

Customer attendance with adequate distance between seats, obliging shop staff Ongoing to wear face coverings, installation of virus protection shields on customer

counters, provision of protective goggles for shop staff, etc.

Ongoing Online version of "docomo Smartphone classes" providing smartphone operations guidance and enjoyable usage tips in video.

Analysis of demographic changes in principal areas before and after the

Ongoing declaration of state of emergency using "Mobile Spatial Statistics" and provision of analysis results to national and local governments, media, etc.

Extension of payment due for mobile

phone charges, etc.

Re‐grant of expired "d POINTs"

Free online health consultation through

"d Healthcare" app

Deferral of payment deadline of phone charges originally due on and after Feb. 29 to Jul. 31 for customers who filed an application for extension.

Re‐grant "d POINTs" expired in March, April and May 2020.

Limited‐time provision (through Jun. 30, 2020) to "d Account" users of a free 24‐hour chat
service with medical doctors for consultation of COVID19‐related and other anxieties or
health concerns.	26

Toward the New Post‐Coronavirus Society

Promote new value creation and solution of social issues.

Also contribute to structural transition to a remote‐style society.

Sports/Live performance

Healthcare/Telemedicine

MaaS	Remote learning support	Online operation support in manufacturing
		27

Cost Efficiency Improvement

(Billions of yen)

	FY20/1Q20.1Q	20年度（予想）
	FY20 (target)

‐24.0

4Q実績

▲560

‐100.0

Focus areas

◆Marketing

Promotion of DX, sales promotion measures, after‐sales support, etc.

◆Network

Equipment integration, outsourcing cost, etc.

◆Other

R&D, information systems, etc.

◆ The amount of cost efficiency improvement above indicates the cost reduction compared to the previous fiscal year.	28

Shareholder Returns

Dividend increase planned for the seventh straight term

125

120

【Dividend per share (yen) 】

110

		100
		80
60	65	70

FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20
							(forecast)
Share	¥473 billion	¥457.1 billion	¥300 billion	¥600 billion	¥300 billion
repurchase
◆ The amount spent for share repurchase indicates the sum of amount used for tender offer and market purchase.		29

Summary

■ FY2020/1Q results overview

Recorded a decline in revenues but an increase in profit, with operating revenues and profit coming in at ¥1,098.2 billion and ¥280.5 billion, respectively.

Growth of Smart life and Other business contributed to offset year‐on‐year decrease in operating revenues caused by COVID‐19 and other factors.

Total "d CARD" members and "d Payment" users grew to over 13 million and 27 million, respectively.

■ FY2020 guidance and principal actions

Aim to grow operating profit to ¥880 billion while properly managing the impact from COVID‐19.

Continue to focus on growth of Smart life and Other businesses and cost efficiency improvement.

5G subscriber acquisition and coverage expansion making steadfast progress. Release of standard model handsets planned for FY2020/2H.

Shareholder returns: Dividend increase planned for the seventh straight term.
Aim to contribute to the structural shift to a remote‐style society through 5G
envisaging the post‐coronavirus world.	30

Always chosen

to sustain connections

as your robust ICT service partner

31

The new of today, the norm of tomorrow

32

Appendix

33

Principal Services, etc., Included in

Each Reportable Segment

Telecommunications business

Mobile communications services

• 5G services ・ LTE (Xi) services ・FOMA services (3G) ・ International services ・Sales of handset/equipment for each service etc.

Optical fiber broadband service and other telecommunications services

・Optical‐fiber broadband services

・ Satellite communications services

etc.

Smart life business

Content/ Lifestyle services

• "dTV" "d hits" "d magazine" "d shopping" "d healthcare" etc.

・ NTT Plala Inc. ・ Oak Lawn Marketing, Inc. ・Tower Records Japan Inc. etc.

Finance/Payment services

・ d CARD ・ d CARD GOLD ・iD ・d Payment ・ Fintech etc.

Other businesses

Support services for customers peace of mind

・ "Mobile Device Protection Service" ・ "Anshin Remote Support" etc.

Enterprise solutions

・ Enterprise IoT solutions

・ System development/sales/maintenance services

etc.

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Definition and Calculation Methods

of ARPU

i. Definition of ARPU

ARPU (Average monthly Revenue Per Unit):

Average monthly revenue per unit, or ARPU, is used to measure average monthly operating revenues attributable to designated services on a per user basis. ARPU is calculated by dividing telecommunications services revenues (excluding certain revenues) by the number of active users of our wireless services in the relevant periods, as shown below under "ARPU Calculation Method." We believe that our ARPU figures provide useful information to analyze the average usage per user and the impacts of changes in our billing arrangements.

ii. ARPU Calculation Methods

Aggregate ARPU = Mobile ARPU + "docomo Hikari" ARPU

‐ Mobile ARPU

: Mobile ARPU Related Revenues (basic monthly charges, voice charges, communication charges) / No. of active users

1. • "docomo Hikari" ARPU : "docomo Hikari"‐Related Revenues (basic monthly charges, voice communication charges) / Number of active users *ARPU excluding the impact of discounts are calculated without including the amounts of discounts applied in the relevant revenues.
2. Active Users Calculation Method

Sum of Number of active users for each month ((Number of users at the end of previous month + Number of users at the end of current month) / 2) during the relevant period

iv.

1. The number of "users" used to calculate ARPU is the total number of subscriptions, excluding the subscriptions listed below:
2. 1. Subscriptions of communication modules services, "Phone Number Storage," "Mail Address Storage," "docomo Business Transceiver" and wholesale telecommunications services and interconnecting telecommunications facilities that are provided to Mobile Virtual Network Operators (MVNOs); and
   2. Data Plan subscriptions in the case where the customer contracting for such subscription in his/her name also has a subscription for "5G," "Xi" or "FOMA" services in his/her name.
3. Revenues from communication module services, "Phone Number Storage," "Mail Address Storage," "docomo Business Transceiver" and wholesale telecommunications services and interconnecting telecommunications facilities that are provided to Mobile Virtual Network Operators (MVNOs) , and impact on revenues from "d POINT" program, etc.,are not included in the ARPU calculation.

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Special Note Regarding Forward‐Looking Statements

All forward‐looking statements that are not historical facts are based on management's current plans, expectations, assumptions and estimates based on the information available as of the filing date of this document. Some of the projected numbers in this report were derived using certain assumptions that were indispensable for making such projections in addition to historical facts. These forward‐looking statements are subject to various known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those contained in or suggested by any forward‐looking statement. With regard to various known and unknown risks, uncertainties and other factors, please see our latest Annual Securities Report and Quarterly Securities Reports.

Names of companies, products, etc., contained in this presentation are the trademarks or registered trademarks of their respective organizations.

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