JTOWER : Financial Results for the 1st Quarter of FY2020 ended June 30, 2020

FY03/2021 Q1

Financial Results for the 1st Quarter of

FY2020 ended June 30, 2020

August 7, 2020

ＪＴＯＷＥＲ Inc.

Outline

1 FY2020 Q1 Financial Results

2 Management Topics

3 FY2020 Forecasts

4 Appendix

1	FY2020 Q1 Financial Results Highlights

Consolidated revenue increased 59% YoY to JPY818 million, continuing high growth

• The revenue for the Domestic IBS business increased 77% YoY to JPY612 million, driving overall revenue growth.
• Infra-Sharingrevenue*1 accounted for 86% of the total revenue, establishing a stable revenue base.

Achieved profitability in all the profit levels

• Consolidated EBITDA increased by more than 2.2 times YoY to JPY316 million.
• The gross profit increased resulting from Infra-Sharing revenue growth, while SG&A expenses were kept down by factors such as remote work, from these results consolidated operating profit increased to JPY100 million.
• Ordinary profit and net Income achieved profitability.

In Q1, both sales and profits exceeded expectations

• Considering the occurrence of upfront investment costs (personnel costs, etc.) related to Tower business and others from Q2 onward and uncertainties in the external environment, such as further impact of COVID-19,full-year forecasts remain unchanged.

*1: Revenue from Infra-Sharing service based on long-term contracts. For details, please refer to "Breakdown of Infra-Sharing and Other Revenues by Business" in Appendix. 3

1	Impact of COVID-19 on Q1 results

Assumptions for expected	Impact on Q1 results
impacts in FY2020 forecasts

Domestic

IBS

International

IBS

Solution

SG&A

Continuation of a state of emergency by the end of June is assumed, and delays in the launch of services are factored in.

(for up to 6 months)

Belated approvals by mobile network operators will cause the delay in service launch.

(for about 3 months)

The acquisition of new contracts is expected to decline by half at the beginning of FY2020 and gradually recover.

A state of emergency was lifted nationwide on May 25, and the number of installations increased exceeding the expectation.

Incorporate financial results in 3 months time lag.

The impact in Q1 (Jan-Mar) was limited and performance trends were assumed levels.

Acquisition of new contracts related to Wi-Fi decreased at roughly the expected level.

Even after the termination of a state of emergency, restrictions on sales activities

continue and recovery may be delayed.

Expenses were reduced due to implementation of remote work.

(travel expenses, office expenses, etc.)

Personnel costs fall short of forecast due to

postponement of recruitment.

4

1	FY2020 Q1 Consolidated Results - P&L

• Revenue increased to JPY818 million (+58.9% YoY), EBITDA to JPY316 million (more than 2.2x YoY), and operating profit increased to JPY100 million.

(JPY mn)

Revenue

EBITDA *¹

EBITDA Margin

Operating Profit

Operating Profit Margin

Ordinary Profit

Net Income

Capital Expenditure *² (Investment Cash Flow)

FY2019		FY2020
Q1 (3 Months)	Q1 (3 Months)	Change
Results	Results	Amount	%
515	818	+303			+58.9%
141	316	+174			+123.1%
27.5%	38.7%	+11.2pt
-0	100	+101			－
－	12.3%	－
-7	93	+101			－
-24	55	+79			－
－	668	－	－

*1:	EBITDA=Operating profit + depreciation + goodwill amortization + amortization of long-term prepaid expenses
*2:	Unaudited figure. The calculation based on the results of Q1 FY2020 and no calculation of previous year figure.

5

1	FY2020 Q1 Consolidated Results - BS (1/2)

• Cash and Cash Equivalents increased by JPY1,455 million from the end of FY2019 to JPY8,643 million due to an increase in Infra-Sharing revenues, which exceeded capital investment, thereby improving financial soundness.

FY2019FY2020

(JPY mn)	March 31, 2020	June 30, 2020	Change
Current Assets	8,032	9,255	+1,223
Cash and Cash Equivalents	7,188	8,643	+1,455
Notes and Accounts	482	367	- 115
Receivable
Non-current Assets	6,614	6,981	+367
Tangible Fixed Assets	5,860	6,249	+388
Goodwill	579	558	- 20
Total Assets	14,646	16,237	+1,590
Financial Indicators
Debt	1,083	1,239	+155
Net Debt	-6,104	-7,404	- 1,299
Equity Ratio	45.3%	41.1%	-4.2%

6

1	FY2020 Q1 Consolidated Results - BS (2/2)

• Increased number of IBS installations has been reflected in increased current and long-term unearned revenue (to be reported as revenue in the future).

	FY2019	FY2020
(JPY mn)	March 31, 2020	June 30, 2020	Change
Current Liabilities	3,288	3,796		+507
Accounts payable - trade	193	149		- 43
Shor-term borrowings	45	7		- 37
Accounts payable - other	1,204	1,098		- 106
Unearned revenue	1,525	2,185		+659
Non-current Liabilities	4,723	5,760		+1,037
Long-term borrowings	300	300		－
Long-term unearned	3,869	4,766		+896
revenue
Total Liabilities	8,011	9,556		+1,545
Net Assets	6,635	6,681		+45
Share capital	4,272	4,278		+5
Capital surplus	2,433	2,439		+5
Total Liabilities and Net Assets	14,646	16,237		+1,590

7

1	Historical Consolidated Revenue

• Infra-Sharingrevenue*¹ has grown 63％ YoY and is serving as a steady revenue base, accounting for 86% of the total consolidated revenue.
• In Other revenue, one-time sales of contracted construction work, which increased in Q4 of FY2019, became standardized.

(JPY mn)						Infra-Sharing Revenue
												Growth
																113
								(Comparison with the same quarter)
								207
			Infra-Sharing Revenue				Other Revenue
																	114	+63%
														82
									83												% of
																						Infra-
																				75％	705	Sharing:
																			622		86％
																	520
												83％	499
									432

Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
		FY2018				FY2019		FY2020

*1: Revenue from Infra-Sharing service based on long-term contracts. For details, please refer to "Breakdown of Infra-Sharing and Other Revenues by Business" in Appendix.

*2: Figures from FY2018 and before as well as the breakdown of Infra-Sharing revenue and other revenue are unaudited. 8

1 Historical Revenue by Business

⚫ Domestic IBS Business revenue increased by 77％ YoY and has grown to account for 75％ of the total consolidated revenue.

• International IBS and Solution business were as planned (one-time sales

increased in Q4 of FY2019).	828		% of
818
total

(JPY mn)			129
			633
		581	128
515		65	84
	91
63	12%	110
107	21%
			572
		405	459
346	67%

16% 98 12% 15% 108 13%

69% 613 75%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

FY2018

FY2019

FY2020

Domestic

International

Solution

IBS

IBS

Note: Breakdown of quarterly revenue by business is unaudited.

9

1	Historical Number of Installations (Domestic IBS)

• Total number of IBS installations has increased to 273 (installation completed: 182, to be installed: 91).
• Total number of completed IBS installations increased by 21 during Q1.

(Number of properties)

No. of installations completed to date*1

No. of installations to be completed*2

3-year CAGR

+67%

	256
	235
204	215
95

273

91

92

129

116

178

164

147

81

90

82

92

93

95

74

5957

71

76

111 123

140

161

182

39

48

97

65 74

20 26 35

45 53

*1: Projects where radio waves have been emitted and revenues are recognized.

*2: Projects where we have reached an agreement with the property owner and mobile carriers, and radio waves emission and revenue recognition are expected in the next

few years.	10

1	Historical Tenancy Ratio*¹ (Domestic IBS)

• Tenancy Ratio (average number of participating mobile network operators per property) has been steady in the higher 2 point range.

（x）

4.0

3.5

3.0

2.5

2.0

1.5

1.0 1.0 1.0 1.0 1.0 1.1

1.4 1.4 1.5 1.6 1.8 1.9

2.6 2.7 2.7 2.7 2.8 2.7 2.8 2.8

2.1 2.1 2.3

1.0

0.5

0.0

*¹: Average number of participating mobile carriers per property (at properties where IBS has been installed to date).

11

1	Historical Consolidated EBITDA*1

• With an increased number of installations for the Domestic IBS business, consolidated EBITDA grew 123% YoY.

	EBITDA growth rate
(JPY mn)	(Comparison with the same quarter)
316

+123%	249

171 174

141

	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
		FY2018					FY2019		FY2020
*1:	EBITDA=Operating profit + depreciation + goodwill amortization + amortization of long-term prepaid expenses
*2:	Figures before FY2019 are unaudited.

12

1	Historical Consolidated Operating Profit

• Consolidated operating income turned positive in Q2 of FY2019 and increased 92% compared to Q4 of FY2019 to JPY100 million.
• Gross profit increased due to the increase in Infra-Sharing revenue, while SG&A expenses fell short of the plan, resulting in improved profitability.

(JPY mn)

Improve

52

						12		5
Q1	Q2	Q3	Q4		Q1	Q2	Q3	Q4	Q1
		FY2018			-0	FY2019			FY2020

Note: Figures before FY2019 are unaudited.

13

1	Historical Consolidated SG&A Expenses

• Consolidated SG&A-to-revenue ratio improved to 40% due to a decrease in expenses caused by implementation of remote work, postponement of recruitment, and an increase in Infra-Sharing revenue.

				138	138	144
(JPY mn)		129	131
124
116

Consolidated #																									1,209
Of employees
																									386
817																									40
228																									159		47％
7
																																SG&A
138
59％																			355										to
												297												323
									288																	revenue
				267
																					98	625				ratio
						96						106								94
444				86											40						18	40％
													43％	32
				47	52％	41						30						41
				152						162					177								179
				135
				Q1					Q2					Q3			Q4							Q1
																	FY2019
																											(Full Year)
FY2018															FY2019													FY2020
														Use of
																				Research and
									Labor											Others
												outsourcing
									costs					14			development
												services

Outline

1 FY2020 Q1 Financial Results

2 Management Topics

3 FY2020 Forecasts

4 Appendix

２

Topics - Development of 5G infra-sharing equipment/ Tower Sharing in Rural Areas

Development of 5G infra-sharing

equipment

• Steady progress toward completion of development during FY2020.

Tower Sharing in Rural Areas

• Negotiations with landowners generally obtained internal consent.
• Tower construction is expected to commence from 2H of FY2020 based on the results of the study for using by mobile network operators.

16

２

Topics - The installation of 5G smart poles in the Nishi-Shinjuku area

2020 July

2020 Fall onwards

FY2021 onwards

• Entered into an agreement to install smart poles in the Nishi-Shinjuku area with Tokyo Metropolitan Government.
• The four MNOs all decided to use these smart poles to be installed in accordance with the Agreement.
• Install 5G base stations including 5G infra-sharing equipment and begin to share telecommunications facilities.

• Establish a business model through the project in the Nishi-Shinjuku area and expand the coverage areas with smart solution demands.

* This image is created based on a smart pole under construction as of July 10, 2020

17

Topics - Capital and business partnership with

２	Mitsubishi UFJ Lease & Finance (As of July 2, 2020)

Position of both companies in capital and business partnership

Expertise in the field of Infra-Sharing,		Customer base of real estate companies
and related sales & technical		and local governments, asset business
capabilities.		insights and financial base.

Utilization of the customer base of Mitsubishi UFJ Lease & Finance in

sales activities to real estate companies and local governments.

Cooperation in the establishment of a finance scheme for capital

investment in indoor and outdoor telecommunications infrastructure.

18

Outline

1 FY2020 Q1 Financial Results

2 Management Topics

3 FY2020 Forecasts

4 Appendix

3	FY2020 Full-Year Forecasts

• In Q1, both sales and profits exceeded expectations.

Considering the occurrence of upfront investment costs (personnel costs, etc.) related to Tower business and others from Q2 onward and uncertainties in the external environment, such as further impact of COVID-19,full-year forecasts remain unchanged.

	FY2019	FY2020		FY2020
	12 Months	12 Months	Change	Q1 (3 Months)	Progress
(JPY mn)	Results	Forecasts	Amount	％	Results	%
Revenue	2,558	3,381	+822	32.1%	818	24%
EBITDA *¹	737	1,128	+390	52.9%	316	28%
EBITDA Margin	28.8%	33.4%	+4.5pt	ー	38.7%	ー
Operating Profit	69	150	+80	115.4%	100	67%
Operating Profit Margin	2.7%	4.4%	+1.7pt	ー	12.3%	ー
Ordinary Profit	5	107	+101	1796.4%	93	87%
Net Income	-13	62	+75	ー	55	89%
Capital Expenditure
(Investment Cash	2,611	3,468	+857	32.8%	668	19%
Flow)

*1: EBITDA=Operating profit + depreciation + goodwill amortization + amortization of long-term prepaid expenses

20

Outline

1 FY2020 Q1 Financial Results

2 Management Topics

3 FY2020 Forecasts

4 Appendix

Appendix Ⅰ Growth Strategy

Appendix ⅡBusiness overview and other information

Ⅰ Growth Strategy

Domestic IBS

Tower

• Increase number of IBS installations
• • Sustainable increase in new buildings.
  • Broaden the target to increase sales potential (installation at existing buildings, add-on-service such as 5G-realted services).
• Improve tenancy ratio
• • Upside potential with new entry of Rakuten Mobile.
• Development of 5G infra-sharing equipment
• Launch tower sharing in rural areas
• • Selection of candidate sites completed and in the process of negotiation with landowners.
  • Planning to start services in some areas in FY2020 and expand locations from the next fiscal year.
• Launch tower sharing in urban areas
• • Selected as 5G Smart Poles provider of Tokyo Metropolitan Government .
  • Use the momentum of smart city planning initiatives to expand services in other areas.

Local 5G	✓ Development of local 5G service
・ Invest in business development for commercialization of the service. .
Strengthen	✓ Strengthen Overseas IBS and Solution Businesses
Related
Businesses	23

Ⅰ

Persistent Demand and Upside Potential

- Domestic IBS Business

IBS installed by JTOWER in Japan*1: 182 installed and 91 to be installed*1

• New buildings*2

~300

【Main target】

・・・

Demands for

/year

new installation

Y1

Y2

Y3

② Existing buildings

【Upside potential】

(Offices*3, commercial*4, hotels*5, hospitals6, high-rise residence*7, etc.)

~30,000 properties

System upgrade

③ New category

④ 5G infra-sharing

(Railway tunnels etc.)*8

equipment add-on

①+②+③

New

~5,000

installation

Potential for

further demand

*1:	As of June 30, 2020. *2: Company estimate based on large-scale projects with floor area of >10,000㎡. *3: Large-scale projects with >330㎡ per floor (as of Sept. end 2018, office building criterion based on Sanko Estate). *4: Large-scale projects with >1,500
	㎡ retail floor space and >10 tenants, developed by a developer. *5: Based on the number of resort hotels, city hotels and business hotels in Japan (as of Dec. 31, 2018). *6: Large hospitals with >300 beds in Japan (excluding general clinics, as of Oct. 1, 2017).
	*7: Condominium buildings with >20 floors in Japan (estimate for 2020 as of Oct. 31, 2018). *8: Total number of tunnels used by private railway companies and Japan Railway Company based on the statistics provided by the Ministry of Land, Infrastructure,
	Transport and Tourism (as of 2016)

Source: "OFFICE RENT DATA 2017" by Sanko Estate Co., Ltd., Japan Council of Shopping Centers Website, TOKYO KANTEI Co., Ltd. and the Ministry of Land, Infrastructure, Transport and Tourism (Annual Railway Statistics)

24

Ⅰ

Development of 5G infra-sharing equipment

- Domestic IBS Business

• We plan to complete the development of 5G infra-sharing equipment in FY2020 for the general 5G service expansion in the near future.
• Required process and schedule for the service launch

FY2019	FY2020	FY2021
and later
Specifications	System development and approval process	Service launch
determined

Various upside potential

• Installation at new buildings
• • Opportunity to install as an add-on to the existing 4G infra-sharing service
• Installation at existing buildings
• • Add-onopportunities at buildings where our 4G infra-sharing service has been installed
  • New opportunities at buildings where our 4G infra-sharing service has not been installed

25

Ⅰ

Sharing of New Towers in Rural Areas

- Tower Business

• We're making progress in negotiations with landowners for tower construction and plan to complete constructions in some areas by the latter half of FY2020 and to expand sites in FY2021 onwards with the expansion of the general 5G service.

Tower sharing in rural areas

Company A

Company C

Company B Company D

				JTOWER
JTOWER	shared antenna
shared tower
(iron pole or
similar
structure)

Roadmap for tower sharing in rural areas

Q4 FY2019

Q4 FY2020

Selection of

candidate sites

Negotiations

with landowners

Study period

by MNO

Construction

(tentative)

Construction completion Service area expansion (tentative)

Time

26

Ⅰ

Sharing of New Towers in Urban Areas

- Tower Business

• In April 2020, JTOWER was selected as the 5G Smart Poles provider of Tokyo Metropolitan Government . We will start the construction in FY2020 and expand the coverage to areas with smart solution demands in FY2021 and onwards.

Tower sharing in urban areas		Roadmap for tower sharing in urban areas

Street light

5G Sub-6 shared antenna

5G 28GHz antenna

Wi-Fi6

Digital Signage

Charger (plug in)

FY2020

FY2021 onwards

• Selected as the 5G Smart Poles provider of Tokyo Metropolitan Government (April 3, 2020)
• Preparing to take part in the leading smart city project in Japan
• Start with Nishi-Shinjuku area in central Tokyo then expand the coverage areas with smart solution demands

27

Ⅰ Development of Local 5G Service

• Use the management resources we have accumulated in domestic IBS Business for development of services.
• Plan to make investments in the verification process and other start-up costs.

• The Image of Our Local 5G Services

Expect to provide B2B2C and B2B2B services to property owners

Property owners

Network

service

Maintenance

For:

Equipment

Procure

and operation

Offices

vendors

Operation

Local 5G

Shopping

Visitors

malls

network service

Tenants

Application and

Hotels

Employees

system vendors

Procure

Network

service

fees

Agriculture

28

Ⅰ

Strengthen Related Businesses

- International IBS Business and Solution Business

International IBS

• Operating as a consolidated subsidiary (top player in Vietnam).

• Possibility for M&A of local

Vietnam	competitors or existing assets
in operation.
• Operating as an equity-
	method affiliate (Myanmar)
	and non-consolidated
	subsidiary (Malaysia).
Myanmar •	Strengthening the business
	foundationthrough the
	improvement of the operating
	system and the organizational
Malaysia	structure.
•	The improvement of
	profitability in mid- to long-
	term.

Solution

Provide following and other solutions as value-added services to the IBS and tower

business: • Started providing an independent solution

		service to meet the
		demands of real estate
		companies.
Cloud-based	•	Strengthening upsell
	strategies for properties
Wi-Fi solution
	where we provide our IBS
		service.
	•	Strengthening marketing
		strategies including
		alliance with partners such
		as JA Mitsui Leasing to
		scale up the database.
SITE LOCATOR	•	Explore opportunities to
	provide further value-
service
	added services.

29

Appendix Ⅰ Growth Strategy

Appendix ⅡBusiness overview and other information

Ⅱ JTOWER's Vision

SHARING THE VALUE

Creating business with social impact that brings value to all stakeholders

31

Ⅱ Company Information

Company Name	ＪＴＯＷＥＲ Ｉｎｃ．
Founded	June 2012
Representative	Atsushi Tanaka
Director
Head office	8-5-41 Akasaka, Minato-ku, Tokyo, Japan
Employees	144*1 (consolidated, as of June 30, 2020)
Capital	JPY4,278 million (as of June 30, 2020)
Business	Provision of telecom Infra-Sharing service and related services in Japan
Description	and overseas

*1: Number of employees includes the average number of temporary workers (contract workers and workers from staffing agencies) in the past year, which is 26

32

Ⅱ Telecom Infra-Sharing Business in Japan and Overseas

IBS*1 Business (Indoor Infra-Sharing)

• Integrate mobile network operators' in-building infrastructure as a shared system
• Beneficial for real-estate firms, mobile users and mobile network operators
• Steady growth with a stable revenue model

IndividualJTOWER

Construction(Infra-Sharing)

Integrate system and equipment

	JTOWER
MNO	Infra-Sharing
base stations	equipment

• Installation at 273 properties*2

Japan	(including the number of installations to be
	completed)
	✓ Recent 3-year growth (CAGR): +67%
	✓ Expansion in emerging markets
Overseas	‐ Top player in Vietnam
(Installation at 156 properties*2)

• • Expanding in Myanmar and Malaysia
• Alliance with strong local partners

Tower Business (Outdoor Tower Sharing)

• Full-scaleentry in FY2020
• New market for outdoor Infra-Sharing service driven by the deployment of 5G
• Outdoor telecom infrastructure sharing among mobile network operators

Rural Area

Urban Area

Solution Business

• Value-addedservices for Infra-Sharing business
• Serve demand by mobile carriers and real estate companies for rooftop base station installation through SITE LOCATOR, cloud-managedWi-Fi solution and others

*1:	IBS: In-Building Solution	33
*2:	as of June 30, 2020

Ⅱ Management with Telecom Expertise

Years of

Telecom

Industry

Experience

Previous

Experience

Representative

Director

Atsushi

Tanaka

23

Goldman Sachs

(Equity analyst / Telecom sector)

eAccess

(Head of corporate

planning div.)

eMobile

(CFO / Head of

corporate planning

div.)

Senior

Managing

Director

Yusuke

Kiriya

17

M'sWorks

(Senior engineer)

Managing
Director	Director	Outside Director	Outside Director	Advisor
CFO
Ryosuke	Nobuo	Naoki	Hiroyuki	Eiji
Nakamura	Nezu	Ota	Mitoma	Hagiwara
12	52	21	25	46
		Boston	NTT WEST	NTT DOCOMO
		Consulting	(Director)
PwC Aarata		(Director of
	Group	Panasonic Mobile
	KDDI	equipment div. of
(Audit / Advisory)	(Senior partner /	Communications
(Managing	Kyusyu group)
eAccess	Managing director)		(Senior Managing
executive officer /	NTT(Holding
(Group head of	Full time auditor /	Ministry of	Company)	Director)
business planning	Advisor)	Internal Affairs	(Director of	SAMJI
div.)		and	technical planning	ELECTRONICS
		Communications
		div.)
		(Advisor to Minister)	(Advisor)

34

Ⅱ Footsteps as a Pioneer

2012

2013

2014

2015

2016

2017

2018

2019

June 2012

September 2014

October 2016

July 2017

October 2018

July 2019

Founded

Launched

Launched

Launched

Entered

Capital & Business

Domestic IBS

International

International

the domestic

Partnership with

IBS service

IBS service

service

in Myanmar

in Vietnam

tower business

NTT(Holding Company)

• Established a solid position in the market with a high entry barrier Certified from mobile network operators
• First-moveradvantage
  Pioneer of the service with high switching cost and low churn rate
• Strong relationships
  Established network with mobile network operators and major real estate developers

Listed on the Tokyo Stock Exchange Mothers

on December 18, 2019

35

Ⅱ Domestic IBS - Our Business Model of Infra-sharing

Unique Business Model to Build Win-Win Relationships Cost-Benefitsfor Mobile Network Operator*1

Individual construction	JTOWER
(Infra-Sharing)

MNO

base stations

Cost sharing

Real Estates

• Simplified system and energy saving
• Installation cost reduction

Integrate system and equipment

Infra-Sharing

services

Mobile Users

• Improved connectivity

	JTOWER's	MNO C	Cost
	profit	cost	reduction
JTOWER	Equipment	MNO B
cost	cost
Infra-Sharing
equipment
Network service			MNO A
		cost
fee
	Construction	MNO A
	cost
	cost
Mobile Network Operator	JTOWER's	Infra-Sharing	Individual
cost structure		construction

✓ CAPEX/OPEX saving

Mobile Network Operators' cost

• Improved customer satisfaction

Note1:

For illustrative purposes only

36

Domestic IBS

Ⅱ -The number of installations around the country and type of buildings *1, 2

Public facility 3%	Other 5%
Highrise
condominium 2%					Hokkaido：4
University 4%		Shopping
Hospital			facility
10%			24%
Office			Complex	Tohoku：8
		facility
16%
		20%
	Hotel
	17%

Chugoku：2

Kinki：27

Kanto：99

		Okinawa：4		Shikoku：4
				Kyushu：11
*1:	As of June 30, 2020
*2:	The number of buildings where IBS installation was completed	37

Chubu：23

Total number of

installation

182*1

Ⅱ

International IBS - Capturing Emerging Markets

Expansion mainly in Southeast Asia by partnering with influential local players

Market growth

• High growth opportunities

✓ Market share expansion	Vietnam

Myanmar

Malaysia

Myanmar

Vietnam

• Market share expansion

Malaysia

Market share

*1:	As of June 30, 2020

• Entry：July 2017
• Local entity name：
  SOUTHERN STAR TELECOMMUNICATION EQUIPMENT JSC（SPN）
• Market leader in Vietnam
• 156 installations*1
• Wholly-ownedsubsidiary
• Entry：October 2016
• Local entity name：
  GNI Myanmar Company Limited (Affiliated company)
• 5 installations*1

Partners

• Entry：January 2019
• Local entity name :
  JTOWER MALAYSIA SDN. BHD. (Non-consolidated subsidiary)
• Preparing the business foundation

38

Ⅱ

Tower - Potential Demand Driven by 5G

		Challenges for 5G Network Roll-out		Increase in Demands Driven by 5G
		Smaller cells and multiple cells
		Lack of installation	New entry of
		locations	the fourth carrier			・・・
		Concerns about degrading landscape		A few base stations	5G network must be
			cover a wide area	covered more frequently
		aesthetics				by a larger number of base
					stations

Full-scale 5G Infrastructure Investment

Infra-Sharing Guideline by MIC

5G Base Stations Deployment Policy

移動通信分野におけるインフラシェアリングに係る電気通信事業法及び電波

法の適用関係に関するガイドライン

2018年12月

1. ガイドラインの目的

携帯電話等の移動通信サービスの提供においては、広範な地域に相当多数の基地局

を設置することが必要となる。

特に、第５世代移動通信システム（以下「５Ｇ」という。）の導入に当たっては、移動

Based on area coverage

→Development focus will be on business feasibility and not area type

(residential, urban, regional, etc.)

5G

Based on population coverage

→Coverage of residential areas & large cities is prioritized

~4G

通信システムの高速化・大容量化や高周波数帯の利用のために基地局の小セル化や多

セル化が必要となるが、空中線を設置するための鉄塔の設置場所やビル等の物理スペー

スは限られており、また、景観上の問題等で新たな鉄塔等の設置が制限される場合もある ため、ビルや地下街等の屋内のみならず、ビル屋上やルーラルエリア等の屋外において鉄塔

等の設備を他人に使用させ、又は複数事事業者間で共同で使用する「インフラシェ

アリング」がこれまで以上に重要となることが想定される

Infra-Sharing will play an even more significant role

Mountainous

areas

Suburbs / rural areas

Remote islands

Regional	Large cities
cities

Sea

level

Source: Ministry of Internal Affairs and Communications

39

※Divide country into grids of 10km2 to determine areas to develop

Ⅱ Tower - Create New Market by Full-scale Investments

Entry Background into Tower Business

• Growing demand for 5G network rollout
• Entry of a new mobile network operator
• Infra-SharingGuideline by MIC*1 (December 2018)

Overview of Tower Sharing

• Share outdoor communication infrastructure among mobile network operators
• Resolve various issues such as CAPEX burden, lack of locations and landscaping
• Open not only to mobile network operators but also to IoT operators

Demands for Newly-built 5G Towers

Mainly in the Rural Areas

Company A

Company B

Company C

Company D

Non-residential areas：

Along railway

Digital divide in rural areas

Company A

Company B

Company C

Company D

Non-residential areas：

Tourist spots

*1: MIC: Ministry of Internal Affairs and Communications	40

Ⅱ

Solution - Up-selling for Infra-Sharing

Provide indoor Cloud-managedWi-Fi solution and SITE LOCATOR service which match the needs for

monetization of idle space of real estates and BTS installation of mobile network operator

Cloud-managedWi-Fi Solution

Conventional Wi-Fi

Requires much equipment and long lead time for system construction

Router	Monitoring server
	Controller

Various devices	・・・

JTOWER Wi-Fi

Enables low-cost, highly secure installation

through cloud-managed system

Router	Cloud management
	Shared use of monitoring
	server and controller
Various devices	・・・

Overview of SITE LOCATOR Service

Real

JTOWER

MNO etc.

estates etc.

（Matching）

(BTS*1 installer)

(Space provider)

1. Information

2. Application

3. Mediation

3. Mediation

Real estate

MNO

owners

4. Intermediary

fee

5. Lease fee

5. Lease fee

Electric power

LPWA

companies

Operators*2

(TEPCO, etc.)

+ other

various

companies

Rooftop-space

Tower

Benefits for

Benefits for

information

Providers

Posting information on real-

Users

✓ Monetization of idle

estate properties available

✓ Efficient research tool

space

for subleasing

for BTS installation

✓ Efficient utilization

locations

of idle rooftop

space

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*1:

BTS: Base Transceiver Station

*2:

LPWA stands for Low Power Wide Area and is a type of wireless telecommunication wide area network

designed to allow long range communications at a low bit rate

Ⅱ Significance of Capital & Business Partnership with NTT

Announced Capital & Business Partnership with NTT(Holding Company) on July 4, 2019. (NTT acquired approx. 20% of stake.)

Provision of Infra-Sharing Solutions

Combining the Resource of Both Companies

JTOWER		NTT Group
Expertise in the field of Infra-Sharing,		Wealth of operational know-how
	and technical capabilities
and related sales & technical capabilities.		in telecommunications.

(Business Partnership example) Use of facilities owned by NTT Group and its store of know-how in areas such as construction, maintenance, and related management

Development of solutions

Issues facing the entire communications industry in the 5G era

Huge capital investment	Assurance of installation sites
for base stations

Targeting contribution to the efficiency in the early expansion of service areasand the contraction of quiet areasin the 5G era

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Ⅱ Mid-toLong-term Growth Strategy

Aiming to expand the Domestic IBS business and the Tower business supported by the increasing 5G

demands for the efficient capital investments in telecom infrastructure area

5G

Capture the demand for IBS and Tower sharing, which is likely to grow over time

Tower

Business

4G

Tapped the Infra-Sharing market with a

focus on in-building sharing

International IBS

Business

				Domestic IBS
				+
				Solution Business
				Local 5G Business
FY2018	Y1（Present）	FY2020	FY2021	FY2022	Y●
FY2019	FY2023

Note: For illustrative purposes only

43

Ⅱ

Important Indicators to Improve Enterprise Value and Upside Potentials

Number of Properties		Tenancy Ratio		Unit Price
Installed

Y1Y●

• Development demand for Tokyo Olympics and Osaka-Kansai Japan Expo etc.
• Strengthen the business foundation by Capital & Business Partnership with NTT (Holding Company)

Y1Y●

• Increase in the entry of mobile network operators such as further participation on existing properties

Y1Y●

• Introduction of shared equipment for 5G to the existing and new properties
• Additional value for IBS Business
  - Provide Wi-Fi solutions
• Provide local 5G-related solutions

Note:

Graphs are for illustrative purposes only

44

Ⅱ Operating Areas of Global Tower Companies

Notes: Based on the announcement regarding main business operating area by each global tower company

Source: Company Materials

45

Ⅱ Potential Infrastructure Demand Driven by 5G

Advancement to be Enabled by 5G

4G (LTE)

5G

High

100 Mbps speed/> 10 Gbps*2

volume

Baud rate will be more than 100 times faster

Strong

0.01 sec reliability/ ≦ 0.001 sec

low latency

Delay time will be shortened by up to one tenth

10,000	Massive	1 million
devices/km2	connectivity	devices/km2

Concurrent device connection limit will increase by more than 100

times

Demand for infrastructure will increase

	due to the significant impact of 5G
	related services
*1:	As of September 30, 2018
*2:	"Gbps" is defined as Gigabits per second. 1Gbps is equal to 1,000,000,000 bits per second
Source:	Ministry of Internal Affairs and Communications, Softbank
	46

Estimated Market Size of the Radio Industries

in the 5G Era

（JPY tn）

120

																112
100
										91					Automotive infrastructure
																				Manufacturing (robot),
																57			Distribution,
80																		Info-communications
																			(excl. radio),
																				etc.
												46
60									59
							28
40		37											Mobile communication,
		13
										55	IoT infrastructure
																Wireless content,
												45
20														etc.
	24		31
0
	2015	2020		2030	2040
												Radio-usage industries
							Radio-related industries
Note:		"Radio-related industries" is defined as industries in which companies use radio in their main business
			"Radio-usage industries" is defined as industries in which companies use radio to enhance or
			streamline their services (excl. radio-related industries)

Source: Mitsubishi Research Institute

Ⅱ Consolidated Profit and Loss Statement

(JPY mn)

FY2017

FY2018

FY2019

	Revenue	756	1,377	2,558
	Domestic IBS Business	510	863	1,783
	International IBS Business	244	455	435
	Solution Business	1	59	339
	Revenue Growth	356%	82.1%	86.6%
	Cost of Goods Sold	587	730	1,278
	Gross Profit	169	647	1,279
	Selling, General and Administrative Expenses	643	817	1,209
	Operating Profit	▲474	▲169	69
	Operating Profit Margin	-	-	2.7%
	EBITDA*¹	▲225	168	737
	EBITDA Margin	-	12.2%	28.8%
	Ordinary Profit	▲479	▲166	5
	Net Income Before Income Taxes	▲560	▲166	▲ 1
	Net Income Attributable to Non-Controlling Interests	1	15	2
	Net Income Attributable to Owners of the Parent	▲577	▲214	▲ 13
	Consolidated Number of Employees*²	72	116	138
*1:	EBITDA=Operating profit + depreciation + goodwill amortization + amortization of long-term prepaid expenses
*2:	Number of employees includes the average number of temporary workers (contract workers and workers from staffing agencies) in the past year.

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Ⅱ Consolidated Balance Sheet

(JPY mn)	FY2017	FY2018	FY2019
Current Assets
Cash and Cash Equivalents	2,452	2,329	7,188
Notes and Accounts Receivable	195	379	482
Total Current Assets	2,781	2,983	8,032
Non-current Assets
Tangible Fixed Assets	1,500	3,631	5,860
Goodwill	460	638	579
Total Non-current Assets	1,994	4,412	6,614
Total Assets	4,776	7,396	14,646

Financial Indicators

Debt	637	818	1,083
Net Debt	▲1,815	▲1,510	▲ 6,104
Capital Expenditure	913	2,441	2,787
Equity Ratio	24.1%	21.0%	45.3%

Current Liabilities	FY2017	FY2018	FY2019
Accounts payable - trade	68	172	193
Shor-term borrowings	15	12	45
Accounts payable - other	429	1,019	1,204
Unearned revenue	318	737	1,525
Total Current Liabilities	986	2,143	3,288
Non-current Liabilities
Long-term borrowings	150	300	300
Long-term unearned revenue	1,024	2,042	3,869
Total Non-current Liabilities	1,580	2,744	4,723
Total Liabilities	2,566	4,887	8,011
Share capital	1,049	1,399	4,272
Capital surplus	1,341	1,658	2,433
Total Net Assets	2,209	2,508	6,635
Total Liabilities and Net	4,776	7,396	14,646
Assets

48

Ⅱ Consolidated Cash Flow Statement

(JPY mn)	FY2017	FY2018	FY2019
Cash Flows from Operating Activities	888	1,290	3,165
Change in Unearned revenue	1,002	1,437	2,565
Depreciation	233	300	612
Amortization of Goodwill	15	36	53
Cash Flows from Investing Activities	▲1,900	▲2,110	▲ 2,699
Purchase of shares of subsidiaries resulting in change in scope of	-	▲91	-
consolidation
Purchase of property, plant and equipment	▲800	▲1,775	▲ 2,611
Purchase of shares of subsidiaries resulting in change in scope of	▲1,067	▲99	-
consolidation
Cash Flows from Financing Activities	2,603	570	4,385
Net Increase (Decrease) in Short-term Borrowings	14	▲2	32
Proceeds from issuance of shares	1,095	697	5,725
Proceeds from Share Issuance to Non-controlling Shareholders	1,060	-	-
Payments from changes in ownership interests in subsidiaries that do not	-	▲158	▲ 1,604
result in change in scope of consolidation
Effect of exchange rate change on cash and cash equivalents	-27	▲ 4	▲ 0
Net Increase (Decrease) in Cash and Cash Equivalents	1,563	▲ 254	4,851
Net Increase (Decrease) in Cash and Cash Equivalents Due to Changes in Scope	-	-	▲ 6
of Consolidation
Cash and Cash Equivalents at Beginning of Period	697	2,261	2,006
Cash and Cash Equivalents at End of Period (Q4)	2,261	2,006	6,851

49

Ⅱ Breakdown of Infra-Sharing and Other Revenues by Business*1

■ Infra-Sharing Revenue	■ Other Revenue
	Domestic IBS Business			International IBS		Solution Business
			Business

		Cloud-basedWi-Fi
All items except for the		service
item below	All items

		SITE LOCATOR service
Contracted construction
work

*1: Breakdown as of June 30, 2020

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Disclaimer

This document has been prepared solely for the purpose of presenting relevant information regarding JTOWER Inc. ("JTOWER"), and JTOWER does not represent or warrant the accuracy, completeness, fairness or certainty of the information contained in this document. This document is not intended for a solicitation of any investment.

The information on industry, market trends or economic and other conditions contained in this document is prepared based on the information currently available, and JTOWER is not liable for the truthfulness, accuracy or completeness of such information.

Any forward-looking statements, including targets, plans, estimations, forecasts and expectations, contained in this document are based on the current judgments and opinions of JTOWER as of the date of this document, and involve certain risks, uncertainties and other factors. Due to factors such as domestic or overseas economic conditions, market or industry trends, competition with others, human resources, technological innovation or other business environment, the actual results such as the performance or financial position of JTOWER may be materially different from statements contained or implied in this document.

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The financial results for the 2nd Quarter of FY2020 are scheduled to be released at 15:00 or later on November 10, 2020.

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