We will now start the briefing session of NTT's Financial Results for the Six Months Ended September 30th, 2021. Thank you very much for participating today despite your busy schedules. I am Fujiki from the IR office, and I will be today's facilitator. It is nice to speak to you today. I would like to introduce today's attending members. Mr. Sawada, Representative Member of the Board, President. Mr. Shimada, Representative Member of the Board, Senior Executive Vice President. Mr. Nakayama, Executive Officer, Senior Vice President, Head of Finance and Accounting. Mr. Taniyama, Executive Officer, Senior Vice President, Head of Corporate Strategy Planning. Today's session's voice audio will be streamed live on the internet. This will also be distributed on demand basis on a later date, so we kindly seek your understanding. After this session, NTT DOCOMO will hold its briefing session regarding their results, so please attend this session also. Today's presentation materials are posted on our website under the title Presentation Materials. On the first page of the Presentation Materials, points to be considered are stated, so we kindly ask you to please read through them. After this, Mr. Sawada, our President, will explain the outline of the results and others, followed by opening the floor for your questions. Mr. Sawada, the floor is yours. Thank you very much for joining us today. My name is Sawada, the President and CEO. I would like to give you the highlights of the consolidated results for the first half of the year. Please turn to page four of the material. This shows you the consolidated results status. We saw year-on-year both operating revenue, operating income increase, and profit set a new record high level. That is the situation. As for operating revenue, due to increased NTT DATA, operating revenue increased by JPY 176.0 billion. Operating income, there was decline due to impact of reviewed accounting system in the previous year at DOCOMO. Due to increased revenue at various opcos, such as NTT DATA, as well as their cost reduction efforts, operating income increased by JPY 700 million, up to JPY 1,009.3 billion. As for profit, this increased by JPY 134.3 billion. Saw an increase year-on-year. Both operating revenue and operating profits exceeded our expectation. As for overseas sales increased year-on-year due to increases in system integration, so we saw both increase in operating income and operating profit and operating revenue. Page five talks about the percentage of change in revenues and profit on a quarterly basis of the last couple of years. The blue shows 2018. We made an increase in both. Increase in revenue and income, green on the bottom, this shows increase in revenue, but profit decline. This is for 2019. This is due to the reduction in billing plan at DOCOMO. 2020 shows the impact of COVID-19. We were able to make a recovery from that, and we were able to revert to increase in both revenue and income during the year. As for 2021, this is indicated in red. In the second quarter, we saw an increase in profit. We're now back on track toward increase in both operating income and operating plan. We are very much in line with our initial expectation. As far as the recent situation is concerned, as far as the first half is concerned, we've actually exceeded our initial business plan. Turning now to page six. This shows you the contributing factors by segment. Top shows operating revenue, bottom shows operating profit or income rather. As far as the downward trend is concerned, this is in DOCOMO. But as for other segments, correction, it's not DOCOMO. DOCOMO and long distance and international communication. Other sectors show both increase in operating revenue and operating income. As for mobile, as the sales revenues are increasing, we now see upward trend in operating revenue in the mobile communication segment. As far as the profit is concerned, there was JPY 27 billion impact from the review of the point plan. There was also increase in 5G-related investment and also increase in R&D. As a result, on a year-on-year basis, this went down. However, there was JPY 35 billion decline in the first half, in the first quarter. It's only JPY 5 billion in the second quarter, so things are improving. As far as regional communication segment is concerned, focus on fiber, we see increase in service revenues. Also, again, increase in revenue and income due to cost reduction. As for long distance and international segment, at NTT Limited, there was increase in structural transformation costs. Also there is a semiconductor shortage impact. This has had impact on decline in handsets on equipment sales, as well as maintenance service revenue. That is why they are experiencing decline in both operating revenue and operating income. As for data, I think they have already announced their plans last year just yesterday. Last topics. I'll be very brief in highlighting the topics. first relates to establishment of a sustainability charter. For the first time, we are setting a sustainability charter on a global basis. This is a broad concept that includes SDGs, ESGs, and CSRs. This sets the norm. We have set our principles as well as we have already announced. We have already announced the Environmental Energy Vision as well as new Management Style Transformation Policy. On top of these policies, we've also announced our Human Rights Policy as well in conjunction with the aforementioned vision. Let's skip page nine and go on to page 10. Here we talk about our thinking behind the policy itself. There are three topics. Entering the coexistence of nature and humanity, improving prosperity for all people and cultures, and maximizing well-being for all. Please turn to page 11. We have set 30 activities for them, especially three is what I would like to point it out. Carbon neutral and in the center where it says our culture is promoting the B2B2X and under the human rights, promoting recruitment, training and education, diverse human resources and women's advancement in the workplace. These indicators will be reflected in the executive compensation. Page 12 is explaining about the basic way of thinking regarding the human rights policy. Page 13, second topics. The Japan Rugby is going to be changed to Japan Rugby League One as their title partnership. We will be supporting them as the sponsors. On page 14, this is the third topic, is showing the initiatives to create a remote world. There are three points. NTT East telework system, NTT West elgana business chat, NTT Business Solutions elgana Business Chat, and Myna Pocket Service, which has a combined identification verification and My Number Card from NTT Data. On page 15, we're showing the progress regarding the medium-term management strategy initiatives. It's in detail. If you can look at the red letters, the IOWN, the avatar robot, has been implemented and to have had the remote control. It's moving under 20 ms. It's 1/20th-ish of the regular delay what we have we're able to realize through this. Using that method, we wanted to apply it to the e-sports, which is a network game, and we are working on it. Millisecond order, we wanted to control the latency, and we have developed that technology. Was that the case for IOWN? There is a possibility that we will be able to come out with this technology to be applied. Globally, NTT EMEAL, including Latin America, we have established a new company, and we would like to promote migration. As for strengthening of our new businesses, together with MUFG Bank and Osaka Gas companies, total of, and others, total of eight companies, we created a renewable energy fund in September. At the very bottom, enhancement of our corporate value, we have issued NTT Group Green Bonds. Today it was resolved in the board of directors meeting at Tokyo Stock Exchange new market classification. We will be selecting Prime Market. Also, comply and commit to the items in the revised corporate governance code. Lastly is about the cancellation of the treasury stock. It is going to be 7.15% of the outstanding shares prior to cancellation. We will cancel 279 million shares. That is all from me. Now, we'd like to take questions. With regard to your questions, we are taking questions only those who have registered in advance and those who are connected to the phone conference system as we speak. We would like to invite the operator to explain how we're going to accept your questions from now on. We will be starting the Q&A session. If you have any questions, please push zero followed by one. If you wish to cancel and withdraw your question, please push zero followed by two. From Daiwa Securities, Mr. Ando, the floor is yours. Please ask your question. Hello, can you hear me? Yes, we hear you, Mr. Ando. Please go ahead. Thank you very much. I would like to ask two questions. The first relates to overseas. Well, NTT DATA has announced very good performance, I have heard. What about other parts of your global business? What is the situation? If you give us some, a wrap-up overview of the overall global business situation. What about dimension data? What about the former dimension data? What about added value services? What about the impact of COVID-19? What about the impact of shortage of semiconductor? There are several perspectives that one could take. If you could please give your assessment of your global business, I would appreciate it. That's my first question. Okay, thank you for your question. Let me talk about NTT Group global business. NTT DATA Group and NTT Limited these are the two contributors to our global business. As for NTT DATA Group, as you're aware, they're doing very well overseas as well. That being the case, for example, the impact of COVID-19 is really felt more or less by NTT Limited, and also the shortage of semiconductor is also being felt by NTT Limited The portfolio for NTT Limited and the service lineup of NTT Limited, for example, relates to sales of equipment sales and offering maintenance services and also offering, for example, network-related services and offering simplified system integration services. We're offering Arkadin's video conference system. That enjoyed very strong sales last year, but this year, in reaction to that, the sales have been lower this year. NTT Limited's value-added services are increasing. Because of semiconductors and COVID-19, they are faced with a significant negative element. That being the case, they're now in the negative territory. The impact is now in the negative territory as far as NTT Limited is concerned. I would like to have numbers. Okay, the numbers. As for NTT Limited, for revenue, negative JPY 12.4 billion. As for value-added service, as further mentioned, they're doing very well. For operating negative, yes, there is, but that's JPY 26.2 billion, the impact we're seeing. Now as for technical integration services and also maintenance, here, the COVID-19, JPY 20 billion in impact, and also supply chain impact in relation to semiconductor, about JPY 20 billion. That's bearing in mind the effect. JPY 39 billion negative is what we're experiencing. At the end of the day, added value is in the positive territory, but I'm afraid the negative in the maintenance sales and equipment sales is exceeding in terms of the negative impact. Okay. Have we answered your question? Okay. What about the achieving overseas margin target for the management strategy for the global service? Okay. Well, as we explained the numbers, NTT Limited is going to face very difficult situation this fiscal year. Having said that, they are now further carrying on additional streamlining. They have that plan to pursue even added streamlining. Therefore, for the analysts, you're saying that we should be completing our structural transformation. I know that is your expectation. There are some things that we have to carry out in conjunction. To rephrase the situation, NTT DATA is doing very well. NTT Limited is exerting very various efforts. We want to maintain the target for the overseas margin without any change. That's what we want to do by combining the efforts of these two companies. Okay, thank you. Let me now turn to my second question. It's about fixed-line business, in particular, NTT East and West. They seem to be doing very well. Also, as far as revenues are concerned, they're enjoying growth year-over-year. What are the factors that are contributing to the very strong performance at NTT East and West? If you could explain, please. Thank you. Okay. Well, to give you the overall picture, yes, there is the impact of COVID-19, but IP packet service revenue increased. That's one thing. As far as profit is concerned, the accounting system when it comes to air conditioning useful life procedure treatment has changed. That has had very slight positive impact as well. Cost reduction. This is an ongoing program. At NTT East, they've disposed several buildings. Orders related to Olympic Games have expanded. Mr. Taniyama, if you have any numbers that you can share, please go ahead. Okay. Let me give you the numbers. Taniyama here. As for East and West, JPY 30 billion increase in operating revenue on both sides. Now, both East and West has increased IP service revenue. JPY 60 billion impact from increase in IP service revenue. As for other positive factors, in the case of NTT East, Olympic and Paralympic Games has had a positive contribution. System integration in particular. For NTT West, call center such as Marketing ACT and Solmare enjoyed positive increase as a result of call center business. That has also had positive impact. Operating profit situation, Mr. Sawada has already explained, I believe. Okay, thank you very much. Thank you very much. We would like to take the next question. Next is from Mitsubishi UFJ Morgan Stanley Securities. Mr. Tanaka, please go ahead with your question. This is Tanaka speaking. Thank you very much. Can you hear me? Yes, we can hear you. Thank you. I have two questions that I would like to ask one by one. First of all, for NTT Limited, this time in the first half, the structural reform spending amount and the effect or the outcome of that, what are the numbers for that? This is Taniyama speaking. In the first half, the structural reform expense is JPY 11 billion, and the impact from that is JPY 5 billion. However, JPY 11 billion, this is an JPY 8 billion increase, compared to the previous year. Understood. In that sense, annually it's JPY 28 billion, so it means that in the second half you'll be using more of the expenses. How is it going to progress in the third quarter and fourth quarter? For the first half, as I have mentioned, we spent JPY 11 billion and it's behind the schedule. However, we have prepared to use the set JPY 28 billion throughout the year. For the positive impact from that, we are seeking JPY 18 billion. Thank you very much. Regarding NTT Limited, I would like to ask additional detailed questions. Due to the shortage of semiconductors, the communications equipment such as routers, the sales of that being stagnating, I do understand that, but the maintenance of revenue is, I think, what you haven't mentioned.. What d oes that mean? Can you elaborate more? Well, originally, dimension data, their business was to resell Cisco routers or HP's equipment. Then after that, they were receiving the maintenance business. It's a sales and maintenance business that they were conducting and there's a shortage of semiconductors. So, there's actually no product, so they cannot actually provide maintenance for those products. Meaning that the component for maintenance is lacking? No, there's something. Well, we cannot sell the product itself that uses semiconductors, so we cannot sell the maintenance that was sold as a with the products. Okay, understood. Second question is the cancellation of the treasury shares is what you have announced. I believe that there will be some overhang that will be generated as a result of that. Therefore, I believe that you have already had a thorough discussions with the government and can we have an expectation towards the next fiscal year? In addition to responding to the overhang, are you thinking of doing something within the open market? Can you share your thoughts regarding that or comment on that, please? This is Shimada speaking. First of all, regarding the overhang, if you do your calculation, it's about JPY 300 billion. If the government makes the decision, that size will be about JPY 300 billion, and they'll be able to sell JPY 300 billion worth of the overhang. At that time, as usual, we are purchasing it outside the open market, but we are making it in a way that the general public can also participate. Therefore, if such a situation arises, we will need to think of something. Regarding the share buyback, we would like to consider looking at the overall picture. Okay, thank you very much. That is all for my questions. This is Nakayama from the Finance and Accounting. I think you have asked about the timing, and regarding that, it will all depend on how the government will record their budget. Therefore, at what time, what is it going to be like, is something that we will have to wait after the government will make their plans and decisions. We will be responding to that accordingly. Uh, thank you very m- Thank you very much. Next question, please. Next question is from [inaudible]. Thank you. Kinoshita here. Can you hear me? Yes, we hear you, Kinoshita -san. Please go ahead. Thank you. I would like to ask two questions as well. They might be somewhat similar in nature, but I will ask them lumped together. This time around, you talked about the progress. You mentioned that you are exceeding your plan, but you did not change your full year guidance despite the strong performance. Why is it that you did not revise your full year guidance? Do you anticipate toward the second half some uncertainties or do you expect additional costs that will have to be incurred during the second half? Is that the reason why you have not changed your full year guidance? That's my first question. My second question, when we take a look at the overall trend, NTT DATA seems to be doing very well and they're probably offsetting the negative of NTT Limited Toward the full year, from an outsider's point of view, I think you have a safety net that you can work with. Now, as for DOCOMO, you have not changed your full year guidance of increase in operating profit for DOCOMO. Why not leverage that? Why not spend money? Why not allow DOCOMO to go out to acquire additional customers? What is the thought of NTT Holding? Does NTT Holding want DOCOMO to go to acquire new customers actively? Or do you want DOCOMO to hang on to the full year guidance of increase in operating profit? That's my second question. Okay, thank you for your questions. Well, when we take a look at the most recent performance, be it NTT Data, NTT, DOCOMO or East and West, yes, they're all doing very well. As you're aware, energy cost has been increasing. Various enterprise customers are affected by the increase in energy prices. For NTT Data, they have very large scale customers, and these customers are planning DX. I would imagine that we see an upward trend. As for overseas and global, this includes NTT Data. The COVID-19 situation is not as well as here in Japan, especially the situation in Europe is not all that positive. As we head towards winter, what will happen? That is the second element we have to bear in mind. Third is the impact of semiconductors. This is very deep-rooted. Now, in principle, the effect is primarily seen at NTT Limited, but will that have impact on enterprise customers for NTT East and West and DOCOMO? We are still not clear on that. We have to watch and monitor the situation for some time before we can make any upward revision in our full year guidance. That is the backdrop. Having said all this, yes, things are very well. Are we going after acquiring new customers? In principle, DOCOMO will maintain or should maintain its plan of increasing operating income on a full year basis. That is our thought at NTT Holding Company. We're greedy. We want them to protect their base, but also go after new customers as well. I guess that is the situation. Thank you. Thank you very much. We'd like to take the next question. Next, SMBC Nikko Securities, Mr. Kikuchi, please go ahead with your question. This is Kikuchi speaking. What was discussed before regarding the overhang, it is this timing. Probably the direction is that it is going to incorporate in next fiscal year's budget. On the other hand, your company's cash flow, you have made NTT DOCOMO a wholly owned subsidiary, and after that, it seems that the cash flow way of usage throughout the year is very close to the limit. If you allocate JPY 300 billion for the share buyback. You have the framework of JPY 200 billion-JPY 300 billion of a share buyback. I believe that you are going to continue that plan. Was that including the overhang of the government side also? I just wanted to confirm that. As for the dividend, this fiscal year, it's a JPY 5 increase in dividend. Compared to the past track record, it seems that the degree of the increase is small, but you have a strong performance, and you're able to bring in 100% of DOCOMO's profit, so you have an increase in profit. Next fiscal year, the number of shares outstanding, if you cancel the treasury shares, there will be less number of shares out in the market. If that is so, I thought that maybe you can increase the dividend more slightly. The share buyback and the dividend, regarding this backdrop, can you elaborate more? Thank you very much. Basically, every time, as I have been mentioning, continuous increase in dividend is our basic policy for dividends. When there's a momentum of the increasing profit trend, of course, we would like to consider that. That's the way of thinking regarding dividends. As for share buyback, after wholly owning NTT DOCOMO, and on the other hand, in line with the plan, generating cash, at the same time, we are repaying our interest-bearing debt. Conducting share buyback is something that we have been conducting. The efficiency of the cash usage, the real estate, data center or credit receivables, we would like to thoroughly control that. We also would like to improve the efficiency of working capital are the efforts that we have been conducting. Therefore, we don't think it in like one framework, but we would like to further expand the share buyback. Several years ago, we conducted share buyback both from the government overhang and the open market. Of course, we want to reflect that to the total return ratio. We would like to see what the total return ratio will be. I cannot comment in detail, but it's not that because there's no government overhang that we're not doing anything. Please understand that point. Thank you very much. My second question is related to the previous Q&A, and it's regarding NTT Limited How long are you going to conduct structural reform? I think everybody is thinking that. Next fiscal year, what is going to happen? To begin with, as the business structure itself, is it difficult? Is it becoming more difficult? Structural reform, is that going to disappear next year? Once that is completed as a company, it might end up being a smaller size company, is what I think. Next year and next year's NTT Limited's outlook, if possible, can you show it in numbers? For example, next year, you would like to increase it by JPY 20 billion or such. If there are some specific numbers, can you share that with us? Thank you very much for your question. In that sense, we don't have any specific numbers yet. However, in the medium term plan, of course, we have created the numbers that exist. In that sense, several tens of billions level achievement is the commitment that we have. If I may comment regarding the structural reform initiatives. The mature feeling is that not just for NTT Limited, but NTT DATA's outsourcing model in the future is going to come within the scope of the structural reform initiatives. Meaning that NTT Limited is doing that in a faster speed because the market is moving in a faster speed. The conventional IT cloud infrastructures within the new cloud and new IT system, the migration is happening in a very high speed. Different from Japan, unless we replace the people, we'll not be able to respond to the new solutions that come out. The structural reform continuing means that the change in the market is very rapid, and we are responding to that change accordingly, is how I would like you to understand that. We would like to continue that within NTT Limited and NTT DATA respectively. At this point, it is true that we don't have any specific number allocated yet. Thank you very much. That is all. Thank you very much. We'd like to go on to the next question, please. Next question is from Nomura Securities, Mr. Masuno. Mr. Masuno, please go ahead with your question. Thank you. I would like to ask about DOCOMO and NTT Communications. JPY 100 billion synergy in the first phase. What is the current situation? I would like to ask about these two points, if I may, in the course of my question. In the first half, both NTT Communications, domestic business and DOCOMO, saw increase in revenue, but decline in profit. You through structural reform, you want to generate profitability. I think that is the phase you are in. The industry overall, corporate, enterprise network demand is very strong and solution business is expanding, so therefore, profit should be increasing against such backdrop. What are you doing in the face of the industry trends? Maybe NTT Communications could do more against the backdrop of the current industry environment. Also, in January, I understand that you, NTT Communications will become a subsidiary firm, and then for the second quarter you have functional separation. That is what you have announced. The strategic benefit over the two-year period. If that is the case, in what form will the strategic benefit and synergy come, be generated? I know it's, it might be difficult for you to forecast the two years in time, but if you could just give us an image of how this synergy will be realized. Thank you. Yes. In terms of the integration between DOCOMO and NTT Communications, especially the enterprise business, well, DOCOMO has been focused on mobile. Therefore, enterprise business will be pursued primarily by NTT Communications. Two trends. First is software introduction will be progressing, especially as a network service. Demand is increasing, but the overall volume is going down. Second relates to mobile. We have to combine these two factors. Up until now, indeed, NTT Communications was actually behind the rest of the pack in this area, so therefore it's important that they work on this. That is one trend we need to work on. The other is cloud. Cloud is Microsoft Teams and O365, these services are very popular. Again, the volume, the per unit value is not that large, but there is demand for this type of service. Therefore, we have to add voice service on top of that and also add security on top of that. We are trying to partner with Microsoft on a global basis in this market segment, so if we can combine mobile in the pack, in this packet, then this will be very strong. As far as synergy is concerned, about two weeks ago when we explained the mid-term management strategy, I think we touched upon the same topic. I think this is more heavily skewed toward the second half of the program. JPY 100 billion in 2023, JPY 20 billion in 2025. I would say that the synergy will probably begin from the second half of fiscal year 2022. This year, synergy is not going to be felt that much this year. Next year, it will be more concentrated toward the second half of the year. That is what. We want to make sure that we deploy various policies to generate synergies, but the synergy will be more heavily skewed toward the second half of the overall program. I hope I have answered your question. I see. If DOCOMO had enterprise segment and if combining that with the NTT Communications, how do you see the business environment for the enterprise business if you combine these two teams? Well, if you add the two, it will come to JPY 1.6 trillion. If you exclude that, well, KDDI, I believe their size is over JPY 1 trillion. I think SoftBank does about JPY 700 billion. As far as the business environment is concerned. Before we can talk about business environment, we really have to make effort in this voice. The sentiment is not very bad because the demand for remote services is strong. IT services. There's strong demand. Having said all this, the per unit value is not all that large. That is the situation, I believe, as far as this market segment is concerned. I see. Okay, if I could follow up. Sure. Half of the synergy have to come through its sales, right? What type of sales are you looking for in the form of synergy? Well, first of all, we want to pursue cross-selling opportunities. DOCOMO's customers and NTT Communications customers, if you combine the two, there would be overlaps, but there will be customers that will be owned independently by these two companies. First of all, the overall subject or the overall target customers will be expanding as a result of combining the two teams. Also this might help NTT Communications even more. The solutions offered by NTT Communications, we can add mobile component on top of that. That is the second element. The third element, the value might not be all that large, but the fixed mobile conversion services that are offered by other competitors, this cannot be offered by DOCOMO. That's the third strength. That being the case, as far as the products and offering circumstance, we're able to enrich that. The customer expanding customer base and enriching and our offerings. Lastly, we in the case of SMEs, both companies again are lagging behind. If we can offer DX and mobile-based services to SMEs, if we could approach that, then this would actually lead to opportunity. That's the third element. This is an area where we were not able to have inroads up until now, and we want to change that. Okay, thank you very much. That is all from my side. Thank you. Thank you very much. We would like to take the next question. The next question is from Credit Suisse Securities. Mr. Eguchi, please go ahead with your question. Thank you very much for this opportunity. This is Eguchi from Credit Suisse Securities. This is related to and a follow-up question regarding NTT Limited The outsourcing model you said it is struggling. The competitive environment such as AWS or with the Indian affiliated companies, the competition is becoming severe. Can you share with us your views, the future views on this? Thank you very much. The outsourcing model may start to struggle. That is for NTT DATA. As the AI technology evolves further, instead of having outsourcing offshore, there'll be more patterns where that will be done through AI. The outsourcing that will increase the value added is the shift we need to make. In that sense, the personnel or the solution lineup that we need to have is going to change. Therefore, the outsourcing model will also become within the scope of a structural reform, not. It's more than limited. Okay, understood. The global delivery model, I think, is what you're going to review based on this. In India, if my memory is correct, you have about over 10,000 engineers. The effective utilization of those personnel is something that you need to think for the future too. Is that the correct understanding? Yes. It's not that we are going to immediately do so, but in the long term, we believe it's going to change that way. Mr. Sawada, in the long term, the global business, I believe it's going to become one of your main pillars. However, in the last several years, it seems that you're implementing initiatives behind the actual situation and you're actually reactive than proactive. I thought that maybe the changes are going to be more difficult to make. Do you have a specific timing of where you will catch up? What I want you to understand is that in 2010, we have acquired dimension data. In U.S., we have acquired Teams. It was over ten several years ago. At that time, only JPY 100 billion or JPY 200 billion was the revenue or sales overseas, and that is close to JPY 2 trillion. Within the last several years we have doubled the business. How are we going to expand the revenue of the overseas business is what we have been putting our efforts in. What we are striving right now is to increase the profitability of the overseas business. We have made the focus of shifting over to the profit several years ago. In that sense, the structural reforms or strengthening the governance and various management being involved more. We have close to 600 companies overseas alone, but each brand was separately operating. Within the last several years, we are integrating and consolidating these brands. We are doing all this at the same time. It seems that the structural reforms is being reactive, but if we don't do that, we cannot move on to the next step. The technology that we can take the lead, we need to actually pioneer or cultivate that market to grasp that. In that sense, we are lacking the capability there. However, we are putting our efforts in now so that you can expect more from what we are doing now. Thank you very much. Thank you. Next question, please. Next question from Goldman Sachs Securities. Mr. Tanaka, please go ahead with your question. Thank you. Tanaka with Goldman Sachs. I hope you can hear me. Thank you very much. I have one broad question. It's about NTT Limited Well, I'd like to confirm the short-term demand situation. The margin has slowed down, I believe. Maybe I thought it was just 4% by the previous year, but the network, it seems you want to expand, I'm sure. That's what you mentioned in the first quarter about strengthening your network. Network, but the IP network is slowing down. Yes, there's the impact of semiconductor. Is it just one-off factor such as semiconductor? Is this organic? Can you talk about your outlook for the demand situation? How do you see the demand situation for NTT Limited, especially for their added value services? How do you see the situation? Thank you for your question. First, as far as revenue is concerned, yes, it does seem as though it's not growing. That is due to the external environment such as semiconductor and COVID-19. We also changed the accounting about the reporting of the revenue. Telecom maintenance services, only part of that is reflected. The revenue side, we don't have a structure where we can enjoy exponential growth like we enjoyed in the past. As for network service revenue, last year, the growth of Arkadin was very strong last year. That part, that was a very large contract, and that element is no longer there, for this is clear. As for Arkadin, the web conference and video conference technology conference sales, this is also subject to structural transformation. New SDN is in the picture, and also intra-enterprise network. That's for NTT, that's offered by NTT Global Network Services. This is recognized as number one by Gartner. We are globally number one in this area. Its value is not that large, but we can ensure steady growth as far as SDN is concerned. Overall, we're still in the upward trend. We're going to make efforts to further expand this. I would like to invite my colleagues to offer any additional comments. Mr. Taniyama, if you could comment. Yes. As data center and managed services, they're doing well as value-added services. As you pointed out, Arkadin, this is cloud communication, that part and network part, we're seeing some slight problems right now. We're trying to increase the pipeline. Therefore, for the first half, yes, although we were not able to see concrete results, but we want to make recovery toward the second half. That is, we're working on that. As for cloud communication, as was mentioned, we'll be carrying out structural transformation. We believe that in the second half, we'll be able to see recovery and improvement from that point onwards. Thank you. That is all from my side. Okay. If I could ask a follow-up question. This is a temporary factor, and things look challenging because of the temporary factor, but the demand situation itself is not problematic. You're saying that if you see growth potential for value-added services. Is that how you see the situation? Yes, that is how we see the situation. This is very competitive markets, so we have to expand the market. We have to expand our pipeline against this competitive landscape. That's what we're working on. Okay, thank you. I'd like to ask about NTT DATA. Any cross-selling or collaboration with NTT DATA? Is there progress on this front? If you could share that, I would appreciate it. Well, with regard to Microsoft-related services, we're discussing working together. Also with regard to SAP, NTT, we're discussing working with NTT DATA when it comes to SAP. Also when it comes to Telefónica and carrier, telecom carrier-related system integration, this is now being done by NTT DATA. This relates not so much for NTT Limited, but using DOCOMO's technology, maybe there's room for partnership and collaboration. These are discussions which we're engaged in right now. In principle, through cross-selling, we want to work through cross-selling. NTT DATA's DX solutions, we should add product on top of that. When it comes to data centers, yes, they're doing a lot of good sales, so we want to enhance this area as well. Okay, thank you very much. Thank you very much. We'd like to take the next question now. Citigroup Securities, Mr. Tsuruo, please, go ahead with your question. Thank you very much for this opportunity to ask a question. Sorry, my question is in the last part of the question, so I may ask you about detailed numbers. The first is regarding NTT Limited I am looking at the supplementary materials, full year NTT Limited numbers. I have one question there. Mr. Sawada, at the beginning, you said that we need to step one step deeper into the structural reform. You mean that the structural reform expense is gonna increase to JPY 28 billion? For sales, there's for the others, there are the telecommunications equipment. In the first half, it is showing a decline, but it seems that in the second half, it's going to recover. The overall forecast, you have not changed, so you have not changed these numbers over here either. At this point, moving forward, how would these numbers look like, is what I would like to know. Thank you very much. Regarding the structural reform question, we are going to be making the plan from now onwards, so in that sense it is going to increase. Therefore, at the bottom part, there will be the pressure on the profit or the final profit. We will see that pressured. But of course, we would like to see the positive effect of the structure reforms immediately, so we are going to plan that number. Regarding the full year figures, Taniyama-san, can you share? As for the full year, the original plan, the COVID-19 impact was up to the first half. For the second half, the impact of COVID-19 is going to show the recovery with the base or assumption of the plan. Therefore, there's more weight on the second half in terms of performance. As mentioned before, however, the COVID-19 impact remains more in Europe, and also the semiconductors, the supply chain. Probably it's not going to be resolved within this fiscal year. Therefore, we need to keep a close eye on those situations. However, on the other hand, what we have conducted in the first half, which is the structural reforms, that positive effect is going to start to show in more specific terms and also in numbers in the second half. Therefore, the operating income is where we would like to start accumulating. That is all. Thank you. Sorry, my second question is regarding numbers also. This is regarding share buyback. You have a wholly owned entity, DOCOMO, and from there you said that you will conduct JPY 250 billion of share buyback every year. You said that you may have the share buyback from the government as an overhang. When we think about the amount of overhang, it will be equivalent to JPY 300 billion. In that sense, on next fiscal year's share buyback, how should we look at it? Is it going to be the most bullish calculation will be JPY 550 billion? That's possible. As a reality, realistically speaking, it seems that it's not going to be so. Maybe this is a question asking you to read between the lines, but I would like you to once again explain this part. First of all, I will answer that question first. I think it's better to read between the lines. I think even in the past, we didn't have this JPY 550 billion of a share buyback, so simply adding it, I don't think that's the correct way. Nakayama-san, Mr. Nakayama, do you have any comments? First of all, we've got the free cash flow is about JPY 1 trillion on hand and JPY 400 billion for dividends. The remaining JPY 600 billion, how are we going to use that, is what we think every year. When we think by fiscal year, individual fiscal years, how much of the allocation is going to be for what, we're looking at the balance. As Mr. Sawada explained previously, we're selling the assets and we are working on becoming asset light. Therefore, of course, we don't know how to respond or what the government is going to decide this time. We only can make decisions depending on what the situation will become. That is the only answer I can provide with you. In the past, responding to the government and there were some issues, and it was not a JPY 200 billion or JPY 300 billion level of a share buyback, but there was a year that we conducted about a JPY 500 billion level of a share buyback. However, we need to take a look at the bigger overall picture and make the decision. Prior to doing so, we're not going to be able to share the specifics with you. Okay. Understood. Thank you very much. Thank you. Next question, please. Next question from UBS Securities, Mr. Takahashi, please go ahead with your question. Mr. Takahashi, please. Thank you. Takashi from UBS. I just have one question. It relates to the billing policy at NTT DOCOMO. Mr. Sawada, what are your thoughts about DOCOMO's billing policy? In particular, there was an announcement about ahamo and MVNO. I think DOCOMO itself, they are saying customer first, and also they have a large user base that is more suitable for this type of billing plan. Do you believe that this policy, this policy alone would be sufficient for you to compete with your competition? Personally, I doubt whether or not your billing plan would be sufficient to compete with the others. Mr. Sawada, what are your thoughts? Thank you very much for your question. Well, first of all, it's not so much of a straightforward reduction of billings, right? It's about adding value. It's all about convincing the customers. Providing service package that will be convincing to the customers, that is important thing. Our concern is this, of course, the billing question has to be considered. There was an interruption. What about customer service response to our customers. We have to constantly brush up our response to our customers. Having done all that, it is important that we constantly scrutinize the prevailing situation. Mr. Takahashi, you asked your question about DOCOMO. If we believe that there is need for new services beyond a certain threshold, then we hope that they will put out such a service as soon as possible. If they believe that they should add value for the time being, then they should do so, bearing in mind the prevailing situation. I think efforts to expand their partner MVNOs is also important. I think we have to take a look at the overall picture, but be sure to consider various policies. That is my position. Just because they seem to be losing, should they come up with newer, cheaper zero model? No, that is not my position whatsoever as far as DOCOMO is concerned. I see. If you look back, if we look back over the past. If you look over the past situation, initially they took a wait-and-see attitude. At the end of the day, DOCOMO had was forced to reduce their pricing. That was a frequent occurring situation for DOCOMO in the past. When you consider the past trend, this is, yes, you have to consider the profit. I'm sure NTT holding company is forced to make a very difficult position because they want to safeguard profitability. Over the long term perspective, maybe there's a need to take proactive measures beforehand. Any thoughts? Well, from the standpoint of marketing, as you pointed out, what type of service is required for each of the segment? I think we should have multiple diversified offerings for different segments. The issue is the lead time. You have to reduce the lead time after you make the decision and launch your product. It's not just about your pricing policy. Even if you lead the market, they'll be catching up. You have to take countermeasures. You have to work based on moving target. That is what you should work on. That is my wish for DOCOMO. Also, if I could add further with regard to the handsets. We want something that goes beyond smartphones as soon as possible. Also when it comes to services, they should be more converged services involving health and medicine. We're getting to these areas, so these services should include all these essential sectors and offer added value to our customers. Once you have that, I believe that you'll be able to expand your customer base more strongly. You'll be able to improve your output, and that I hope that can be realized through marketing. That is my wish for DOCOMO. Thank you. Very clear. Thank you very much for that. Thank you very much. We would like to take the next question. Cheuvreux Research and Consulting, Mr. Soejima, please go ahead with your question. I think you're on mute. Mr. Soejima, it seems that we cannot hear you. Oh, this is Soejima speaking. Can you hear me now? Yes, we can hear you now. Thank you. In the United States, there was an infrastructure bill that has passed and about JPY 30 trillion level of investments will be made into the market with what is reported. Towards a old infrastructure, the country is committed to replace that to improve their competitiveness as a country, is what is going to happen moving forward to be some impact on your business or your company through that. Backing up the telecommunications environment, if the United States government is going to spend money there or not, I think it's difficult to think that they will be spending that. However, IT or digital transformation, in order to move that forward, if the government is going to allocate budget for that, then NTT DATA's America, it will be a positive impact for them. On the other hand, semiconductors manufacturing plant, including the supply chain, bringing it back to the United States, that trend is becoming stronger. For us, we only manufacture a small volume of semiconductors, but in the future, through IOWN, with Intel and Broadcom that are partners, if we collaborate with our partners, that will suffice is what we think. Directly to IT or telecommunications, I don't think there is going to be any positive direct impact. Thank you very much. Do you think that there's going to be some impact for Japan moving forward? As a country, Japan, the supply chain is almost disappearing from our country. Therefore, from the economics security, especially, semiconductors or the other essential, medical related supply chain, I think there's gonna be movement to bring it back to Japan. The infrastructures in the United States, if they're going to move towards the infrastructure development using that, close to JPY 30 trillion budget, if we are just going to watch it without doing anything, we are going to fall behind. Even though they're the United States, Japan needs to put an effort to keep the supply chain existing within the country. Okay. Thank you very much. Thank you very much. I believe these are all the questions we have received. We want to confirm whether or not there are any additional questions from anyone else. Any other questions? If any questions, please push zero followed by one. It seems that there are no additional questions. With this, we would like to complete the presentation of financial results by NTT Holding Company. Thank you for joining us. We would now like to continue with the session by NTT DOCOMO. Please remain connected. We will now continue on with the session involving NTT DOCOMO. Thank you for joining us today. Thank you very much.