We will now begin the briefing session of NTT's FY 2025 first quarter results. Thank you very much for gathering in spite of our busy schedule. [Foreign language] I am Sakine, Head of Public Relations, serving as the facilitator. [Foreign language] First of all, let me introduce today's three speakers. [Foreign language] Akira Shimada, Representative Member of the Board, President and CEO. [Foreign language] Toshihiko Nakamura, Senior Vice President, Head of Finance and Accounting. [Foreign language] Akitoshi Hattori, Senior Vice President, Head of Corporate Strategy Planning. [Foreign language] Today's presentation materials will be made available on NTT's webpage at 2:00 PM today. [Foreign language] Now, we would like to begin. President Shimada, over to you. 36.6 °C, thank you very much for gathering here today. I am Akira Shimada, the CEO. I'd like to explain about the financial results for the FY 2025 first quarter. [Foreign language] The consolidated financial results for the first quarter were operating revenues increased and operating profit and profit decreased against the previous year. Operating revenues for the first quarter reached new record high levels. Though there was an approximately JPY 50 billion decline from foreign exchange rate impact due to the revenue increase from the enterprise business expansion at each group company, the operating revenue was at JPY 3.262 billion, up by JPY 22 billion year-on-year. As for profit, though, NTT East and West increased its profit at DOCOMO, in addition to the decline in mobile communication services revenues due to the rollout of initiatives such as strengthening customer base and improvement of mobile network quality, EBITDA was JPY 801.4 billion, down by JPY 13.9 billion year-on-year. Operating profit was JPY 405.2 billion, down by JPY 30.6 billion year-on-year. Both revenue and profit are largely progressing as expected. While the foreign exchange rate is slightly going to the negative side for us, however, by continuing to surely reduce the costs and expanding the enterprise businesses and others, we will work towards achieving the NTT consolidated plan. As for the profit, it was JPY 259.7 billion, down by JPY 14.4 billion year-on-year due to the decline in operating profits. As for the revenue and profit by segment, for Integrated ICT Business segment, though the mobile communication service revenues decreased, revenue increased year-on-year due to the growth of Smart Life business led by finance business and the organic growth of the enterprise businesses. In addition to the increase in profit of the enterprise business and implementing various measures to improve the income and expenditure, profit declined year-on-year due to implementing measures to strengthen customer base and improve the network quality. As a result of initiatives to strengthen our customer base, NP was positive in the first quarter cumulatively. Towards achieving the annual plan, we will strengthen our competitiveness through continuing to strengthen our customer base and improve network quality, as well as surely conducting cost reduction and expanding our growth of businesses such as Smart Life business and enterprise businesses. For the Global Solutions Business segment, though there was an increase in revenue due to capturing the digital transformation demand in Japan, there was a negative foreign exchange impact of approximately JPY 50 billion. Therefore, both revenue and profit are at the same level as the previous year. The Regional Communications Business segment resulted in an increase in both revenue and profit year-on-year due to the increase of revenue of both enterprise and optical fiber businesses, though the legacy business revenue is declining. Furthermore, the net additions in fiber optic services have increased year-on-year due to a 10 GB plan and strengthening sales of providing service to the entire apartment building in the apartment market. For the others, like real estate and energy business, due to the expansion of a data center engineering at Urban Solutions, both revenues and profit increased year-on-year. Next, I would like to talk about five topics. Starting with the upgrade of truly Japanese-made large LLM, tsuzumi 2. [Foreign language] Tsuzumi was developed by NTT from scratch as a purely Japanese-made LLM, and the second generation, tsuzumi 2, will be launched in October this year. We have significantly evolved the understanding of complex text and meanings, which is necessary for interpreting internal documents and manuals, as was requested by enterprise customers. For example, accuracy in responding to inquiries on accounting manuals improved by four times compared to the previous model, and equal or better in the benchmark comparison with other models. [Foreign language] The excellent cost performance as a single GPU model remains unchanged in tsuzumi 2, allowing for on-premise environments, safely supporting highly confidential data as a purely Japanese-made model. [Foreign language] I hope that you will look forward to the upgraded Tsuzumi 2. Next, listing of NTT DC REIT on the Singapore Exchange. NTT DC REIT, a real estate investment trust managed by NTT DC REIT Manager, a consolidated subsidiary of NTT Data Group, was listed on the Singapore Exchange on July 14th this year. [Foreign language] Through the transfer of six data center assets to the REIT, we aim to accelerate the recovery cycle of DC investments, generate investment funds, and maintain financial soundness while further growing the data center business and maximizing corporate value. [Foreign language] Next, on Expo 2025, Osaka Kansai's ION use cases. [Foreign language] On NTT Pavilion Day, May 24th and 25th, NTT performed the Chou Kabuki powered by ION. [Foreign language] Expo 2025 version as a real-time joint performance using ION APM and two-way transmission between Japan and Taiwan. Also, the computers in the NTT Pavilion utilize ION 2.0, consuming one-eighth of the power of conventional computers. In FY 2026, we aim to offer a commercial version with twice the communication capacity of the Expo version. [Foreign language] Next, on the announcement of our policy for the future of fixed telephone service. [Foreign language] Given the aging and decline in cost efficiency of NTT East and NTT West's copper-based fixed-line services in the future, NTT East and NTT West plan to gradually transition to fiber optic and wireless-based fixed-line services by 2035, ensuring the continuity of fixed-line telephone services. [Foreign language] To avoid causing inconvenience to existing customers, we will provide sufficient notice and transition periods before switching to alternative services. [Foreign language] NTT East and NTT West will announce [Foreign language] b asic policies and related information around late September. [Foreign language] Progress under the medium-term management strategy beyond May is shown here. That concludes my explanation. Thank you very much. From now, we would like to take the questions from the reporters. First of all, we'll take questions from those who are in this venue. For those of you who have a question, please raise your hand. The staff will bring the microphone to you. Please identify your company name, your media name, and your name, and then ask your questions. Due to the time limitations for the first round, we ask you to limit your questions to two per person. We would like to take the questions now. From my side, on the right-hand side, please go ahead. [Foreign language] My name is Chikai Tanaka from Tokyo. I have two questions. The first question is related to the Integrated ICT Business segment. From June, you started the new rate plan, and in the first quarter, you said the MNP turned positive. With the new rate plan, I would like to know the impact of it. Also, with the SBI Sumishin Net Bank, I believe that it is going to become NTT's subsidiary company. What is the impact to the performance of this acquisition ICT Integrated ICT Business? First of all, related to the new rate plan, actually, yesterday from NTT. [Foreign language] There was an announcement that the basketball program will be added to the service. At that time, we did announce the numbers as well. From June, the new DOCOMO Mats has been launched, and we have had 700 million subscribers use this service. On average, it's about 350,000 a month. On an annual basis, 3 million is the plan. I believe that we have started in a good way. In addition to that, in addition to the contents and MLB contents, we would like [Foreign language] The service to be accepted and used by, excuse me, NBA, not MLB, they buy more subscribers. Also, regarding the [Foreign language] [Smashing] SBI Net Bank, the process has not completed yet. I believe it will be around October. If we can consolidate it by then, from that [Foreign language] w e will be able to consolidate it. [Foreign language] They are growing business. It will be more than last year, but more than half, around half, will be included in this year's performance. The next is related to the photonics-electronics conversion devices. For the commercialization next year, I think you are working on some various use cases, but specific demands and what is the direction regarding this moving forward. If you have visibility on that, I would like to know the current situation of it. Within the area of this photonics-electronics conversion technology, NVIDIA is also developing their products there. Can you actually share the strength of your device? At the Expo in Osaka, we have the optical switch that is used there, and that speed is about 51 TB. The commercialization product that will be launched next year is about double the speed, meaning exceeding 100 TB. Currently, I cannot name the specifics, but currently, we are having this product being evaluated by the customer. As for our partners, we are starting to organize them. October 6, where the naming is not decided, but it's an IR from the IR perspective and the PR's perspective, we're planning to hold an explanatory session. At that time, together with [Foreign language] t he optical switch using the photonics-electronics conversion technology, we're hoping that the partners or the customers that will be selling it can join us at that session. [Foreign language] We have reached that phase now. [Foreign language] I should say it within this fiscal year, first of all. [Foreign language] If the customers allow us to disclose their names, we will be able to share with what kind of customers that we are doing the business, and we'll be able to reach that stage. Thank you. [Foreign language] Looking at the industry trend, what is the strength that your company has? [Foreign language] For example, in spring, NVIDIA, as all of you know, with the CPO method, [Foreign language] t hey have announced they're using a CPO method. To begin with, NTT [Foreign language] w anted to bring the optical signals very close to the chip as much as possible. That was a concept that we have launched because that will reduce the power consumption. More than that, the issue recently is that the heat cannot be fully treated. We are hearing those voices more from the users. Bringing the optical signals close as much as possible to the chip, we'll be able to reduce the heat emission. Without using electricity, [Foreign language] We'll be able to release the heat. This type of concept [Foreign language] i s starting to come about in the society that probably gets better, which means that the direction that we have selected has been correct and has been valued as that's the correct direction. The technology, but having said that, there's the technology that only NVIDIA and NTT have. We would like to emphasize on that point. Together with our partners, we would like to continue to work with our partners to commercialize it. Thank you very much. [Foreign language] Next question. Tanaka from Kyoto Tsuzumi. [Foreign language] I'd like to ask about the metal or the copper lines for the fixed telecommunication. We'll have the geographical information when you make the announcement in September regarding the transition period. I'd like to also ask about why this is necessary to transition away from the copper-based fixed-line telephone? [Foreign language] Well first of all, t he copper-based fixed-line telephone is the basic infrastructure that has been built, and in Kyushu and other areas where we have major natural disasters, [Foreign language] we have tried to be very creative in maintaining that service. Of course, a typhoon and various flooding would have an impact on the copper-based fixed-line services. At this time, laying the new copper-based fixed-line telephone is not efficient, and we would like to avoid that if possible. From that perspective, [Foreign language] 2035 is probably the limit for the use of the current copper-based fixed-line telephone infrastructure. By then, we would like to have the transition to the new service to our customers. As early as possible, we would like to first communicate this to the customers with the NTT law amendment. In the September announcement, we will not be having such geographical information and such details, but we would like to provide an explanation of the reason behind the transition. [Foreign language] First of all, in urban areas, the fiber fixed lines have already been laid out to a large extent. If we can start with certain urban areas with abundant fiber infrastructure, that may be best. I'm sure that there are various feedback and comments that we received. We will study that and consider the appropriate transition plan. Thank you. Next question, please. [Foreign language] The left side in the back. This is again from NIKKEI BP. As asked in the previous question regarding the copper line, with the amendment of NTT law, the final provision obligation has been applied. If there are other companies that can offer that service, NTT does not have the obligation. Do you have that reflected in your plan? Basically, the customers that we are providing the service are the ones that we are asking them to transfer over. [Foreign language] These are customers, if they voluntarily would like to select the mobile company's service, I mean, they will be able to do that. This needs to be further discussed. For example, NTT East and NTT West, from the mobile operators, regarding a particular area, if they are contracted or receiving the wholesale service, there may be such cases. From the customer's perspective, as much as possible, the contact point being, for example, NTT East and NTT West, will give them peace of mind. We hear those voices. We would like to come up with a system like that for those who already have the optical fiber cable. That's fine from the broadband perspective. They can use that. They will have various choices. At the timing around September, I'm hoping that I will be able to elaborate more. Okay. Thank you. [Foreign language] Next question, please. Middle front row. [Foreign language] I'm Sano, free writer. [Foreign language] This is mostly about NTT. [Foreign language] Regarding Integrated ICT. There was a decline in revenue. I'd like to ask the reason why this happened? [Foreign language] The main reason, as mentioned, [Foreign language] Is the customer base enhancements. [Foreign language] The marketing cost has been increased. Last year, we have increased, but that was mostly in the second half of the year. On a year-on-year basis, compared to the previous year, there was an increase in the customer base strengthening cost. We are also enhancing the service space, requiring a new base station. We've increased by about 20%. That is an additional cost that is put on the Integrated ICT. For the enterprise and the Smart Life, there has been a positive increase in revenue, but there were not enough to make up for the decline in revenue because of that. [Foreign language] What about Apple and the telecom service itself? [Foreign language] MNP, you said, was positive. All that is going well? In terms of the first quarter ARPU, it's the same as the previous year. [Foreign language] We need to continue to look ahead, but we believe that this has bottomed out. My second question. [Foreign language] In terms of the CapEx investments, Open Signal report, a 5GSA report was issued recently. NTT DOCOMO was partially excluded from the survey. Regarding 5GSA, what is the schedule for the planning and the CapEx for that? [Foreign language] DOCOMO being excluded in part of that survey. The reason is that because there are many areas where we have both 4G and 5G. That was probably the reason why DOCOMO was excluded from the survey. [Foreign language] SoftBank and KDDI. [Foreign language] The sample number is quite different. It's very difficult to compare apples to apples. [Foreign language] Going forward, are we doing SA? 5G [Foreign language] 5G's middle run will be the main service. SA, [Foreign language] first, of course, the target will be the enterprise customers. [Foreign language] In terms of providing a concrete service to enterprise customers, that will be the first priority in this area. [Foreign language] Thank you very much. We would like to take the next question. The person in the back, thank you. [Morioka-san], NIKKEI Across Tech. I have a question regarding NTT Data Group. Regarding the hiring plan, domestically, for a long time, it was said there's a shortage of IT talents. In the U.S. or global, the AI talent layoff is accelerating. As planned, are you going to continue the hiring to increase the headcount? Are you going to suppress the headcount? Are you going to revisit your strategy? I would like to know the current situation. [Foreign language] Well, [Foreign language] Through the reporting in the media, due to the penetration of AI, especially in the North American region, there's been a reduction in headcounts in the industry, is what I have in mind as an image, roughly. [Foreign language] We need to look at the market situation as well. [Foreign language] if the market situation becomes better, for example, [Foreign language] t here are things that can be covered and efficiency can be improved through AI. However, the consulting to implement AI, those types of talents will be required. In a temporary perspective, saying that because the AI is going to be implemented, the requirement for headcount is going to go down. Instead of thinking that way, in order to implement AI, we need the talent that can do that, and we need to recruit more. This fiscal year, AI-related orders, around JPY 150 billion worth, is what we're going to achieve. In 2027, it's probably going to increase up to the JPY 500 billion level related to AI. In that sense, engineering people or the consulting people for the AI implementation, we probably, I think we need to increase it regardless of within Japan or both for Japan and overseas. [Foreign language] And for t he contact centers. These types of businesses where AI can fully be implemented. Probably AI will be able to respond to the calls. There is a possibility that those areas will have a decline in talent. In North America, their backyard is in India. Having said that, if the business grows and expands, then it will require more talent to be hired. It's not necessarily the fact that the hiring or recruitment will decline. Sorry, this was my personal perspective. If the business expands, then the contact center side, there are areas that you will not decrease or decrease. There will be a balance. The contact center is where we'll see a decline. Depending on the area and industry, it will differ. Thank you. One more question. The Trump administration's impact. This is for NTT Data Group. Due to the Trump administration, the public sector orders are declining. Is there an impact from the Trump administration? Regarding tariffs for us and also for NTT Data Group, we are not in the exporting business. I believe that it's not going to directly impact us. However, due to the impact of the tariffs, the various manufacturing companies [Foreign language] b eing impacted, and its economic situation will be impacted negatively, then the IT demand will be negatively impacted as well. We need to be sensitive to the economic situation trend, and we are keeping a close eye on it. In fact, the German automobile market, we do have quite a large customer base there, and they are being impacted. That is due to not only tariffs, but overall economic recession in Germany. Therefore, we are more concerned than the market of the market situation. Understood. Thank you very much. [Foreign language] We will take one more question from the floor and then take questions online. [Ishikawa], I'm a freelance writer. The other day, KDDI is an au-driven bank, and SBI Securities announced a partnership. What is your take on that? Monarchs and SBI Securities being treated equally was also mentioned. Can you also talk about that? [Foreign language] Of course. SBI Holdings is our partner. We have a capital partnership. I cannot say that this has no impact. Regarding SBI Securities, we have no capital relationship. [Foreign language] With the relationship with the SBI Group, we would like to enhance that further. Regarding Monarchs and SBI Securities, we would like to continue to have equal treatment. [Foreign language] SBI is forming partnerships with other players, t hat is all up to SBI. That is not something that we should comment on. Thank you. [Foreign language] Next, for those of you participating online, we would like to take your questions. For those of you who have a question, please raise your hand and wait. We would like to appoint you. At that time, please press the microphone button on the bottom left and unmute. We have a hand. [Nikkan Jidosha Shimbun, Mr. Yamamoto], please go ahead. Just a moment, please. [Foreign language] Please go ahead, Mr. Yamamoto. Can you hear me? Yes, I can hear you. Thank you very much. Thank you very much. I have two questions. The first is related to Rapidus. The other day, Rapidus announced their prototype. How are you looking at their progress? Including the next round, what is your stance relating the investment? [Foreign language] First of all, Rapidus came up with the prototype product. [Foreign language] Our Chairman, Sawada, went to their opening ceremony. It was truly very modern. Maybe the word modern is old, but it was a fully automated manufacturing plant. I heard that he's seen it. In that sense, [Foreign language] our cutting-edge semiconductor factory being constructed is a very good thing. [Foreign language] As for the investment, at the very initial stage, we did invest for about JPY 1 billion. As before, the photonics-electronics conversion device has that included in the manufacturing process. We do have those types of expectations. We will respond in an appropriate manner in terms of the equity investments. Thank you very much. [Foreign language] One more point is the MU City of Toyota is going to have the public opening at the end of the month. The collaboration with Toyota that you have announced the other day, if there are any updates that you can share with, including Uben. Uben is purely Toyota's project, and we are receiving some jobs. I would like to refrain from the comment of Uben City. Also, with Toyota together creating a safe society, including the autonomous driving. Regarding that concept, we have been deepening our discussions. Therefore, in that sense, we are having discussions that have progressed quite a bit. That is the comment that I would like to leave you with. Thank you very much. [Foreign language] Thank you. [Foreign language] Next q uestion from online participants, please. [Foreign language] There are no further questions from online participants. If there are any questions from the floor, we still have a few minutes. [Foreign language] Yes, from Kutai Watch. Thank you for taking my question. My first question r egarding the Q1 results, NTT's business. [Foreign language] Competitors have announced new rate plans like KDDI. Rakuten has also announced their new rate plan. You're next. SoftBank has not changed their rate plan. What is DOCOMO's impact with regards to competitors' rate plan. How do you analyze that impact first quarter to second quarter? [Foreign language] Well c ompetitors' rate plan having an impact on NTT. I think it's premature to make such an assessment at this time. So f rom June 1 to DOCOMO Max w as introduced. [Foreign language] And DAZN a nd international roaming and other value-added services are provided in a more comprehensive manner with an expansive menu. The numbers that we have seen actually exceed our initial expectations. I believe that customers are giving us high marks. For this plan. Each player is considering their own plans. NTT is always talked about as raising our tariffs. Actually, we have maintained the existing plan with no price change. We are just attaching the pricing to the value. It's not a price hike. It is simply introducing a rate plan that matches the value that is being provided. [Foreign language] And to [Foreign language] further add content to the plan to seek further satisfaction of our customers. This is the backdrop of the new rate plan. Going forward, we will continue to provide services that have big value to the customers. The second question is regarding the network quality of DOCOMO. [Foreign language] You talked about the cost side o f the network quality improvements, how do you see the actual improvement? This may be a bit qualitative. [Foreign language] Last year, we planned for new base stations. All the base stations have been constructed, exceeding the initial plan. This year, we have decided to further increase the number of base stations. We're also accelerating the schedule compared to the previous year. Last year, a lot of the work was concentrated in the fourth quarter because of the preparations that needed to be made. For this fiscal year, from Q1, we have accelerated our progress. [Foreign language] This year as well, we are still a bit biased in terms of the second half. We're trying to make adjustments so that more work, more of the construction work, can be done in the first half. Of course, this needs to be coordinated with the different companies that provide the construction service. We would like to increase new base stations in advance of the initial schedule. Tuning, et cetera, has already been more or less completed last year. In areas like Shibuya, where we have constantly new buildings or the demolition of buildings, we need to continuously work. Otherwise, tuning-related adjustment has already been completed. [Foreign language] I'd like to take the next question in the back with the short-sleeve shirt. [Foreign language] This is [Takatsuki from Nikkei]. [Foreign language] I have t wo questions. First, the other day, there was the council held at MIC, and the KDDI AU and the other competing carriers showed a large concern regarding the integration of NTT East and West and with NTT DATA. I would like to know what claim will you be making against that? First of all, NTT received the interview, the hearing process, and we have answered to the questions quite a bit. From the anti-monopoly law perspective, already more than the majority of shares have been held. Even though it is going to become a wholly owned subsidiary, it is not going to impact the competition law or the anti-monopoly law. When the company was spun out, [Foreign language] w e did come out with the exclusion clause. [Foreign language] The dominance of the market. After that, [Foreign language] t he law has been developed. If we comply with the fair competition regulations and laws, that will suffice. Also, NTT DATA itself's solutions business market share at this point is around 11%. Therefore, they are not in the position of the market dominance. We believe that there's not much of an issue there as well. Regarding NTT East and West, at least with the fair competition conditions, there are some actions that are prohibited because of that. Once we comply with that, there is no special preference or anything that occurs. [Foreign language] We believe that there are not that many discussion points regarding this. That is all. Thank you very much. The other question is related to what you have explained, the Tsuzumi 2. [Foreign language] Due to the improvement of the performance, t he Japanese-made, the small LLM, the lighter LLM d ue to the launch of Tsuzumi 2, how much of the application can be expanded? Until now, it was a proof of concept. With this, that commercialization can be accelerated. Can you share, elaborate more on your expectation? The parameter size. The first Tsuzumi was 7B, and this time it's about to increase to 30B. First of all, t he performance has improved due to the increase of parameter size. Of course, it's not that the larger the better. The cost competitiveness or the price competitiveness, that is what we have been pursuing. As a little bit written here, GPU, the more you increase the GPU, of course, we'll be able to increase the number of parameters. With just one GPU, if we bring about a certain level of performance, we'll be able to suppress the cost. In order to improve the competitiveness, we would like to improve the performance, but not increase the price that much. This enables us to do so. Regarding the application area, it's not going to be that different than the conventional tsuzumi. We only have this launched with Japanese. We are having it studied for about 16 languages. It's only Japanese that we can fully commercialize. Therefore, in that sense, h ow the WRAG will be combined, that's matching the Japanese companies. Implementing AI or LLM for companies, it needs to be combined together with consulting. Because with just the data held by the customer, whether they'll be able to reach the correct answer or not, t hat type of a detailed response needs to be conducted to have a sufficient level of implementation. That is why, to our customers, we may say that it's better to implement tsuzum i t may be better that for that particular customer, different services, LLM is better. We have changed it. Last year, domestically and internationally, we have actually delivered to 800 customers. Implementing the AI that is suiting the customer will bring about the full benefit of AI. Of course, we want to put Tsuzumi at the forefront. However, there are customers out there that it's better that it is not Tsuzumi. We would like to respond to those in a flexible manner. Thank you. Next question will be the last question. [Hokkaido Shinbun, Takahashi is my name.] I'd like to ask about Rapidus. [Foreign language] Regarding the backend process. Going back to ION strategy and Rapidus, how is that impacting? In 2026, the commercial version will be launched. Is that the right timing? I'd like to ask about your strategy around this. 2-nano chip i s what we want to launch going forward. I'm not able to provide a clear answer about the actual product yet. It's more about the future. As new devices are launched going forward, it is likely that there will be a demand for this. On the other hand, for the supply chain, t he big challenge going forward is the heat, how to lower the heat. The biggest challenge for data center is how to control the heat that is being emitted. Water cooling is being done for the frame or the actual device being in the cool liquid to lower the heat. That is what is being done in data centers. Of course, you need a lot of air conditioning to cool the room as well. How to suppress heat is really the challenge that is being faced. In the backend process, having an optical circuit to reduce the overall electricity consumption and to reduce the heat, if that becomes a reality, [Foreign language] Then data centers' heat issue, that is really a big headache, can be resolved. The semiconductor of Rapidus's value also increased as a result of that, and we can contribute in that area. [Foreign language] That is an area that we would like to provide support. [Foreign language] Thank you very much. [Foreign language] This concludes NTT's press briefing. Thank you very much for attending today. Thank you.