Thank you very much for attending despite your busy schedule today. We now like to start briefing session for NTT Inc.'s first quarter financial results of FY 2025. I am Akaishi from IR office serving as the moderator today. Thank you very much for your cooperation. First, I'd like to introduce today's attendees. Representative Member of the Board, Senior Executive Vice President Hiroi, Senior Vice President, Head of Finance and Accounting, Nakamura, Senior Vice President, Head of Corporate Strategy Planning, Hattori. These are the attendees from our side. Today's briefing is audio-streamed live. It will be available on demand on the website at a later date. Your understanding is very much appreciated. I would invite you to refer to the presentation material posted on our IR site for this briefing. Also, may we ask you to kindly read disclaimer on the first page of the material. First, with Senior Executive Vice President Hiroi will explain the overview of the financial results, and then we will take your questions. Well, Mr. Hiroi, please. This is Hiroi speaking. Thank you very much for attending our briefing session despite your busy schedules. I would like to explain FY 2025 first quarter financial results overview. As for the results, overall, operating revenues increased and operating profit and profit declined year-on-year. Operating revenue for the first quarter reached new record high levels. As for the revenues, though there was an approximately JPY 50 billion decline from the FX rate impact due to the revenue increase from the enterprise business expansion at each group company, the operating revenue was JPY 3 trillion, 262 billion, up by JPY 22 billion year-on-year. For the operating profit, although NTT East was increased at NTT DOCOMO. Both revenue and profit is progressing as expected by continuing to surely reduce the cost and expanding the enterprise business and others. We will work towards achieving the annual consolidated plan. Next will be the overview by our segment. As for the Integrated ICT Business segment, though the mobile communication service revenue decreased, revenue increased year-over-year due to growth of a Smart Life business led by finance business and the organic growth of the enterprise business. As for the profit, there was an increase in the enterprise business and implementing various measures to improve the incoming schedule. Profit declined year-over-year due to implementing measures to strengthen customer base and improve network quality. As a result of initiatives to strengthen our customer base, MNP was positive in the first quarter cumulatively. Towards achieving the annual plan, we will strengthen our competitiveness as we're continuing to strengthen our customer base and improve our network quality as well as surely conducting cost reduction and expanding our growth business such as Smart Life business and enterprise businesses. Next is regarding the Global Solutions Business segment. Although there was an increase in revenue due to capturing the DX demand in Japan, there was a negative foreign exchange impact of approximately JPY 50 billion year-on-year. Therefore, both revenue and profit are at the same level as the previous year. Next is regarding the Regional Communications Business segment. Resulted in increase in both revenue and profit year-on due to the increase of revenue of both enterprise and optic fibers business, though the legacy business revenue is declining. Furthermore, the net additions in the fiber optic services has increased year-on-year due to 10 GB plans and strengthening sales of providing service to the entire apartment building. As for others, segments, due to the growth of data center engineering at Urban Solutions, both revenue and profit increased year-on-year. From now on, I'd like to go share five topics. First of all, the very first one, I'd like to talk about tsuzumi 2 upgraded purely Japanese-made LLM. tsuzumi is a purely Japanese model that NTT developed from scratch, and we will be releasing the second generation tsuzumi 2 in October of this year. We have significantly improved its ability to understand complex context and meanings, which is necessary for interpreting internal business documents and manuals, a feature that was highly requested by our customers. For example, the accuracy of responses to inquiries about the accounting manual has improved 4x compared to the previous model. Performance is comparable to that of other companies for models in benchmark comparisons. In addition, since it maintains its cost performance and effectiveness by running on a single GPU, it is also compatible with on-premises environments. As a purely domestically produced model, it can be used safely even with highly confidential information. We hope you look forward to this upgraded tsuzumi 2. Next, the NTT DC REIT listed on the Singapore Exchange. NTT DC REIT, real estate investment trust managed by NTT DC REIT Manager, a consolidated subsidiary of the NTT DATA Group, has been listed on the Singapore Exchange on July 14, 2025. Through the transfer of six data center assets, which is composing this AUM. Well, with this, well, listing, the recovery cycle of data center investment could be accelerated and also we will be able to generate investment funds and maintain financial soundness while further growing our DC center business and maximizing our corporate value. Next topic is the IOWN use cases at Expo 2025, Osaka, Kansai, Japan. May 24th and 25th on our NTT Pavilion days this year, NTT held a CHO KABUKI, powered by IOWN, a real-time joint performance using IOWN APN and two-way transmission, well, between Japan and Taiwan. Hanakurabe Senbonzakura Expo 2025 version awards were given. At the NTT Pavilion, computers utilizing IOWN 2.0 consumes just 1/8 of that power of conventional computers. In FY 2026, we aim to offer a commercial version with twice the commercial communication capacity of the expo version. The next topic is the announcement of the policy for future fixed line telephone services. Given the deterioration of NTT East and West copper-based telecommunication facilities and the decline in cost efficiency in the future, NTT East and West plan to gradually transition to fiber optic and wireless-based fixed line services by 2035, ensuring the continuity of fixed line telephone services. To avoid causing inconveniences to existing customers, we will provide sufficient notice and transition periods before switching to alternative services. NTT East and West plan to announce basic policies and related information around late September. The very well, final page is about the progress under the mid-term management plan strategy. The progress since May is as shown. I hope you will take a look at it at your leisure. Thank you. Next, we would like to move on to the Q&A session. Regarding the questions, we would like to take those from those who are connected to the web conference system who has registered prior to this meeting. For those of you who have a question, please push the Raise Your Hand button on the web conference system. If you want to cancel your question, please press the Raise Your Hand button. When we appoint the person to ask the question, please identify your company and name and unmute. If and when we ask you to unmute, please unmute and ask your question. Please keep it on mute till we ask you to finish your question. Now, we would like to take a question from SMBC Nikko Securities. Mr. Kikuchi, please go ahead. Please unmute. This is Kikuchi speaking. I have two questions. The first is what you have explained, the NTT DC REIT. It has listed, and it seems that it has slightly declined. Could the responses or how are you looking at the responses that you're receiving right now? As even Mr. Hiroi said just before, using this scheme, you want to accelerate the investment cycle of data centers, and you'll be able to circulate the funding in an effective way, and I have high expectations towards that. However, is it really going to be something that's usable? I want your feeling on this. That's my first question. This is Hiroi speaking. As the total evaluation is, it has reached the passing score. From the spring, we went through various processes such as pre-marketing activities and others. The market environment, there was the impact of the Trump tariffs, and the market was kind of soft. Also in the Singapore market at the data center REIT, there were ones that were not outperforming so well. There was a slight of a negative impact that we have received. However, data center REIT that NTT is sponsoring and the content of the asset has been valued to a certain level. We believe that we have received a certain level of positive valuation from the investors. The scale being large and being able to hold for long-term, I cannot name them, but it seems that an anchor-type investors are participating. The pricing and in terms of launch pricing, I believe that there are various evaluation sources, but I think it is overall a satisfactory valuation. Thank you very much. The communications with the investors increase the scale, sell it. It became something that you can absorb that, meaning that on a regular basis, you'll be able to sell and transfer your assets, and that was the passing grade. Well, if you're not able to do such a thing, there's no meaning to it. On a regular basis, towards the market as us, a good quality asset that is in line with investors' expectation, we will transfer to the REIT, and we want to grow the REIT itself. I think we were able to make the start that will enable us to do that. Okay. Thank you very much. My second question is related to performance of the first quarter. At DOCOMO, I have various detailed questions. I'll ask them later. Overall, the JPY 405 billion of operating profit, I was forecasting about JPY 430 billion. I thought it may be close DOCOMO, as expected, still weak. For NTT East and West, as you said, yes, have increased their profit. For the first quarter, as your company, how are you looking at it? Maybe it is not satisfactory, but so-so. Still, it is as planned. Hiroi-san, from your perspective, how are you viewing the results of the first quarter? Well, this is Hiroi speaking. Just before, as I had explained in the overview explanation, overall, the performance was in line with what we had expected. If we look in detail at the content of it, there's the ups and downs as you have pointed out, Mr. Kikuchi. In a large way, what impacted the profit was the DOCOMO, the mobile business. Later on, I believe there'll be an explanation from them as well. They are strengthening their mobile business, MNP turned positive and continuing positive. In terms of ARPU, it is proceeding in line with the plan, and I think that is good. In order to maintain that, to improve the strength of their marketing and sales capability, because the competitive environment is becoming severe. At the point of selling the handsets, reinforcing the sales activities had a fairly negative impact in the results. In order to strengthen it further, it will require cost. However, this part, we need to maintain our market share. Therefore, in order to achieve the overall full-year of performance that needs to be done thoroughly as well as the cost reduction efforts. These are things we would like to continue to do on a full-year basis. Also for DOCOMO, the enterprise business side, the DX demand, and also we have the special elements factors such as GIGA School. The enterprise business is steadily growing. What was slightly a concern, which was the SME customers side of the business. Their revenue is increasing, so we are seeing signs of improvement on that part of the business as well. Therefore, for the Integrated ICT Business, that is something to evaluate. There was an announcement about NTT DATA yesterday. Though there's some FX impact. They were able to secure the revenue in line with what they did last year. Same as the domestic DX demand, they were able to capture that demand. As that is for the Global Solutions and also for the Regional Communications, they are increasing their profit, and that can be highly valuated. There was some impact of selling the asset. Last fiscal year, there were some ups and downs, but the trend is that the profit trend based on the network is starting to bottom out. That is all. Thank you very much. That is all from me. Thank you very much. Next is from Daiwa Securities for Tokunaga-san. After muting yourself, please start asking your question. Tokunaga-san, can you hear us? I hope you can hear me. Yes. Well, Tokunaga from Daiwa. I have two questions. First question, NTT DATA TOB progress. Well, in the past, well, from the autumn to, well, winter, well, I think this will be done. Last year, well, as of the end of September, you had the IR Day. I think, well, disclosure will be well present made. Is that the correct understanding? Also the MIC is now conducting hearing. On that basis, well, this, the, well, the timeline and for generating synergy with this, with TOB for the NTT DATA is not going to change. Well, TOB processes, well, we are really making steady progress in TOB. Well, 81% being purchased. Well, as of the end of September, we are to complete the entire TOB process. There is not much major concern with this kind of process. In this way, and as you have pointed out, the market verification, well, council, or survey is conducted. There are various, well, opinions were expressed. On our part, as for the fair competition, well, there are, well, legal assertive requirements, and we are complying with those, well, legal requirements. Some kind of concerns have been expressed, but what exactly is their concern? Which is not so clear. Within the rules, we are responding. We don't expect to see, well, any major assertive negatives from these concerns. The share of NTT Data is quite different from that of NTT, well, DOCOMO. It may not be really, well, giving, well, major impact to market because of the smaller share. With this kind of verification procedures, we hope that we will be able to remove, well, this kind of anxieties or concerns, and we hope that we will be able to really, well, make progress in line with the plan for TOB. Thank you very much. Second point is related disclosure, this time NTT East and West. You have, well, changed a lot in terms of breakdown of revenues. What you have presented, well, according to the four quadrants, then you will be breaking down on a quarterly basis. You have the work in progress and also the legacy and, well, so the profit margin and others. Well, I hope you will, once again, help me understand. Also we have JPY 25 billion increase and also JPY 40 billion increase. With this, increase, in revenue will come from all these, major SI business segments. Is this the correct understanding? Nakamura speaking. Thank you for your question. As Mr. Tokunaga pointed out, on IR Day last year, for the Regional Communications Business, where are we going to grow? In which of the areas are we going to really organize and sort the business out? That was announced on that day. In line with that, we have separated the quadrants and then to really show the revenue by such classification. As for the profit or income, as you have just, well, mentioned, the, well, so income from services by service. We think that we need to further clarify and present, well, various, well, the income from different segment or different, well, business domain more clearly. This is something we need to work on and improve on that. Please, well, allow us to spend some more time. I hope I have answered your question. A follow-up question. The net adds of Hikari is very steady and also the fixed line migration, and you are presenting the path going forward. Both, well, for the optical fiber business and also the fixed line. I think what you are saying, well, more upside compared to what you presented on IR Day. Is that the correct, well, assumption? Well, in a longer term plan, lately, as Hiroi-san mentioned, as for the, well, optical services, we have been implementing various measures. Many areas. The service base has been growing steadily. The revenue from that is, well, growing steadily. As for the fixed line, telephone communications, the number we are presenting has some noises. We have some 1-off factor. We hope that we will be able to really well talk more in details. I think excluding that, well, the revenue is decreasing. Well, in terms of the overall trend, we are seeing favorable trend. Well, that's it all. That's all from me. Thank you very much. Thank you very much. From Nomura Securities, Mr. Masuno, please unmute and then ask your question. Mr. Masuno, can you hear us? We can hear you. Please go ahead. I have two questions. First is a negative, second question is kind of positive. April to June, if I look at the numbers during this period, the structural issue, NTT DOCOMO cellular communications business NTT DATA's overseas SI business, seems to be struggling. I'm wondering, how are you going to respond to the situation? First of all, the mobile communications service revenue of DOCOMO in the, it's flat or the, for handsets and MNP is a plus. Both is plus, but it's a - JPY 15.8 billion for revenue. Why is there such a decline? The consumer communications operating profit in three months went down by JPY 42.8 billion, and in full-year is JPY 30.7 billion decrease. You have already exceeded the full-year. How are you going to recover it to the full-year level? The Integrated ICT Business segment from mobile part and NTT DATA's overseas business, I'm sure, there's a FX impact. I believe you're saying the same thing for about the last 10 years. What can be done to this to become what that? I would like to hear your thoughts on these points. This is Hiroi speaking now. As you have pointed out, Mr. Masuno, first of all, DOCOMO's consumer's mobile telecommunication service revenue. Regarding the ARPU, we are starting to see a bottoming out, and MNP is ±0. However, since the last fiscal year, there was a continuance of a decline. That impact seems still remaining if you look at the numbers. This flat trend, if this starts to stay that way, I think it will start to bottom out. For this fiscal year, there is still a declining trend impact that was continuing from last fiscal year. The challenge here, well structurally speaking, the ARPU or the numbers of subscribers should stabilize moving forward. However, on the other side, we are spending a lot of marketing cost to strengthen the sales capabilities. How much are we going to be able to absorb that cost is the challenge we need to overcome. However, the customer base, we need to surely support that or else the declining trend is not going to stop. Therefore, though it requires cost, we would like to surely absorb that and strengthen it. If we make it too strong or relax it in the mobile handset business, we have the mass retailers and the agents. Through them, we are selling the handsets. The sure commitment to these people or the DOCOMO's sales policy needs to be surely strengthened in the medium-term and showing that to those is important. That is why we would like to do that. The management of the profit, as you have pointed out, towards the fiscal year-end, though it's not easy, maybe a Smart Life business as it has a structure. As we go in the later in the fiscal year, it will generate more profit. In a total perspective, we would like to manage the profitability to achieve the annual plan. The second NTT Data, especially overseas business, you have pointed out that. Is my understanding because the Japan domestic business, comparatively speaking, is performing steadily. That was announced by NTT Data yesterday, and the numbers are telling that story as well. However, for the overseas business, there are going through trials and errors still. You've mentioned that it hasn't changed for 10 years. That was quite of a severe comment. There have been improvements that have been made. By region, for example, North America, the orders are received and the sales both were declining. It's still continuing for the first quarter, from the second quarter onwards, they are starting to see signs that it's going to bottom out. They are able to win a large account as well. We would like to keep an eye on that. For Asia, the foundation, the base business is stable. The last fiscal year regarding the Australian business, it had many issues, that is starting to come about. We are actually responding to that right now. We'll be able to see that positive effect towards the latter part of the year. The most concern is the Central Europe, the Holland and the German country. They have a high dependency on the automobile manufacturing industry, and the automobile industry is facing difficult times. The businesses that are conducted in those countries and area, we're still not seeing the signs of improvement. Even these areas, well, they also have the data center businesses that are performing strongly. In a total picture, we are evaluating it as they are heading towards improvement direction. I hope you understand that. Thank you very much. Maybe I said for the last 10 years, you haven't changed, was a bit rude, I would like to take that back. The second question is for the business that is growing. When I look at your share price, how would your data center be evaluated as a key point is what I think. If we just look at the P&L, there's amortization, depreciation, interest rates, so it's a very small profit. It does not become a large valuation. However, this part, not from the P&L, but not, and not EBITDA, but the true cash flow after interest payment, after tax, and after maintenance CapEx adjusted funds from operations. If we look at it from the recurring cash flow perspective, we were able to make a higher valuation than just looking at the profit level. In addition to the EBITDA, AFFOs disclosure is what I would like to request. Of course, we can estimate it. However, if there is an official number, at the market, multiplying it, this, we will be able to see a clear number, multiplying it at PER. After interest rate payments, tax or CapEx, the cash flow of that, how much is that increasing? Or in what way is it going to increase? If you do have some visibility, I would like you to share that with me. This is Hiroi speaking. Mr. Masuno, what you have requested and pointed out, well, the data center business, in order for it to be correctly evaluated, from all of you, I think what you pointed out is extremely important. We also have a REIT, from that perspective, the valuations of the REIT will be conducted. We will be coming up with the estimation calculation of that. In a very forward-looking perspective or positive direction, we would like to work on the disclosure of such information. I'm hoping that you'll give us a little bit of time. To get, in addition, the movement of the actual cash flow, currently, I'm sure you'll be able to conduct your own estimation looking at the profit. You'll be able to estimate the movement of the cash flow, and of course, it's going towards the positive direction. However, for this as well, as you have pointed out, in line with the timing of the disclosure, we would like to come up with a way of disclosing it. At that time, I would like to give more specific explanation. Yes. What I am assuming is that looking at just the overseas data center business, AFFO, in 2 years, it's probably going to double the cash flow pace starting this year as a base, fiscal year 2027, fiscal year 2028, March of 2028, when the medium-term plan is going to end. Seems that there'll be a double of a cash flow that will be generated is what I'm assuming or estimating. Is that a too high number? Well, regarding that point, please forgive me of refraining from answering that question in a quantitative way. It is a fact that it is heading towards improvement. We would like to gather the material and explain that in appropriate timing. Please do so. If you will, do that, the external evaluation, well, it'll be easy to understand your business from the external perspective, so please do so. Do that. Okay. Moving on to the next question. Goldman Sachs and Tanaka-san. Well, please unmute yourself and start asking your question, please. Tanaka from Goldman. I hope you can hear me. We can hear you. Thank you. I have two questions. First question, in the Regional Communications Business segment, the background of the increase in revenue. I think where you have included effect from the price increase, but the one-time cost, which was recorded in the previous year, it's gone now. One of the sort of the expense will drop. Also if you could just spell out the separate, all these factors, whether you'll be able to maintain this kind of the trend into the second quarter or not, I hope you will give me the sort of the breakdown of the factors contributing to that. Breakdown? No, not exactly breakdown, but basically speaking. We have been steadily increasing the revenue from fiber optics service. Relatively speaking, this is not exactly the base trend, but the sum will impact for the shorter- term and the enterprise business revenue, particularly this year or particularly the first quarter quarter. We have some of the impact from GIGA School, and the profit contribution came from that. Somewhat detailed, but in Western Japan last year, there was disaster recovery of Noto Peninsula, there was, well, the sort of cost incurred. That has pushed down profit, revenue last year. That has really been the background factor of the increase in revenue this year. You have the effect of really, well, the absence of one-time cost, also you have this, well, the continuous trend going into the second quarter as well. Can we expect that? As you have said, the fiber optic network business and also the enterprise business and NTT east and west have been performing quite strongly. This will be contributing to profit as the underlying or supporting factor. The second question is related to data center. Yesterday, NTT Data the financial results announcement and overseas. I think that the data center business is really supporting all that. Also data center business is profitable. The CapEx planned for this year is almost flat from that of the last year. Going forward, is there any potential increase in CapEx? Because you are really going to make it wholly owned subsidiary company, there is the growth potential. In the mid-term view, is there any idea to really, well, enhance or increase the CapEx, well, from the mid-term perspective? From this, well, the fiscal year, is it going to be flat or do you see any potential increase? Well, data center investment in the mid-term, I think that is a such a big question. Still vis-a-vis, well, data center demand is still very strong. As with investment into data centers, I cannot really, well, clearly say how much. In order to really respond to the strong demand and investment-wise, well, we would see a somewhat upward trend. That's what we think. The demand for AI, there are mixed views, and some people say that it is very strong, and some people are saying it is a kind of the bubble in demand and a very solid demand for cloud. We have that kind of demand. We expect that the strong demand is going to continue. We would like to capture business opportunities with in line with that and to really, well, have this sort of reflection of that into this, well, the revenue as well as income. We think that we can be quite bullish on that. Thank you. That's all from me. I would like to take the next question from Okasan Securities. Mr. Okumura, please unmute and ask your question. This is Okumura from Okasan Securities. Can you hear me? Yes, we can hear you. Please go ahead. Thank you very much. I just have one question, a qualitative question, and maybe overlap with the previous question. NTT DATA's overseas business is run by NTT DATA, Inc. Regarding this company, your company, if I read the material you submitted, MIC, your interest is transferred and made it wholly owned company by NTT Data, is my understanding. The decision-making process being centralized, what is going to change? In the last several years, what kind of specific challenges were there? Towards that, on a global basis, expanding the data center business, what are you expecting to happen? It's quite of a broad question, but if you can answer as much as possible, I will appreciate it. This is Hattori from Corporate Strategy. Wholly owning NTT Data and NTT DATA, Inc.'s capital being centralized, as we explained at that time. When we announced this deal, we have explained it several times, decision-making will be centralized, and we are able to have a flexible decision-making. What we're saying about this is that there's a specific decision-making between the holding company and Data or between Data and NTT DATA, Inc. It's not that we have problems agreeing to a certain decision. However, looking at the current AI demand and within the Global Solutions area, the environment is changing quite rapidly. In order to be able to make a flexible, agile decision-making regarding the capital investment and investments. At each level of the decision-making, if they have a certain group of the shareholders and trying to get the consensus of that and then try to move it forward, then the reaction will be behind the speed that the market is moving at. It's not that there was a difference in decision-making and with centralizing it, we'll be able to make a decision. It's not that. It's the responding to the environment and being able to have a more agile, flexible decision-making that will be in line with the market trend. Thank you very much. Thank you. Any other questions? Or if you have any question, well, please press the raise hand button. There seems to be no further questions. Well, then there seems to be, well, no further questions. With this, we would like to conclude the briefing session. We are going to have the brief session of NTT DOCOMO after this. Please, well, keep your line connected, and thank you very much for your attendance today.