Good afternoon and thank you for joining Rakuten Group’s 2023 Second Quarter Financial Results Meeting. We have disclosed the latest consolidated financial reports at 3:00 p.m. today, and you can view this data on our corporate website page for investors along with the presentation documents used in this meeting. Mikitani will give a presentation. Miki, please go ahead.

Hello, ladies and gentlemen. I would like to update 2023 the second quarter consolidated financial results announcement. So we would like to start the session. Thank you for coming. So today, for myself, I would like to go through the summary. The overall will be reported for myself and then by segment by segment, the performance of the segment will be reported by the person in charge of that specific discipline and also financial strategy, at the same time, the open AI, the other day, we have made announcement of a strategic partnership. So inclusive of the initiative, we’d like to also ask about AI strategy. And Tensa will be reporting on this segment. So first of all, the overview of our business in FY 26 consecutive years, we have been able to increase our revenue. So global, of course, GTV is JPY34 trillion. And in terms of CAGR is plus 39.2%. So revenue, again, is going to be close to JPY2 trillion. And in terms of ‘97 to ‘22, we have been able to grow very robustly over the years. So CAGR is plus 56.9% during this time period. And in terms of this quarter, so in terms of consolidated revenue, we have JPY497.2 billion, so plus by 9.7% year-on-year increase. And in terms of the revenue, tremendously, we have been able to make it a major improvement. So in consolidated non-GAAP operating income, last year, the same quarter, it was about a minus negative by JPY80 billion. And this time is minus JPY39.4. And in terms of the EBITDA consolidated on the rate, we have JPY33.6 billion positive that we were able to achieve. So dramatically, the mobile, of course, investment and return has been able to be obtained and the overall business is now in surplus, and we’re on the trajectory in achieving a higher growth. I like to talk about marketing slightly and the monthly active users. So in Japan as a business, we have exceeded 40 million. So 40.5 million people are now doing the transaction on Lakota and Lactotravel and Magotan card is being utilized, utilizing various services offering. And this is 8.2%. So in terms of the size, even, we are seeing a very high growth rate, as you have seen. But more than that, I must say that Lakota ecosystem, the users are increasing NRIs and in terms of research. Those people who utilize more than 2 services is 76.7%. So respectively, the business segment, I would like to touch upon the performance of the business segment. First of all, Internet service. This is shopping travel or advertising. And the sales is JPY294.7 billion on year is plus by 11.7%. And non-GAAP operating income, excluding the investment business, this is a 4.3% plus positive. But with that being said this time, Rakuten Mobile, especially the shopping, the contributions are large and significant. So, therefore, SPU costs, the mobile SPU cost and the lack Internet segment has been transferred to the Internet segment. So with that, we are going to grow – have grown by 16% year-on-year plus. So in terms more than the revenue growth, the so-called the profit structure is even better. So this is what we call the building ratio. In terms of the revenue, the profit of further larger in growth and significant growth of the revenue. So in terms of the domestic EC, EIA in terms of total GTV is 10% plus is JPY1.5 trillion, especially large sales is also doing very well. And also at the same time, Rakuten travel year-on-year, I would say, acute before compared to before COVID, it’s plus by 36%. And especially, what needs to be highlighted is profession is doing very well. And in terms of total GMS, the recent 12 months is JPY1.1 trillion. So it’s year-on-year plus 9% and U.S. Membership business, the Rakuten Alris is USD 2.7 billion, with the current conversion rate is going to be JPY300 billion, exceeding that level of yen terms. So doing very well as a trajectory of our business. And fintech – with this again yesterday, Rakuten Bank, A very good, of course, track record has been reported already. But of course, 13.3% of achieving JPY181 billion and non-GAAP operating income is 31.2% plus and JPY33 billion. The highlight is Rakuten Card, it continuously is doing riding on a tailwind. So it is having 2 trillion 16.3% year-on-year growth. And the Rakuten Bank is now close to JPY10 trillion, plus 16.9% year-on-year growth and acute security deposit asset. So how we were able to stabilize the profit in terms of the transaction commission, we will also be able to drive profit and JPY22.2 trillion. So again, a very strong robust number. Rakuten Card is 29.4 million, plus 9.5%, so close to 30 million cards right around the corner. Rakuten Bank accounts year-on-year 10.8% positive, is doing very well as well and Rakuten Securities to general account accounts for JPY9.24 million, plus 14.8% year-on-year. So now with that being said, the mobile business, let me describe about the mobile. In terms of revenue and profit, it’s the segment is 13.3% revenue plus positive and non-GAAP OI is JPY37.2 billion. So it has improved in terms of the revenue and EBITDA basis, it’s plus JPYJPY42.6 billion. So year-on-year, there is an improvement that we were able to make. So what have been achieved so far is that, first of all, the coverage of population is 99.9% coverage and Newby, the new initiative, a roaming agreement that we have concluded is high-quality non-limit utilization. And I would like to describe this later on, but MNO subscribers numbers are both increase is now a free of charge now is with charge. We have dropped, but now it’s coming back in terms of the growth trajectory as well. So seeing a good sign. And also the entity institutional cost contract is going up. And ARPU is one, it’s a plus by JPY736 plus, so it have exceeded JPY2,000 as of now. The most important thing is the churn rate has dropped significantly, making a huge improvement. And Rakuten Symphony, the project also is pursuing very steadily. [Foreign Language] So from here and onwards, a big topic about irate mobile, social contribution, and also as a business, how it is performing, it would be covered. And then myself, so what we want to realize is unlimited, low price and high quality. So how can we provide this in a low price to all the citizens of Japan? How can we provide this to them? With that, we can help their household budget and revitalize the economy. And then mean they can spend their money into a more meaningful thing. So this is under the Rakuten Mobile social mission, we believe. So why do we say so? Because the smartphone are not a voice communication tool. It can become a TV or magazine or maybe or TikTok or Instagram and then self-assertion or self-expression, the place occasion and it will become a wallet and then it will become a securities companies and maybe they can serve as a doctor in the future. And also, they will become AI and then become another brand of yourself. So with low cost, – and then the penetrated broadly and then without worrying about the data volume, it should be used. That is our strong mission statement as a result. So now the price is increasing in the market, but the mobile phone price in this 2020 with the entry of Rakuten to this mobile market and then the price has become a low price since then. And it used to be JPY6,755, but it went down to JPY5,073 on average by the over 4 monthly fee. And then this is not just because of the Rakuten Mobile it pays right now is contributing to return JPY4 trillion back to the household.So, let’s say, family of 4 members and then using unlimited data codes. And looking at this as an example, so the throughout the family member of and more than JPY200,000 can be saved. And if it will become more than JPY2.1 million in 10 years, that can be saved. Maybe they can use that money for the travel or maybe they can shop at Rakuten Ichiba or make it for their investment? Or maybe the tuition can be paid by that. So that can be realized throughout this. And this is so Rakuten goal all of the employees of Rakuten Ecosystem members, the strong intent is working to make this happen. In other words, we want to democratize the mobile phones, the low-cost, high-quality, and unlimited data usage is something we would like to realize. However, this is a business. So let me talk about the benefit. So I will be talking later, but in terms of Rakuten Ecosystem, the contributions are very significant. So this is a very strong message. So how large in terms of the subscribers of Dark Mobile for a year, the service fees is – more than 2 services are being utilized. So it’s quite a surprising number overall group already. Over 12 million new use are increasing. So Rakuten each by those people who only utilize will not be supplied for Rakuten Card, those back bankcard users, and now they are going to go into Rakuten Bank, opening a deposit or Rakuten Pay. So the royalty is really exploding in terms of utilizing multiple service from our ecosystem and in terms of GMS, before contract after contract in a flat ground basis, plus 35% 53% in terms of increase. So in terms of ARPU increase, it’s JPY720 overall in terms of ARPU conversion. So the group contribution is now JPY9 billion and contribution and EBITDA is plus JPY5 billion on the quarter. So we now have JPY20 billion as of now. So furthermore, utilizing data, utilizing AI, by doing so, the JPY700 trillion of the target, we’d like to achieve JPY1,500 in terms of the group ecosystem contribution, which we believe that we’ll be able to attain. So in other words, in terms of – not included in the earlier report, but it’s quite interesting. But the Rakuten Life Insurance, the sales agent. It could also as a registered basis, but they can sell Rakuten Mobile. So that number is also on an increase. Life Insurance, very expensive. And of course, let’s say, Rakuten Mobile being covered by Rakuten Mobile, the cost saving of the mobile cost payment, you can pay that to avert to life insurance payment premium. So then the lifetime value, so A&P annualized insurance premium of new policies. So 4.4xis going to be the benefit that will be brought about. So in other words, with mobile, again, to reiterate, saving the payment for the mobile, you’ll be able to utilize that for the future guarantee and gaining cover of insurance that may be of use at contingency. So a very virtual cycle with 4.4x of value. And also what I have explained earlier. So this is a very big project, as I explained earlier and the 3 companies, for example, NTT and using the government budget to create the network and which is privatized, and then other providers are doing, but we did this from the scratch with the power of venture try to establish the mobile network. So this is to cut into the monomeric environment. And that would start back 2020, having said that. So unlike the overseas market, so the government has not been supporting us, so we have to manage it on our own. Therefore, – so we aggressively establish base stations means we opened up the base station with the virtualization technology to accelerate opening up the station built. That was from 2020. And this year is Phase 2. And then we have been aggressively opening up base stations. So first of all, we would like to optimize our cost. And then also network, we have a roaming partner, KDDI, that was increased like other providers, maybe we can cover much coverage than other providers and better performance. And the third one is marketing. We want to sophisticate the marketing based on the region or using CRM for the marketing. And the fourth one is Rakuten Strength, which is the relationship with the clients. So we want to set up or start the B2B business. This is a big goal in 2023. And the Phase 2 is about to complete. That is our impression. And probably from Q4 this year, we will be able to start Q3, meaning first of all, we make this business into the profitable, and then we want to follow the path to become the #1 mobile carrier in Japan. And then I’ve already explained this to the investors. And the first of all, monthly, so-called operating cost. So mobile, the cost optimization target is JPY15 billion per month, and this is quite aggressive target that we set up. And then as of June, we’ve already achieved JPY12.9 billion cost saving, which is 86% of cost optimization target. We’ve already achieved that. Therefore, the remaining, which is JPY2.1 billion, and it is already foreseen. So probably, I think we can achieve that. And because we’re using software and automated – automation is possible because of the software. And this is quite a very efficient management in the global businesses. And the second is about the coverage, as you know. So beside your plan was launched. The new roaming agreement was concluded, so we are going to leverage them to increase the coverage of 99.9% and with the areas with unlimited high-speed data. And another point is maybe this is a surprise to you? But we have some fact data from the open signal, Open Signal in the market research company, and this is the report from them. Among the 38 prefectures in 16 prefectures, the network coverage is net coverage we are. So it means we can provide the services in 6 prefectures. So, using this, why – because we have a bit of operation. And then the site location is managed by AI. Therefore, around 4 this year, KDDI roaming agreement would be becoming better, and we will have better coverage in location. Therefore, this adapting portion, so rank or ranked to other parts will be expanded with those things. Rakuten Mobile 16 out of 38, Rakuten Mobile is the most covering and number one in those areas and other than that, performance, and this the virtual technology, how about it. So someone is quite suspectable about the virtual technology, but 4G and 5G download upload speed, we are servicing others, and we have the fastest speed in here. And including these facts, in the past, so when we make our services from to the paid basis and the churn rate back then was 7% or 8%, but in 1 month, so the going other careers, wanting to have some project, excluding them. The actual churn rate is 1.4%, so which is on par with other three major carriers. So in near future, probably in 1 or 2 weeks, so 5 million subscriber would be possible to achieve. We are quite near to that. And another highlight here is the Rakuten Group, more than – we have more than 900,000 clients and how to empower those clients were the Ichiba business and the travel or the advertisement revenue and then we have been contributing using those powers and to the other clients low price and easy to use and the corporate agreement, we want to sell this B2B, the contract, and we are targeting B2B subscription target 1 million by the end of this year. And looking at other companies and looking at the B2C or B2B, there are big price differences. However, in terms of Rakuten, there is no big price gap. So this has become a really profitable business. So now we’ve already started sending this corporate mobile. And then we already get some voices from the actual corporate users. So please watch the video. [Foreign Language] Rakuten Mobile’s secure plan has been launched for the general public. And now corporate customers are also benefiting from the strongest mobile service. Rakuten Mobile’s corporate service originally comprised of 3 plants, which all had limited data usage. Now the offer has been enhanced with 3 updates aimed at providing the strongest service at a lower cost. The first offers unlimited data and free calls through Rakuten Link office. The second is an upgraded version of the existing limited data plan. And the third is a new data exclusive plan. This is set to be enhanced further with the upcoming release of the Rakuten Link Office desktop app. Japan’s corporate mobile market is estimated to comprise of around 36 million phone lines. And within this market, there are as many as 900,000 client and partner companies connected to Rakuten Group businesses such as Rakuten Ichiba, Rakuten Travel, Rakuten Card, and Rakuten Payment. These companies, which have already established bonds of trust with Rakuten represent a promising opportunity for Rakuten Mobile to increase its corporate customer base. We paid a visit to one of the businesses that has already signed up to Rakuten Mobile. MIC is a company that offers a wide range of services to promote sales for businesses such as platform provision, design, and printing. It operates across 6 offices in theKantoregion. We asked a company representative about why they chose to sign up. [Foreign Language] Rakuten Mobile’s corporate sales staff are now all concentrated together on a single office floor. Each morning, they gather for a busy all-hands briefing to get updated on the latest sales findings and figures. With all members being so close at hand, it makes it easier to share information and get a firm grasp of current business strategy as well as the situation among neighboring sales teams. As such, the office floor is often lively with conversation.

I joined mobile corporate sales department in November 2021 and since then, it changed and grown at such rapid rate.

So if you’re interested, please on the web, you’ll be able to see the whole real. So with that, the corporate contract is increasing quite steadily. And again, – this is Rakuten Group, what we are best at, what we’re good at. And last but not least, I’d like to talk about data AI and slightly about fintech as well. And first of all, data AI strategy due today, Rakuten Optimism Conference, we announced the – with Sam Altman of OpenAI with the CEO, Sam Altman, the right service opening, the basic agreement has been concluded by means of memorandum understanding. For us, internally, utilizing OpenAI, but not that alone to a client like within Ichiba merchants and hotels and against clients, we’ll be able to develop and also share and offer an AI services. So that’s what we’re intending to. So Rakuten Group, in a nutshell, the marketing strategy, AI strategy, data strategy. Rakuten Data is truly – is a very rich data set that is secondly known around the world. So marketing efficiency, therefore, would go up by 20%, and also internal operating efficiency, including coating as well. That is also going to increase by 20%. For instance, Rakuten Mobile, why will be able to operate in such a low cost or manner is because many of them are being automated. So this could be done by software. If you’re working hardware, it’s difficult to automate hardware, but the container cloud developed containers. So it could be automated. And automatically can scale up automatically, it could switch over automatically, it could see optimization and efficiency. So that is the reason why it is enabling that service. And the Rakuten Group, not us alone utilizing AI and getting better. But it’s the merchant of Rakuten Ichiba and also the Alris and hotels, accommodation, various clients of ours, and also business partners. We’ll be able to bring about 20% efficiency. It’s really by means of impoundment. So that’s the concept of Rakuten Group. So utilizing AI in the impairment, of course, is what we are trying to achieve. So OpenAI and also working with them, the various services and products will be offered. So Rakuten Group proprietary, of course, AI development is also always underway. And with that being said, the other last but not least, this is not directly related to AI, but already part of the mass media have covered the story in terms of reorganization of our structure, we have online offline and there’s marketing and data. How are you going to combine them together is going to be a very important name of the game. So only Rakuten not that alone, but we are also working in offline as well the level Rakuten Card in QR code, Rakuten Pay with QR code, and also Rakuten Point and [indiscernible]. So those are something that we have been doing in the past. But this is going to be integrated. So it’s a total cashless payment company. So we’re going to evolve our business. So Rakuten Card Corporation below that, we have Rakuten Payment cooperation will be brought under the umbrella of Rakuten Card. Just as a reference, the competitors, competitive competitors already. In the past 12 months, the total GTV is JPY27.4 trillion. So therefore, we are going to achieve JPY30 trillion, very close to achieving JPY30 trillion. So within the world, I must say, is a very strong settlement platform, payment platform, and a platform that’s highly credible and reliable. So one of the synergy that we have foreseen, we made announcement Rakuten Pay terminal the other day. Within this terminal, Rakuten Mobile, 4G LTE is already embedded. And therefore, in terms of – without paying the mobile payment, this could be done outside, inside, sometimes, there may be an area that’s with Wi-Fi, but you can still utilize them at the restaurant. When you do the payment, if you bring a credit card, you don’t know sometimes it could be utilized in other means. But in front of you, you could pay – do the payment and settlement. So for us, not only Rakuten pay alone, but pay-pay deep payment AU Pay and other credit, all the credit cards, American Express, Visa, Mastercard, JCB, Diners, Discover, and also e-money also covers all these e money’s. And points, Rakuten Point, will you be able to pay with Rakuten Point? Is it integrated anywhere in use terminal. So in the free market outside, inside, anywhere, you’ll be able to utilize them. And we made this announcement another day. And it is a very strong – it’s learning a lot of strong attraction interest. So this is one of the IoT technology in Rakuten. This is one of the small example of how we can do with this technology. So that will be all for my part of the presentation. And now I would like to pass over to [indiscernible] mentioned, mobile internet, fin-tech and also the other department quite succinctly, we would like to present for each of the divisions. So thank you very much.

So thank you very much for joining to our earnings meeting today, and Hyakuno speaking, Rakuten Mobile and Rakuten Symphony is under my management as well. And today, before this presentation, we have announced on Monday about the Rakuten Mobile and Rakuten Symphony is new organization. I would like to reexplain about the organizational change of that. And the first of all, business status and Rakuten Mobile for this year, as mentioned earlier before. So we are going to improve the operation and the quality to expand our business as a result of these initiatives, the next phase, we are foreseeing the unprofitability turning into the profitability. So that from the year beginning to tariff, I wanted – I told him to work more on the Symphony side, and the CTO side. It has been serving on behalf of him for the both operation and development side. And the Symphony side, so the starting a launch phase to the expansion of the business phase, they have been transiting and it’s in line with our plan. Under that environment in tariff, they had been consulting with me about his personal matter, and we have been discussing every heat personal situation has not resolved and we had a discussion. And as of August 7, he decided to resign from this company. And then I am really appreciating his efforts. And I would like to send my help to him. And after that and has already announced the CTOs, Sharad, Rakuten Mobile, the Symphony is quite complicated, and Sharad become Co -CEO and CTO at Rakuten Mobile Symphony. And then the Co-CEO, Suzuki-san and Sharad would be leading these model businesses. And the Rakuten Symphony side Mikitani-san is a representative CEO and Chairperson. And Sharad would become the representative of the President. So these two leaders would be accelerating the business of Symphony. And Sharad about 30 years, he had been experiencing in this industry. And then in mobile technology, he is acquired expert, and then he joined the Rakuten Mobile in September 2018 and 2022 March. Since then he has become the CTO. And then in 2022, April, the Rakuten Group, I’m the Managing Director. He took the position and introducing open run a full virtualized cloud-native network. And this is a cutting-edge Rakuten network technology development and operation under his responsibility. So he is taking care of the core or the hard part of Rakuten Mobile he is leading that part chalet. And this new organization structure and Rakuten Mobile and Rakuten Symphony will be accelerating their businesses. And today, Sharad is not here overseas, but he is joining this call and later he will be introducing himself to you. And next, from Suzuki-san, he would explain about the mobile segment financial results of the Q2.

Good afternoon, everyone, and Rakuten Mobile Co-CEO Suzuki is speaking. So I would like to cover the mobile segment business performance. And first of all, Q2 revenue entire mobile segment was JPY80.1 billion comparing to the previous year, minus 0.9%. But Rakuten Mobile loan made double-digit growth, which is 13.3%, and then others. So related energy business, about procuring the cost will increase. Therefore, we control the sales. That’s why it has a negative impact to this. But the Rakuten Mobile stand-alone revenue has been steadily growing. In OI mobile segment total or Rakuten Mobile standalone, so a significant improvement was made. As shown in this graph, continuously, we have been growing revenue and improving the operating income we have been achieving both factors. And as for the revenue, as explained before, there are some seasonal factor. So new fiscal year device sales will increase. That is the seasonality. Because of that, Rakuten Mobile revenue seems to be stagnated, however the communication part is growing steadily. With that segment Operating Income or segment EBITDA based on the profit made a significant improvement. So maybe everyone is interested in here about the network quality improvement time line and the new roaming contract was made, so in Tokyo, Nagoya, Osaka region, for those the metropolitan areas, we have some available area with this new roaming contract. So we have more coverage with that roaming contract, and this is in the final stage for the adjustment, and this will be starting shortly. And by autumn of this year, we will see a big improvement with that. And then looking this from the nationwide basis, well, we are able to continuously use these areas. And then even in this area, we have changed some parameters or the sitting change, and then we see improvement with those changes and still it’s improving, and that will be showing a certain results, good results in autumn this year. So through these initiatives, or our efforts. So the Rakuten Mobile users awareness changed a lot. And the Rakuten Mobile users, so they have intend to continue using Rakuten Mobile, that is about more than 77%, and this is a fact data. And also the subscribers using other carriers, but for the destination for switching over the device and then the 30.7% are thinking Rakuten Mobile as a destination among that 42.3% of the people say that after the announcement of Rakuten Mobile Tokyo plant and they are quite serious of switching their device to Rakuten Mobile network. So we are improving network quality like this. But the people tend to think that the plan to the subscription is quite cumbersome. So we are improving that process. In July this year, as for Data SIM, very simple sign-up, easy sign-up, and activation was made at minimum 3 minutes is needed for signing up and activation, and we started the service, which is highly appreciated by our users. And we will expand the service and add for voicing. Without eKYC, the easy sign-up and activation will be possible. that this will be started, and we are aiming for that. And if that person is using Rakuten Finance services, and then there are some limitation that the person is living here. But this kind of the epic-making sign-up activation or easy sign-up process will be contributing to increase the application of new users. And as network quality improvement and the streamlining application processes. So we’ll be accelerated toward autumn of this year. And at that time, we were thinking of new marketing initiatives to be launched so that we can accelerate the things. In terms of the line that has opened B2B, B2C, the number of subscribers, we have JPY4.81 million in total. So the second quarter, the net increase is a total of JPY240,000. So again, it’s now on a growing trend as of now. And this single month of July at JPY100,000, we were able to add on top. So end of July, we have JPY4.91 million. So the third quarter, we believe that more than the second quarter, we will be able to seek a larger growth rate. And on top of that, interim churn rate, again, we have seen a reduction in decline. After the announcement of SAIKYO Plan part of the in terms of those people who go after the point, this given month that subscribe and lead on the same month, excluding those people, and after the adjustment of the churn rate is 1.4%. So now it has been declined to the level of the industry standard. And again, ARPU increase. Again, we are seeing a very robust growth on the ARPU as well. The mobile data ARPU improvement plus some of the option ARPU improvement are also growing very steadily. So together both, we have an ecosystem ARPU uplift, ecosystem ARPU uplift. So Rakuten Mobile, after subscribing and the user supply to Rakuten compared to non-subscribers within 12 months, Rakuten Ichiba, the money that they spend on Rakuten was totally different, quite significantly. So what sits on top as a plus is a monthly value, which is an uplift. So in other words, Rakuten Mobile ecosystem of Rakuten, the benefit is quite significant and large as of now. So average data utilization volume is again growing steadily. At the end of June, the average data utilizes exceeding 20 gig. So in the future, the large volume data era that we are foreseeing, YouTube, live, core streaming, you participate and watch, and Web3, that’s virtual the world of virtual reality is coming around the corner. So these upcoming data explosive era, we need to be prepared for that. So for us, already, unlimited data utilization is a plan and program that we offer today. And of course, in term unlimited data, the value of that is going to be much, much more significant and that is what we are expecting out of this trend. Cost optimization. Let me report on the progress that we made so far. So as I have and have been described last September in a single month, the monthly cost was maximum. It was JPY39 billion, and it has been reduced or it will be reduced by JPY15 billion. So various, of course programs initiatives are implemented. The roaming, of course, cost is one thing. But of course, opening a base station and the construction costs in terms of the outsourcing logistics and human personnel costs, these details. accumulating these areas, we are already underway to reduce the cost. And on top of the customer acquisition cost, we have been reserved utilizing TV commercial and also unperforming shops have been closed. So by doing so, at this time, we are strengthening our cost reduction effort and already this year. The third quarter target is already being achieved in the second quarter. So that’s where we are today. What we have promised in terms of the reduction of JPY15 billion is now already evident. We will be able to achieve this goal, therefore. And platinum band regarding platinum band, I’m sure this is the area of all of your interest. 700 meg already, we are in due preparation of that. And this year, in fall, 700 meg, the allocation, if we are going to be certified and proved, quick scenario. The first, of course, start on air could be started at the end of this year in December. So this is, of course, with the MIC. If they are going to approve the allocation by the inventory of internal affairs and communication, we are working towards getting approval from MIC as of now. And on top of that, 800 meg and 900 meg, these hertz continue to see in parallel, we are considering of these bandwidth 700 meg on top, 800 meg and 900 meg. Together, these opportunities will be tapped in, in seeking for our optimum network establishment. So that’s what we are considering as of now. So in terms of reduction of CapEx, ‘23, ‘24, ‘25, the 3 years, we are going to reduce by JPY300 billion in terms of reducing the CapEx. This year already in a single year, we have been able to the additional plan of JPY300 billion will be reduced by JPY100 billion. So there was JPY200 billion. So we have been able to achieve this goal. And just as a reference in this number, as I’ve said, the platinum band related CapEx partly is already included as an assumption. So platinum band in securing the platinum band, still, there may be additional CapEx that’s needed. And that may be of your concern, and we are aware of that. But in our case, the existing base station could be maximized in use. So existing base station, the new antenna and radio is going to be attached. By doing so, it’s low cost, but still be able to roll out the service. So furthermore, has been talked about already, it’s based on software. So our network is a universal server and software are being utilized. So the software update is going to enable to lower the cost further. So that is something that’s viable. So updating with software and updating our software. One of the benefits is, of course, reducing the cost of wanting, but also in terms of minimizing the construction hours and time being spent is another benefit. Of course, we’re seeing a rise in terms of securing people and the wages are rising and the update by leveraging this capability, we will also be able to minimize the construction cost and time as well. And this is the summary slide. So first of all, in terms of revenue, the revenue, of course, is in terms of the number of subscriptions, a number of subscribers, which is B2B, B2C in total, we have JPY8 million to JPY100 million. And by multiplying this monthly ARPU figure is going to equal to the revenue. And on top of that, the other devices, MBMO, ISP service, other services going to be sitting on top. But basically, this of course, number of suppliers multiply by ARPU monthly use value is going to equal to the revenue. So, for this, again, sorry to reiterate, but new KDDI, the new roaming contract is going to be concluded. So, network quality, therefore is improving down the road. So, on top of that, 700 megahertz platinum band allocation is going to be certified. So, further the network would be further improved in coming years. So on top of that, after all, a large campaign, marketing will be conducted. So, we would like to seek a high awareness of the so-called SAIKYO Plan. And on top of that, as I have said already, in terms of easy and handy way of us getting to be surprised, and easy way to be activated, no cumbersomeness that also will improve in accelerating the higher subscription and subscribers. So, this is the revenue part. And against that, in order to make it black, the surplus, the network, and also in terms of the SG&A costs, how are you going to manage this is a very important area. As you can see, JPY23 billion to JPY25 billion per month is the world is what we can be able to achieve. This is feasible. So reducing the cost, at the same time, increasing the number of the subscription and ARPU, so we will be able to achieve breaking even point as quickly as possible. So that will be all for my part, thank you very much.

Okay, the next about the overseas business, Rakuten Symphony business performance to be presented by Sharad.

This is Sharad Sriwastawa. I know the last name is difficult, so Sharad. I have been part of RMIC since inception. I was deeply involved in all the acquisitions and the formation of Symphony. And of course, as RMIC, I have been the biggest customer for Symphony and very much familiar with all the product line. Now, with this new position in Symphony, I would hope to bring the end-to-end delivery and operations experience to play, which will actually benefit our end customer and indirectly will help us to increase the revenue. So, let me go over the Q2 achievements. We have closed quarter of strong progress in both product development and customer acquisition across all business segments. Some of our key highlights for the past quarter include, on the cloud side, strong traction in channel partner sales for both SIM cloud storage and SIM cloud platform products. Among others, we secured a deal with the digital media company in U.S., successfully deploying SIM cloud storage in many states there. In addition, we closed the global deal with a private 5G channel partner for which we will be providing the underlying cloud platform. On the RAN side, the major focus has been maturing the product to make it brownfield in [Technical Difficulty] to cater more than thousands of new requirements for brownfield operations. And in this quarter, most of it has been achieved. And in next quarter, we will be doing the trial with one of the Tier 1 operators. On the OSS/BSS BU side, we have successfully expanded our footprint of our site manager in U.S., and now we have more than 3,000 monthly active users, which we plan to increase to 6,000 in the coming quarter. On the Internet services, we have been finalizing our key B2B contracts with prominent B-sellers in both Japan and Korea for Rakuten Drive. And regarding Z-pass [ph], we have added a significant number of partners and customers to grow our ARR to 3.2 million in the past quarter. We can move to next slide, please. So, as I have said, main focus has been on the ORAN side. And while we are continuing to deliver major milestones with our anchor customers, we are working to get our ORAN software ready to concur the massive global brownfield opportunity. Our proven ORAN maturity in both 4G and 5G is based on more than 25 global successful global POCs and field trials. Alongside, large-scale commercial deployments, of course in Rakuten Mobile and 1&1 in Germany. Today, Rakuten Symphony is the leading provider of ORAN software to cater to the complex requirements of large brownfield environments. Our strategy to conquer the brownfield space is based on two phases. First, to reach future parity, which I said we are almost there, and the commercial deployment of ORAN with one Tier 1 operator. And then after that, we will scale it for ORAN global footprint by engaging for the brownfield opportunities. Next slide. Coming to our financial results, while our revenue has decreased Y-o-Y, our operating loss has significantly improved. In Q2, we could achieve $72 million, mainly driven by delivery with our existing global customers. Y-o-Y, this represents a decrease of 18.5%, mainly due to the seasonality and lumpy nature of large B2B revenues. We expect a significant revenue increase in the next two quarters along with delivery of major milestones with our anchor customers. Our key financial goal remains to achieve profitability. Next slide, please. Last week we were in Rakuten Optimism, we announced that we have signed a memorandum of understanding with VEON. We will start exploring cooperation in the Ukraine with the goal of accelerating the reconstruction of the country’s infrastructure through collaboration on open radio access network and digital services. So, with that said, we have in Q3, the main objective is to have on-field operate. Thank you.

Hello, everyone. Now I would like to talk about the Internet service. My name is Takeda. I would like to report on our service. So, this quarter, the sales and revenue – the revenue and profit we were able to grow. So, this is the number that we were able to attain. Especially in terms of the total GMS, it’s a two-digit 10% growth of JPY1.45 trillion again is what we were able to achieve. And looking into the content, in terms of revenue, plus 13.5%, and operating income is plus 12%. We were able to grow our business. And especially within that, the highlight is that you see the core Ichiba and travel, we have seen significant growth after COVID, the seasonal changes, and each of the merchant, their quite unique product offering has been reflected in a good promotion and the point scheme. And as you can see on the right, a larger core sales event. Some stimulus has been proven to be very successful. And as you can see, for years, 23.8% growth with a large discount sales event, we were able to achieve this goal. And that then to travel, as you may know, supporting the national promotion – travel promotion program, we have been able to grow with that against 2019 before COVID, it’s plus 36%. So, many travelers have enjoyed our service. Especially amongst that, in terms of the area of investment into logistics business with JP, we were working with Japan Post. And in terms of domestic EC growth, 17.3%. We have been able to grow the revenue. And at the same time, something that needs to be highlighted is the number of sort of merchant on the contract is plus 32.5%, and shipment volume is plus 62.9%. A large momentum had been created. So, logistics around the world, the changes that we see in transformation and our service improvement, especially the super sale, large discount sales, we had the next-day shipment, which we were able to realize. So, that is the reason why we have created this great wave. And also inventories are the stores that has inventory compared to those stores who do not have inventory, 9.1, they had been able to grow their business. And in the future, the last one mile also need to be improved in order to see for higher growth in the operating income. And the other factor is the overall domestic EC business, where are we against the other competitors. So, as you can see here, the other competitors are only growing by one digit. And at the same timing, we were able to grow 12.3%, a very robust growth having attained by us. And at the same time, in areas of fashion compared to ZOZO, the size is 2.5-fold, inclusive of merchant, Rakuten Fashion inclusive of that is 2.5-fold growth greater, and JPY1.1 trillion, we will soon be able to achieve. In other words, on this side still, we are growing by 9% year-on-year. And also alongside with that, the advertising business, utilizing data and the various brand and tie up with a lot of merchants, 12.7% growth we were able to achieve in 2023, it is going to achieve JPY200 billion. So, the major TV broadcasting company and compared to the media, it is on par in terms of the level of the scale that we were able to achieve. So, utilizing leveraging data, we would like to further grow this end of our business. And also on global, the other Internet services, as Mikitani explained, Rakuten – each of international brands, Rakuten TV, Kobo, Viber, and Viki, are also growing, as you can see, and we were able to acquire many memberships. That’s all for the Internet business.

Good afternoon everyone. And as for Fintech segment, Hosaka will be presenting and as you can see from the chart and each of the company performing pretty well. And the overall, as for the revenue, JPY481 million and plus 13.3% Y-o-Y and operating income, JPY33 billion, plus 31.2%, so very large number. And first of all, looking at the revenue side, and the last Q2 was JPY159.8 billion, but now in total this year was JPY181 billion and the Rakuten Card, first. So, their shopping GTV is very large, and the speed was 16.3% Y-o-Y growth. And the Rakuten Bank with the growth of the Rakuten Card, their profit increased and also with loan, and they are steadily increasing the profit and the Rakuten Securities and overall, the market was performing well. This is a big factor. As Mikitani-san mentioned, continuously stable the revenue making, we are trying to change the structure for that. And then the payment well, now we have increased the business, revenue business, and then we can expect more from Rakuten Payment business and operating profit. And the JPY25.2 billion last year and went up to JPY33 billion this year. And the Rakuten Card contribute profoundly to this. And Rakuten Bank, we listed Rakuten Bank, and also we are preparing for the listing for the Rakuten Securities, and these are making a quite high growth and then saving cost, controlling costs, and making a lot of profit. So, as for the membership growth and the Rakuten Card is getting closer to 30 million issuance. And with the steady growth from Rakuten Card, we want to leverage the ecosystem aggressively and Rakuten Bank account is getting closer to 50 million, which is 40.05 million. And the Rakuten Securities in our account is getting closer to 10 million, which is 9.24 million. So, it is increased by 14.8% Y-o-Y. Last but not least every time we explained about triple feed [ph] progress situation. And as repeated, you said, the 30 million target will be achieved in near future. And then shopping GTV aligned with that. And the most recent 1 year, getting closer to about JPY20 trillion, the target GDV share of the 30% target went to secure the current situation. We are performing steadily, and we are at 23.6% today. That’s all from me. Thank you very much.

I would like to talk about financial strategy, Hirose and myself will be describing. First of all, sorry to repeat, but our commitment. So, these are something that we would like to pursue, in other words, no additional gross debt. So, in terms of procurement with the reduced total debt amount, we are going to reduce them. And also interimly controlling the redemption in terms of leveraging the redemption level is something that we would like to achieve. And mid to long-term, we are going to have five-fold of the leverage of the fintech business. And number two, in this year, in December, the initial call is going to come in, in terms of the total JPY68 billion redemption, we still have to make sure that this is going to be made as we have promised. And in securing cash, good, of course, bank institution, we would like to enhance the relationship so that we will be able to support us and securing liquidity on this. And this is Rakuten Mobile funding. Well, in the flow of how we are going to procure cash. So, first of all, the Rakuten Group, within the group, the free cash flow is going to be increased. Internet service, the free cash is going to be increased. At the same time, each of the procurement of the debt is going to be done. And also fintech is already independent in procuring this debt. But dividend and management of core fees, we have JPY70 billion in terms of revenue that has been derived out. So, this is also is going to be the cash that is going to be pulled within that. So again, the overall group, the cash management, this is included. So therefore, we are going to exchange cap and also we are going to look into the dividend and also the management of that altogether. And Rakuten Mobile has their own, of course, a way of lease financing, ECA financing, and also securitization of liquidation. So, within the group, we would like to make sure that the Rakuten Mobile characteristics, we would like to make sure that we have a firm grasp of the management of the cash. So, in terms of the history graph you see, Rakuten Mobile in terms of the funding, the overall is going down and the CapEx also will be contained and improvement of the business, and we will be able to reduce this amount extensively. On the other hand, Rakuten as I have said, internal cash flow funding in terms of inclusive of those non-performing, we are not going to depend on outside funding, but we are going to be self-sufficient in our funding. So, in terms of the maturity of the corporate bond, equity-related financing, we will be able to reduce the debt, at the same time, partly the maturity laddering is going to be utilized in the standardization of this. So, it’s been very brief, but this was my description of the financial strategies going forward.

Good afternoon, everyone. Similar to Sharad, my last name is also difficult to pronounce. My last name is CAI and it stands for conversation AI. Today, I am very excited to share with you our AI strategy as we talk about at the optimism conference, OpenAI and Rakuten will collaborate to develop state-of-the-art AI services. And OpenAI will provide priority, access and support of their latest AI technology and Rakuten Group will also provide Rakuten AI services into ChatGPT by leveraging OpenAI plugging architecture. In addition, we will jointly develop mutually beneficial economic opportunities and pushing the frontier of AI technology. Together, we hope to bring more value to our customers, merchants and business partners. So, here is our strategy is to leverage our unique data and latest AI technology is our existing channel. Data and technology is not enough, channel makes us easily reach our customers. And on data, we have an opportunity to combine the own knowledge of OpenAI with customer contacts of Rakuten as well as enterprise knowledge of Rakuten. The enterprise knowledge is come from tens of thousands of professionals in multiple industry. Diseases are not average human reviewers, that typically AI company employs, these are professionals, insurance agent, e-commerce consultant, travel agent with deep knowledge in multiple domains, combined with our operational excellence, we can continue to grow our data asset and enhance the AI model. And generative AI has been a magic tool. We have seen generative AI can produce songs and create poem and generate essays. It is a magical tool, but we can do more than that. We can augment generative AI with our existing tools from search, from merchant, so it has real-time information, real-time pricing, real-time inventory. So, customer is easier to make purchase decisions. At Rakuten, we have been developing the deep learning technology so that our search, our recommendation is much more relevant. Deepened learning technology is a proven technology that search engine has been deployed for years. But what’s unique about Rakuten is it’s transaction data. Transaction data is high quality, much higher quality than click data, typically you can find on the web. With high-quality transaction data, we can train the model to develop much high-quality search result, but also in a much more efficient way. And also by leveraging the existing channel of Rakuten, we can make the technology accessible to millions of customers and tens of thousands of business partners in Japan and around the world. We have issued 3.6 trillion points. We have over 6 million locations with Rakuten Pay. That rich online/offline makes the technology easily accessible to our customers, merchants, and business partners. With all of the data and technology, we can build a flywheel so that every interaction with our customer is AI first, professionally reviewed and customer validated. And security and privacy is at the core of our operation. It’s not only necessary to comply with regulation and government requirement, but it’s also an opportunity to earn customer trust every day. For businesses, security and privacies also opened up a new opportunity for us to offer secure and private services to our business partners. We are putting our strategy into rapid action. In the last few months, we have been prototyping with our consumer applications, business applications and also figure out a way to optimize our corporate functions. And let me show you some examples. Rakuten Viber has ChatGPT integrated into the conversation experience. So, you can easily access ChatGPT from Rakuten Viber. We have launched English version in February and then Japanese version in May. And today, millions of messages have been exchanged with AI. And recently, we also launched consumer services through Rakuten Security, so people can ask investment questions, get educated about investment knowledge so everybody can participate in the investment opportunity. And as we also mentioned at the Rakuten Optimism Conference, we are leveraging the AI technology to help insurance agents to easily discover knowledge, help them drive content, communicating with their customers, so they cannot only sell insurance, but also sell Rakuten Mobile as well and also help them to have more free time to interact with our customers, have more face and face time. So, in the next few months, we are focusing on Rakuten AI technology for businesses. And then in the third wave, we will bring AI technology to our consumers. Rakuten offers a lot of unique advantage to take advantage of AI technology, not only the unique data we have talked about, existing channels and our culture of innovation, and all of that have attracted open AI to be our partner on technology. Our ability to execute our engineering capability to prototype has proven to be a great asset for us to build partnership with world leader in technology. So, as we have seen that human is super with emotion, empathy, and creativity, and AI is super good that synthesis large amount of information and create draft and automate tasks. By combining both, we have unlimited potential to create new value for our customer, merchant, and society. Thank you.

That concludes the presentation for the account earning call. Thank you very much all of you.

Thank you for joining our live question-and-answer session on Rakuten Group’s 2023 second quarter financial results. We have the entire management team here ready to answer your questions. Today’s presenters are these eight members on the screen. Now it is a Q&A session from the media. This Q&A session will be simultaneously translated into English and Japanese. [Operator Instructions] Yomiuri Newspaper, [indiscernible]. Please ask your question.

I have two questions. First of all, cashless business, reorganization of the cashless business related thing. So, Rakuten Card, so the strategic partnership with the third-party and the own financing is something you were going to pursue that was in your announcement. And the Rakuten Card for example, listing of the Rakuten Card or capital alliance with third-party, for the finance for the entire group, are you looking for this opportunity as well? And this is the first question. And the second question is about the profitability improvement from Mobile segment. So, as you explained in your presentation, cost control is working and ARPU has improved. So, as for the profitability improvement, what factors are contributing largely to this profitability improvement? These are the two questions.

And as for our card business, and the JPY30 million issuance was made, issuance is also reachable. And then for the first meaning to the payment, diversification of payment is something in our mind. In our case, not just Rakuten Card, we have Rakuten Point and Rakuten Pay and [indiscernible] and Rakuten Cash. We have various things. And then online side, so that it’s covered by e-commerce business. And then offline, mainly using QR code for the Rakuten Pay, and it will be integrated. And that is how we view. And then as for the capital, we do not have any plan. But given some condition in the future and we would like to take an action flexibility, because the business has been – has grown largely, so we can have a lot of opportunity to think of. And Rakuten Mobile side, could you show the previous screen with an airplane on the slide. So, this is how we think, because – so just repeating what I have explained in the presentation, for example, the company, the nation, state, the company become privatized, unlike their past, we are a startup company that with a position difference. So, we need to set up our own network. Therefore, the Phase 1, to be honest, it was a little bit aggressive approach that we took to establish a lot of network in Phase 1. And then this network, almost 98% or 99%, we were able to open the network on our own. And then now in the cost optimization phase, we are now at, so including the human capital, maybe we have the less than one-tens of the competitors, and we are promoting the automation in operation. And as for the logistics, its operation is quite efficient. And on the other hand, network quality improvement, so new roaming agreement was concluded and this is a big factor. And this is a big topic, I believe and the roaming costs reduced drastically and it will be going down further. And another point is marketing side. So, to be more efficient, we should become more efficient, and we have been trying to become efficient. And furthermore referral campaign among the users, and then corporate business we started. And the biggest one among these factors, the first one is the biggest one. Cost optimization, including automation, including AI, we have been progressing this and this contributed profoundly. And network would be improved in for this year. And with that we will be able to acquire more customers and we can accelerate the speed of customer acquisition. That’s all. Thank you very much.

Thank you very much. So, from Bloomberg, Hugo-san [ph]. I would like to have you ask question, please.

Can you hear me?

Yes, I do. We can hear you now. Thank you.

Thank you. My name is Huga from Bloomberg. Thank you very much for your presentation today. In terms of corporate bond, I would like to ask a question about the introduction of corporate bonds. In 2024 and ‘25, it is going to exceed JPY800 billion in terms of redemption. And in terms of the methods and means to redempt that amount, you have expressed in various means. But once again, would you be kind enough of how the redemption, how that will be undertaken and do you have sufficient sort of a cash on hand? And what is your confidence level? I would like to ask this question. Thank you.

Thank you very much. My name is Hiroshi, I am in-charge. So, I would like to describe. So, first of all, as you can see here, for us, we have sufficient, of course, we will be sufficiently able to respond to this requirement of redemption after this year. What we are planning, Rakuten Security holding IPO. And also we have the monetization of investment asset and others inclusive, overall. We have been considering, but we will be able to procure enough, of course, cash in order to reduce the funding that is required to fulfill the redemption. And also the mobile business itself, there is an improvement in terms of profit and loss. Free cash flow is going to increase. And on top of that, so funding, we will be able to self fund our self. So, after 2025, we will be able generate free cash. And then that also will contribute to the reduction of the impact. On the other hand, the certain level of refinance is something that we will need to consider. And these of course revamping the financial status. We would like to have a smooth refinancing. So, that is our thought. That will be all. Thank you very much. Well, if I may, 2023, we have seen improvement in terms of the operating income and the fourth quarter, it is going to further improve. That’s the plan of course, and in terms of overall ROI is increasing, at the same time Rakuten’s, the parts is now quite undervalued as of now, so therefore, the mobile before starting the mobile business, the merit discount was there. So therefore, in terms of trading house, one discount is one, but now, compliment premium. They have changed the status. So, that is the trend that we see now. So, Rakuten Group overall in terms of increasing the profitability rate and revenue rate is going to go up. But with that, the so called in terms of the stock market, not stock market, debt market. And also the credibility within the financial market has also increased, that’s all. Thank you.

Just to confirm, so refinancing, when you talk about refinancing, you are going to use that corporate bond and equity and you are going to also borrow. And so at that time, the Rakuten Group is going to undertake that effort. Is that your understanding?

I will not be able to respond to that question. I am sorry. Thank you.

Okay. Thank you very much for that. Thank you.

Okay. We will move on to the next from Ishikawa [indiscernible]. Please start your question. Ishikawa is speaking.

So, the partnership with AI, this is a big surprise, OpenAI, this is a big surprise. And you had – I think you are close with the OpenAI CEO. And what is the reason why you were able to get this partnership?

Well, I am not really close to him, just a friend. We do not sing karaoke together. He is from the Y-Combinator. And he is a partner of Y-Combinator. And Y Combinator – Paul Graham, founder of Y-Combinator. From the 27 years ago, has been talking to him for a long time. And the biggest reason or background here is not just the friendship. So, the Rakuten Group, having a diversified business like this, and having a rich data set and has a great potential maybe we are one and only company in the global market. Looking at the Rakuten Paid, Rakuten Card data, and of course it should be permission based. And we started mobile business, one of the reason is to make maximum use of the data and leveraging and that those data. So, the value of the data probably we are one of the top among the global players. And the second is, so this is not just for the service improvement among the Rakuten Group, but the Rakuten group, we have a business with 900,000 companies are the partners. And to this, our partners, our business partners AI as a service can be provided. For example, Rakuten, each of our merchant and 70,000 is easy to reachable. And then 20% operation efficiency can be made with this AI leverage. And then Rakuten Mobile, maybe in the world, in a practical use wireless Edge Computing net available or programmable network is provided. So, our network structure, the architecture is totally different from others. And we can put AI on our Edge cloud. So, that is possible, given these things. So, just to repeat, there are three reasons. First of all, richness of the data. And the second reason is our client base network. And the third one is Rakuten Mobile, Edge Computing power. These are the three reasons why we were able to make this partnership. And another point is among the Japanese companies, we are a really global company. And the things I am presenting today. And we have our world class AI engineers working at Rakuten. And so we have a common language to communicate. I think this is another big reason. That’s all. Thank you very much.

Thank you very much. And one more question. And from August and one click or simplify the application with yours – no, not August and a little bit further ahead. So, the other the carriers and so given the crime prevention eKYC is needed and they are consulting to the MRC, is there any objection from your side excluding this eKYC?

Because we have the eKYC at the finance business, it is really strict when we check the identity of the consumer defined as much stricter than the Rakuten Mobile shop. So, including this factor, so the finance taking a very strict approach, giving the money laundering [ph] things, and another, that is one thing. And the broader perspective, so when we look at the global market, the U.S. and European market, the credit card based cost payment is okay for know your identity, and then the 70 million inbound people would be coming to Japan that we are trying to invite them. And wireless and WiFi, so not a big factor. So, the Ac can be changed from Japan market. So, the mobile phone based eKYC to be strictly done. So, is it really effective, taking that approach is effective, I think it is same as a fraud. So, as Rakuten Group, this checking the identity to be done in different format that is more important. For example, as you may know, on the Instagram, and my picture comes and a lot of fraud are taking place by utilizing my picture and that kind of a fraud is emerging. That the joining the Rakuten Mobile and the mobile card monthly fee went down to JPY2,000. And then now we have a more competition because of that. And it is contributing JPY4 trillion. If we – this competition is more severe, and then you can spend more money like JPY8 trillion or JPY10 trillion. And with this money including a digital crime as Japan as a nation, how to prevent that crime should be considered. Not the primitive, the approach to check the identities, there should be limit and this is a macro perspective. Thank you very much.

Thank you.

So, there are time limitations. So, for the media, we would like to welcome and entertain two more questions from the media. So please kindly raise your hand. So, NewSpace Anthony-san, please.

My name is Anthony from NewSpace. Thank you very much. Thank you. So, I have two questions that I would like to ask. The first question is Platinum Band announced by MIC in June? I think this is a scheme that is favorable to Rakuten looking at each of the requirement. And Mr. Tarik [ph], CEO leaving the company. Of course Tarik-san who is going to be a new CTO, there is no change in technical capability. But they are a very iconic person. And also I think we mentioned, but externally it really is a face is very well known around the world trying to leaving the company may have an impact to your business. So, what is your take on this?

So, Platinum Band, yes, can you respond to the question about the Platinum Band. This is [indiscernible]. I would like to respond to the question. The mix had some description. And for us we are not in a position to comment on what ministry had submitted and provision. So, yes and also regarding Tareq, yes, first of all, I must say it very personal reason why he had left. So for us, we have to accept and we respect his personal, of course, belief, but person creating zeros plus the one and person who would multiply 1 to 100, the capabilities are different, I believe. So with that being said, in a way more operational sort of strength, Tareq is going to take over after Tareq is practically, it is a more positive situation for us. And that’s all. Thank you.

Thank you very much.

Thank you.

So [indiscernible] please ask your question.

So in the previous question, I think this some part is covered in particularly looking at the YouTube. So the Rakuten management is at crisis. So no matter how you deny this kind of the topic comes up and the fact we see today, including the Tareq, the thing, and also the bank IPO in a different way, you were just at the sending a part of some of your businesses and also the CapEx. You are going to reduce the amount of the CapEx and then it might be difficult to you to connect things. So people – some people say that and the coverage might be increased by roaming and then MVNO should be sufficient. So, any one can say anything or the complaint anything soon?

It’s Mikitani-san. Management crisis, so looking at the field or base, and we don’t believe that it’s not like that, yes, it is understandable, but from the capital finance fund perspective, the funds shortage. When you make a big mistake, will it be possible that your fund would not become sufficient? I want you to say I want you to totally deny these speculations.

So why people repeatedly say this, Rakuten is at risk? How do you think about these comments?

So I don’t watch the news over the internet. So I don’t understand. And I am fully confident about the business management. Well, having said that, so Rakuten Mobile, they are making a huge network in 3 years, this is unprecedented level of the businesses and then we challenged that this business the reason why we are challenged to this big thing is to increase profit at the same time, this is to we have a social mission, because there is a requirement from the society unlimited use by the full members of the family, you can save more than 200,000 again, this is a social meaningful project. There is no other project like this. And we as a group, we serve as a team and we are fully committed, we are determined to serve this because of the social mission. So the Rakuten in a context it’s naïve and we are determined to make this happen. And from the finance perspective, as mentioned before, well, recently our group and the business would become profitable in the near future and with that the actual cash flow would turn into positive and it’s evident that is the first thing and the sum of the first before starting a mobile business and we have been discounted. So, after Rakuten Mobile is actually undervalued, but we actually had the discount before that, so the equity market maybe miscommunication with the equity market, we are having a different way of thinking and also analysts and investors. So we have a quite diversified internet based ecosystem, it is really difficult for them to digest to understand. So the information disclosure and we have become actively disclosing information that is our attitude. So, as I mentioned before, the reason why we did it is Rakuten Bank, Rakuten Securities and Rakuten Card payment business. Maybe this is inappropriate way of things. So, if we are serious, we can monetize at any time and we are sending that message to the market to some extent. Therefore, cash flow only, the Rakuten Mobile profitability recovers and the Rakuten Group’s profitability structure improvement started at a rapid pace and including this, so the repayment with self cash flow to be expanded. And this is a good opportunity. Therefore, from strategic point of view, non-critical part valuation – based on the valuation maybe the monetization is one of the possibility given the capitalism unfortunately. So the churned users, we want them to support the challenges and we will make the better communication to those people. Thank you very much.

Thank you very much.

Thank you very much. This concludes the media Q&A session for the financial results meeting. Thank you to everyone for joining. Thank you very much for joining us despite your very busy schedule for FY 2023 second quarter financial results announcement meeting, I’d like to thank you for your attendance. So for me, I also would like to invite the analysts and institutional investors to ask their questions. So these are the members who are present here today. And following me today with a Q&A, I would like to describe the proceedings. The Q&A is going to be conducted by simultaneous translation for English and Japanese. So, please select your preferred language from your Zoom screen. At the same time, please do not mute the original voice. Please do not mute them. During the transformation, the voice of the speaker will be small and the interpretation will be larger. So at the same time, if as you require, please download them from the IR page for those slides that you will be sharing. So please do confirm, raise hand and to ask you a question. And for smartphone please tap more and then raise your hand. So if your names are being called, please make sure that you are un-muted and ask your question. So now without further ado, we would like to invite questions from the analysts and from the institutional investors. So please, CLSA, Oliver, please make sure you unmute yourself and ask your question.

Oliver Matthew from CLSA. I have two questions. First question for credit card and pay business I think you are combining them. Is this a new strategy? And also just in the kind of larger payment area, it looks like it’s now a two horse race with Rakuten and PayPay. Could you compare maybe the strength and weaknesses of those two groups? And second question, [indiscernible] recently announced their plan to increase their e-commerce ratio from 10% now to 30% in 2025, which sounds very good for you. Could you tell us how you see kind of cosmetics e-commerce market now? And with that kind of shift, are there any other verticals where you think the big companies might finally start taking e-commerce more seriously that they have been dragging their feet for many years? Thank you

This is Osaka speaking. Regarding credit card and also payment, the payment of course is now enlarged in scale, and of course, around the world in terms of payment and settlement, comprehensively inclusive of QR code in Japan is an expansion of various means of payment. So comprehensively, the payment as a market is quite large, at the same time for Rakuten that service is now diverse. So with that being said, as one of the business, of course, entity running this as a business entity, of course, I think is something on the decision that is quite ripe enough for us to make. So, several companies, assets, various risk management, everything could be done. So, therefore, I think it’s a rational way in order to reorganize ourselves in integrating under Rakuten Card. So, for us, we believe that we will be able to further expand this opportunity.

Simply speaking, we are being profitable and they are probably not. And the second question, we are by far bigger. And then we have – as for Rakuten Pay terminals and where you can use this as a matter of fact, it’s [indiscernible] surpassing them as a matter of fact. And if you use Rakuten Pay app now it’s not just about QR payment, we are going to integrate everything into one app. Now we have Rakuten Point, Rakuten Card, Rakuten AD and then in the future – now I know SICA is in not only for Android, but also for iPhone. So this is going to be super payment app. So it is natural that we are going to integrate all payment related business into one. You see – this is robust growth we are going to reach soon ¥30 trillion. So it’s gigantic.

Yes. And then about the e-commerce?

Yes, regarding [indiscernible], in the alliance or 10% [indiscernible] the ambitious goal. This is a following for us. So we are happy about their announcement. Regarding cosmetics, this summer demand in these recent 3 years, people have not been able to go outside their home that there had to be quarantine. So, now hot summer and the sales are picking up quite robustly. The details, I would like to have Matsuura respond to this question and describe the cosmetic market.

Thank you very much for the question. In the cosmetic market in e-commerce that is one of the big category of course, but in the past this domestic market is more or less the price range is rather affordable. So in top line – drugstore market to mid-tier market was a majority of the product. But now on top of that department store market has grown quite extensively. So here Rakuten market, this is the situation. Rakuten is therefore – Rakuten was very strong in this area. So drugstore market very strong, as well. But recent few years, we have seen your growth in department store category in the cosmetic vertical. So major foreign luxury designers have right on channel, luxury beauty, we promote them. So that is one of the major growth sales driver. That’s all. Thank you.

Big brands wanted to increase their share of Rakuten marketplace from 10% to more than 30%. They have very strong intent. I think they want to repeat what they have done in China, in Japan, of course. And the category wise most of the categories like, e-commerce of all categories, we have about 20% market share for entire market. Yes, and it’s gigantic. One of the challenge was that we couldn’t recapture top brand, but because of our strategy for Rakuten fashion, the brand in a presence, especially for high-end fashion is stronger than our competitors as a matter of fact. So these are – these are – we have almost all very top end cosmetic brands. And they – we are communicating with it. They are super excited about this probably. Obviously, it’s a gross market and probably their businesses are more profitable selling online. And so, all the categories are growing right now, including like food. One of the things that we are really helping regional economy by hometown tax, where we have like almost close to 40% market share, more than 40%, 37% market share hometown tax, the business is growing fast. And so, we are very confident, some categories are sluggish this year, because during COVID, it was very strong growth such as, for example, like a PC or some electronics is very, very strong during the COVID era. But now, because of that, people said go out and we had so much growth in the last 3 years. Those categories are a little bit sluggish, but other categories are growing very, very nicely.

Great. Thank you very much.

Thank you very much. And move on to the next from UBS, [indiscernible]. Please unmute yourself and start your question.

Thank you very much for giving me an opportunity to question. I have two questions regarding T-Mobile and the first of all CapEx ¥300 billion reduction slide. So your original 3-year plan was ¥570 billion. And then are you going to make this ¥270 billion in ‘24/25 and the budget it would become the ¥70 billion, this is a math. Am I understanding correctly? I just want to confirm my math is correct or not. And this is our first question. And the second one is about the operating expenditure reduction and then you have achieved this – you have frontloaded this and I think it’s a good progress. So, you will be facing a seasonal peak and then you have some the buffer so, you can have a heavy promotion and then about the promotion cost there might be ups and downs should we assume that about the fluctuation of the promotion fee. That is a second question.

And as for the reduction range and iterating the goal this is very aggressive this year ¥200 billion in the next year, we can make it a half for here. So, we may not be able to reach ¥300 billion that might be possible. However through the internal adjustment we want to achieve further reduction that is how we are working so far and the next year and originally it was 150 and 120. So less than half and we will be able to achieve this level and this year, maybe we can do more. So, maybe we will be able to reduce more than that. And next is – so EBITDA basis, we want to make our business back into profitability at the earlier stage that is the first thing. And another point is while we were doing the marketing at the high level, but we would like to focus more on regional base. For example, Tokyo market share, we have a 6% to 7% but when we go to rural area, we are not as strong as in Tokyo. Therefore, regional-based marketing needs to be conducted that is the first thing. And the second one is we need to strengthen the corporate business. Second point is corporate business enhancement. There is we don’t need to spend a huge promotion cost for here, but the network quality improvement first phase in coming 1 to 2 months, we think we will complete that and given the situation when we reach there and then we will consider should we accelerate about the promotion thing, but we will not make a big acceleration.

Thank you very much. Understandable.

Thank you very much. So JPMorgan, Fujimoto-san please, please unmute yourself and ask your question.

Thank you very much for the opportunity. My – from credit research at JPMorgan. My name is Fujimoto. I have two questions. The first question is internal rating. In June, JCR, there was a derailing. And in terms of the holder of the corporate bond, it’s a significant impact. And it was quite large. And of course, the outlook at the moment is negative. But in the future, the derailing – in managing derailing, we need to have no debt and asset. So what are the requirements? So in terms of spending more time in maintenance in the mobile visitor circle, do you think you’d be able to sustain the railing was JCR? How are you going to communicate internal rating? So I would like to hear your attitude on that. The second question is that in terms of the funding and the second quarter, are going to pay more or pay back the debt rather than receiving funding, but in cash, it seems as though you have enough cash on hand. So from the bank, getting, if you’re going to expect a stable supply from the bank, inside domestic market, the local loans, a payment or LOCP, you may be able to buy back the corporate bond. Economically, that’s far more viable. But what is your thought on this? In terms of the minimum amount, you have a loan, but this is without the collateral? I like to ask this question.

So, this is Hiroshi. I would like to respond to your question. So internal rating first of all, in terms of the judgment other rating agency, I have no, of course room for us to comment. But for us, we have a financial institution. So we would like to therefor improve and sustain the rating. And that is a number one mission aware of the importance of the rating. On top of that, as you have said, for us, in terms of the non-tied loan, by receiving that we are going to seek soundness of the balance of finance. And this is something that we have been already talked about, and there’s no change to that. So in terms of Rakuten Security Holdings, this thing is what we are planning towards, and not give them capital, and monetization of that. And also, as mentioned from our [indiscernible], the ecosystem. The remote company divesting the remote company, we’re going to do that, on the other hand, in terms of the rating perspective, the internal financing balance, and also the overall improvement of profit and loss. As a group, we like to work towards the improvement of the operating income and Ichiba mobile, we’d like to make sure that we will be able to improve the quality so that we will be able to thrive for a higher our revenue and operating income. By stating this clearly the internal rating in the credit market, we believe we were able to improve our position, and that’s what we are working for as of now. And the second question, which had been asked is that – this time the so called in terms of the capital that we have received for a public offering, we have reduced the balance, but of course, in the future, the maturity ladder must need to be leveraged. And therefore, we need to overcome the wall of that and barrier of that, so we need to control them dynamically. So, in terms of the, of course, the issue that you have submitted, we’d like to consider that positively. Thank you. Well, the last point in terms of long-term loan or a small amount of money, this is with collateral or without the collateral Rakuten Group headquarters, the long-term – is not a long-term boring for us while Rakuten Group, so non-financial so mobile ECA finance, so basically non-collateral, but in any case for us. We are going to make sure that we are going to rebuild the gross stat in reducing the global debt. Thank you very much.

Thank you.

So we have a limited time. So the investors and analysts question. Next question will be the last question. [indiscernible]-san. Please unmute yourself and start asking your question.

[indiscernible] is speaking. And I have two question, both of them are related to mobile business. MNO net increase momentum is becoming stronger. And that’s how I view if possible. And the percentage of the corporate and the consumer, what is the percentage between the two and what about the contribution coming from the corporate businesses? And then as Mikitani-san mentioned, that the corporate related Apple were able to gain on power with the consumers. So what were the gap between the two? So sorry for the data question if you can give me a hint, and the second one is about. So the churn and the rate is improving down to 2.4% this time, and then the chance to Asia, given the cancellations to Asian and gross increase, maybe gross increase is very strong, given the churn rate, but the overall promotional strategy, how are you going to do in the future? Could you give some guidance on that?

So the breakdown, because we just started the corporate business. So how to disclose information is something we need to consider towards the future. So including all the feeds, and add for Apple, there is about the only 10% gap between the two. But as we move forward, for example, second same appears, and then the gap would be decreasing. But today, there is a gap of 10% between the two B2B and B2C. And as per the corporate agreement, in the future, our eco – including our ecosystem client, they are quite cooperative. So towards the end of this year, 1 million and we will be able to secure the Apple with the 1 million subscribers toward the end of this calendar year. And for the percentage, we did not disclose the ratio, but for the individual subscribers and looking back the last 2 years percentage several few percentage increase that the reason why is 5 gigabyte – the limit of 5 gigabyte lifted off and then network quality has been improving and the data heavy user and they said the price is quite cheap and word of mouth impact. So the referral program, we have a referral program, which is a really strong campaign and this is contributing a lot. And another – next big milestone would be for full sim one-click application, this would become possible. So the – if a person has an account at bank or securities and that will become another booster to increase the subscribers. And another point is network optimization. The KDDI network by moving the location so that we can improve the coverage with this the network optimization that will come the first phase would be complete by for this year. With that next generation will get better. That’s how our view that’s all. Thank you very much.

Thank you very much. So, I have another point from different angle, you can ask decent question. So, this time be under the Rakuten Card you will move the Rakuten Payment under the card. So the mobile payment you will be aggressively approaching with this reorganization and your competitor looking at the subscriber number they are growing their businesses and this restructuring purpose this time and what will be the to be state with this new reorganization? Or the QR code based payment only has a limit?

So, even with a credit card, well the situation will be changing closer to United States like the touchless payment and also point based payment. And in our case, the [indiscernible] is a part of Rakuten Pay now. So that will be used for the payment method. So the we have to think the payment in a comprehensive manner. S Rakuten Bank and Rakuten payment 4.7% stake ownership. And the Rakuten Bank account and Rakuten payment could be used in a seamless manner. So get to be prepared for the cashless society in the future. And the given the size comparing to the competitors. I think we are double what most. And actual number of users, we are on the same level as our competitor, we catch up there. And then we still have independent application. But our plan is to integrate all of those different things. And then the we will do some advertisement activities as a three point entry place, and then the payment business will be integrated into a single thing. So maybe easier to understand even from the investor’s point of view. So one big difference is our side Rakuten Payment. So first of all catching up the under competitor. And then we made a lot of operational investment. And comparing to the competitors. Our investment amount was really small. Because we have a eco’s – the Rakuten ecosystem as a basis, and we have Rakuten Card, and we have a Rakuten Point. So we don’t have to make huge and the campaign, we have a ecosystem already there. And then our approach is more open and open network. So we don’t lock customers into our Rakuten Card. We should have an open approach.

Thank you very much. So now, we would like to finish the question from investors and analysts to the Mikitani-san.

Thank you very much. At the beginning of the presentation, as I’ve mentioned, for us, the [indiscernible] Rakuten Mobile project, we have a social purpose and intent to pursue, and we have ambitiously made this challenge. And of course, as a group, to our group, business wise, is a very large synergy effect that could be maximized group a role we are growing, but one of the reason for that is that the 5 million people they love Rakuten mobile subscribers are really helping the growth. And only few percentage of coverage now we have 99.9%, unlimited utilization and wide coverage and automation. At the same time. Starting from one-click the new utilization of AI. So in the future, Rakuten Group is continuing to grow. And on the other hand, [indiscernible], this is the further – how to call this, we need to have more stamina further most stamina for the Rakuten management, not only mobile, but all the business arm, we need to seek higher efficiency of an operation. Well, in other words, growing the revenue, we would not slow down. But we’re going to see for a higher efficiency of operation and already that initiative underway in a company. So 20% improvement and marketing operation efficiency by 20% increase, we need to accelerate that as quickly as possible. So in terms of the cash flow and [indiscernible] ability to earn the headquarters, we believe that we are going to seek a search in the improvement. So I hope you will be having high expectation on us. So that’ll be all. Thank you very much for joining us today.

Thank you very much. That concludes Rakuten Group 2023 second quarter financial results announcement meeting. Thank you very much for joining us today.