[Call Starts Abruptly] We have disclosed the latest consolidated financial reports at 3:00 PM today. You can review this data on our corporate website page for Investors along with the presentation documents used in this meeting. Mr. Mikitani will give a presentation.

Good afternoon, everyone. Mikitani from Rakuten Group is speaking. I think the microphone's audio echo is too high. So could you lower the volume? And then let me talk about the FY 2023 third quarter consolidated financial results. Let me start my presentation. And first of all, so the current status from the big point of view, and as Rakuten Group, we excluding overseas businesses, we have Internet business and FinTech business. And now what we've been working on the mobile business, these are segments under our businesses. And looking at the overall thing, the Internet business and the FinTech business both of them are keeping good momentum. And as for the mobile business, the number of subscribers started to pick up and then cost has been reducing largely. And then companywide, we have revisited the cost structure without damaging the top line we try to reduce our cost. As a result of these efforts, first of all, so December, 2023, non-GAAP operating income, finally, monthly profitability will be achieved. Now we see signs for that. And secondly, consolidated EBITDA we can increase more profitability and another point is non-FinTech business EBITDA. And then we set to achieve profitability in Q4. So, we have been working this on 10 years and we are increasing our top line and also strengthen our profitable this characteristic. And I think it's working well. And let me get into detail. So first, starting with the Q3 consolidated performance. More details will be explained later, but for the sales and the revenue year-on-year, it is up by 10.1%. We have Ichiba, Travel as well as the overseas business, and Rakuten Payment, Rakuten Bank, all these sectors are growing very subtly. Regarding the FinTech segment, the revenue has gone up by 13% plus. In regards to Mobile segment, we have been able to make a ¥36.4billion improvement. So, we're trying to make our initiatives more robust. We are able to grow our subscriber base very strongly in terms of consolidated revenue this is what you can see here. Compared to previous year, the same quarter, it is up by 10.1%. So as you can see in the last 26 years, we have continuously marked an improvement in terms of the revenue growth and we are expected to see this speed of growth. It is the growth pace is increasing rapidly, as you can see, and we want to keep accelerating this trend. What other businesses are mainly focusing on are basically the bottom-line. What we are doing at Rakuten is that we are looking at the growth, and we are also going to be aiming for a better operating income profit. And then in December, we are going to be aiming for profitability in December 2023 for consolidated non-GAAP OI. In the first three quarters due to various factors, the many improvements have taken place, but for the fourth quarter that improvement is expected to be bigger. As mentioned earlier, the Internet Service segment, which is our core business has seen revenue growth of 13.9%. This is year-on-year. And non-GAAP OI has also grown by 16.2% year-on-year. So, you can see how robust this growth has been. Now looking at the each geo within Japan and also outside of Japan. These are the key topics. The domestic EC is at plus 15.7%. The last year it was not so bad, but we still saw another growth spurt this year year-on-year. The growth has been even stronger in travel. And I think that has been the main focus, but we have advertising sales that has gone up by 15.3%. With the overseas business, we have Rakuten TV users at 84.4 million people, plus 42.1% year-on-year. We have Rakuten Kobo plus 6.6%, Rakuten Viber plus 5.7% at ¥1.5 billion. And also Rakuten VIKI, This has already turned profitable. It's close to 88 million registered users. Rakuten Rewards business in U.S. is going very strongly and also the content business as such also steadily becoming our sources of profit. Moving on to the FinTech for Rakuten Card, Securities, and Payments, these are strongly contributing to our profit. Rakuten Bank will be explained more in detail later. Looking at the, non-GAAP OI, the profit has grown much stronger compared to last year. For the revenue is at ¥184.6 billion. The revenue is at plus 13.6%. So year-on-year, non-GAAP OI growth has been 35.8%. Now looking at each key KPIs for the FinTech segment. The cards issuance are growing. Our initial target has been 30 million cards, and we are very close to achieving this goal. We think that this might be achievable within this quarter. And also, Rakuten Card shopping GTV is at an astonishing ¥5.3 trillion, which is going to easily excel ¥20 trillion if you convert that to an annual GTV. In Rakuten Securities general accounts, we are going to be talking about, interest rate. This is this business has also grown very steadily at plus 15.8% at 9.68 million users. And Rakuten Securities deposited assets, not just trading, but we also want to look at the other assets. This is another pillar of profit for us and this has reached ¥23.2 trillion year-on-year 34.1%, a very healthy growth. This is Rakuten Bank. This is separate listed a company with the announcements made. So I will quickly go over this. The ordinary profit growth in the first half is at roughly ¥66 billion year-on-year plus 12.8% and the ordinary profit was at ¥22.5 billion and this is in mid-term, not quarterly. So in six months, but still, the numbers are very strong. So year-on-year, it is an improvement by 25.4% and ROE very important for, banking institutions. ROE is at 13.7%. Number of bank accounts has ¥13.3 million. And of that people using these Rakuten Bank accounts as main account is at 31.4%, which is another improvement. Total deposit balance is close to 10 trillion. And G&A expense ratio is 43.5%. Capital adequacy ratio is 11.3%. It's a very healthy and very profitable business we have been able to carry on. Another thing that are drawing attention in the market is our payment business, Rakuten Pay. And on the Japanese Customer Satisfaction Index survey, any customer expectation, the perceived quality and the customer satisfaction, intention to recommend, loyalty plus value, we have been ranked. As number one, there might be some ups and downs. But as of October 25th, so as for the free application downloaded in ranking, Rakuten Pay has become one, so this is in good shape. And then recap. The Rakuten FinTech, it's not just supporting the members. So the answer for the money flow is circulated within our ecosystem. So like self-funding, we are able to grow ourselves just like self-funding. And then recently, Rakuten, we have the Rakuten Pay below the Rakuten Cards for the payment business, not just for the QR, but also for the credit card and the credit card and Rakuten Pay, Rakuten Payment, including those payment methods, integrated way is something we will elect operator. Therefore, we have been working on it online. Now we are having a more impact even in the offline business by this payment scheme. And the cashless payment in Japan is accelerated. So 36%, it's above the ¥100 trillion, but still credit card percentage is very high, which is 85%. And the E-money, such as the QR code payment, barcode payment, and the similar same. And in China and in India QR payment grew a lot. One of the reasons is because of the credit card or debit card penetration rate was low. That is one of the reasons. So here in Japan, so the sustainable growth perspective, this credit card portion and also e-money or debit card and QR code payment and also the point, we are the only one who are integrating those different payment method. That's our strength. So this is the drawing attention about the zero commission trades for domestic stocks. And we have made this announcement with SBI. And basically, for the domestic stocks, commission becomes zero in exchange to enhance the loyalty so that we can increase the customer base. That is a basic strategy. On top of that, so those users can purchase or use other product for this other commission area. So in 2024, our revenue was ¥95.4 billion, but in 2018, we are targeting ¥190 billion. So about the margin financial trade here in Japan and but we will have the NISA. And then making an investment into Japanese industry would be very important. But personal asset or national asset, so the growing, the assets such as the overseas, the stocks or NISA, the way to make an investment for those areas, that is very important. And with that, the number of account would be increasing. Therefore, reselling the mutual fund or delivery, the trade to be included and what is the most recent performance after this announcement? So, the revenue, with this announcement so we anticipated there's more than our expectation anticipated what we didn't see on the negative impact as we anticipated. So when we made a zero commission rate and y-o-y basis perhaps 3.4% increase was made. And the number of accounts is could we think. So this is in line with our expectation. And then I think you are quite interested in this. This was featured in the Nikkei Newspaper and Mizuho Securities, more than Rakuten Securities, there is a holdings and then Rakuten Securities below that holdings. So Rakuten Securities did the stock 29%, which is equivalent to ¥87 billion, and they made announcement that they will make additional investment here. And then Rakuten SAIKYO is 100% subsidiary to Rakuten Securities Holdings. And so this is for mutual benefits. So, Mizuho have the ¥24 million retail accounts. And in personal shop or the bank, and they are able to do the consultation and consulting and the strong wholesale customership and the partnership, and they have the other trust the total of financing finance function. And our strength is that we have more than 100 million accounts and we are strong in digital and online, so we have a low cost channel. And the number of NISA account, we are number one market share. And then we also have the Rakuten Ecosystem. So digital is excellent, UI/UX and then the Mizuho is strong in terms of in person consultation. So Mizuho Group and the Rakuten would like to strengthen the partnership, and that is included in this deal. And the next is about the Rakuten Mobile. Rakuten Mobile, the revenue grew by 21.6% and then the ¥55.7 billion, and non-GAAP operating income on a quarter basis, we improved by ¥35.1 billion and non-GAAP EBITDA is ¥37.2 billion, which is a substantial increase. As you can see, this batch this is the under progress of the Rakuten Mobile. So the Rakuten Mobile, which is expressed in the parenthesis Symphony, the Symphony is on top of the Rakuten Mobile portion bar chart. So that we are making it stable, the profit improvement. And now September and October around this timing, our number of subscribers has been increasing and the October net increase of subscriber with the 192,000. So we are quite honest in the open to say things so of which this 192,000 about the 110,000 -- sorry, 110,000 out of 105.42. So, the BCP of that, which is the secondary thing, so this is another thing that you can use for additional purpose, so this is the contribution to the revenue is quite limited, although we exclude that portion still. We see gross and the number of subscribers, and we target 8 million to 10 million subscribers by the end of 2024 and the population coverage, while including KDI roaming 99.9%. In the population coverage, 99.9%, and ARPU increasing so on the YoY basis plus ¥590, the most important thing is the reduction of churn rate. So as of Q3 '23, 2 0.06% and the October, it's below 2%. So, the percent churn within the month, excluding those people. So the current is 1.44% of the churn rate, it’s quite a good situation. And then Symphony. So the mobile phone players in the globe pay attention in this Rakuten Symphony. And so the virtualization and ORAN, open radio access network and would become a mainstream. And then we have developed that and they widened the doors so that people can join it. And now the mega career players in the global market are -- paying attention in this technology. And then we have been trying this kind of the new things that is our past path, but we changed the management of Rakuten Symphony and the Sharad newly became the President of Rakuten Symphony and I became CEO of the Rakuten Symphony and rolled this business out. Over to the mobile business, I would like to share some more details. So we're transforming transitioning from Phase 2 to Phase 3. Phase 1 was about establishing a foundation rapidly, and the Phase 2 was about lean and solid management. We've been very aggressive in building these base stations, and we have also worked on the virtualization. And now we are making us a more robust, so we can run a marathon, if you will. But as I mentioned earlier, subscription increase is going well very well. And so this year so far, we're already in growth phase. So these are the key words that are going to be necessary for launching our Phase 3 quality and growth. So first, to talk about quality, network is going to be key. So talking about this, there are actually three pillars, but expanding the existing bandwidth. And the second is network optimization under the new roaming agreement, there's a little slight delay, but we're expecting this to be completed by the end of this year. And the third point is a platinum band that we have been awarded. This is going to be available for us to implement in the coming spring. So we're talking about mini. So no, there are many discussions about how viable our investment is. But basically, this is standing on top of our base platform technologies. Depending on the situation, other companies might, when they build new radio units or when they build stations, they have to install new radio units. But what we're doing is to install this7 million hertz band in the existing antenna. This is how the same antenna could be used to make available the platinum band. We're doing this 500 basis, but can we do this at ¥5.44 million? But we can easily cover that with some change to go back to into our pocket. So, what people will do is that they will just go to these places and pop these in. And then the platinum band, the 700 megahertz is going to be made available. And this is exactly, the personification of the virtualization technology. So with the existing network, there has been a study done by Open Network company, a very trusted third party assessment company. So video experience, live video experience, games experience for number one in these, voice app experience is pretty much at par, at the top level at 81.55%. Download speed experience. So this is improving rapidly and we're catching up with our competitors. Upload speed experience extremely fast. So YouTubers, Instagrams, Instagramers, influencers, they really like using this because, they're using up their storage, so we're at an advantage, availability has gone up from 98.4% to 99.12%. So this is another rapid growth factor for us. So within the next six months to 12 months, we should be able to catch up, if not surpass them. Coverage experience, we're at par of our competitors. On the other hand, we talk about packet loss, consistency. For Rakuten Mobile, we've been focusing on providing consistent quality, so we have been able to exceed the average of other MNOs at 83.4%. Now over to the coverage within Japan, according to this open signal survey, you can see that these dark pink areas are the pre-fixtures that have the best coverage. They're ranked number one, so out of 47pre fixtures, 21, Rakuten Mobile is number one. We're going to be working on how we can further improve this. The next is about the most considered option for switching is Rakuten. Our plan, and as I mentioned briefly before, there's a progress update on network optimization based on the new roaming agreement. Basically, in most areas this service is going to be available and updated. There might be some spillovers, but those are going to be covered at earlier time next year. So that is a commitment that has been made. With the revenue, how can we keep growing this? One thing we can say is, to leverage the Rakuten Ecosystem from a customer perspective. So Rakuten customers are going to use our Rakuten Mobile if they are already using other Rakuten functions. And this is going to help to increase, how much and how frequently they use Rakuten. So ID and data are going to be at the core. And this has been the case previously too. But now, mobile is going to be added to the picture with AI as well. So this time, we made change to the point system and many people, I think this is a kind of the upgrade of the point program. For example, Rakuten Mobile users so the other than the Diamond user, it was 3x, but the every one every day, 5x, that is a change. And once you become a mobile subscriber, then you can enjoy more synergy. And then the Rakuten -- purchase rate increased by 60%, as for travel, it's almost double the growth. So when you become a subscriber of mobile and then Rakuten Group service per user per year, they were using the more than 2.57. And on a monthly basis, it is about the ¥721 per user ecosystem ARPU. So the price and points are SAIKYO strongest, and then we would like to provide the best content, strongest content. So we have the NBA games. And if you are Rakuten Mobile user, you will be able to view this for free of charge. And Rakuten Music, Rakuten Magazine and YouTube, we have a various premium. And Rakuten Card user, if the Rakuten Mobile subscribers start using the Rakuten Card, and then they will gain I'm double the point. So, we have this privilege. So the switching and the 6,000 points will be granted. So basically, the more you use the services, for example, using the data 3 gig, and then we will reward the partners the points so they can use the mobile for virtually free of charge for five months. And then if you can purchase four, you can use on the mobile phone virtually free of charge. Moreover, we would like to grow this much more. And the three points is like your plant launch in one stop MNP e-design up and activation, and SBU growing. So there will be more benefit advantage for mobile users. We change the program to that way and the new roaming contract and the 700 Megahertz introduction. And then the existing software upgrade will be made. Therefore, so the congestion, the base station problem would be resolved. So we are on par with other major carriers or maybe we would like to build better network than them. On top of that, the B2B business, which is growing today, and the first-of-all, the recruiting groups partnered which is 900,000. And then also the all companies and local governments, we have a strong partnership. So we would like to grow this business, not just selling the product, but on mobile network solution to be provided to our customers. Therefore, so the various services, including security and AI and translation. So using mobile what can you do with mobile? And then we will actually provide the solution together with the mobile. In addition to that the barriers that cause them to be leveraged. It's something we would like to do. So net ad growth and then the last month, it's close to 200,000, and we will likely continue this space. And then churn rate, and it has been declined drastically. And as for the ARPU, so it used to be ¥837, it is now ¥2046 and our ultimate goal is to including the option addition of value app and base mobile phone services, base the 3,000 uplift and ¥1000 in total, ¥4000 as Rakuten Group, the revenue up will be done with this improvement. As a part of this journey, well, so RCS application, so I think we are the only one who is successful in this. So the Rakuten Link users, I think there are many of Rakuten Link users. And in this Rakuten Link application, we set up home button. With that ¥21 million, this is in a cumulative number, and they are using the Rakuten Group services through this home button. And that can be reached to ¥100 million at the end. Therefore, the Rakuten Link application will become a super application at the end of the day. CapEx this year's plan is ¥200 billion. That is the target, but we’re much lower than that. And then 2024, we would like to make this half. So please be seated. With the interacting group power, with the wisdom and knowledge and then high performance, the less expensive network to be developed. So, the current network, 13 million subscribers can be supported with the current network structure. So if it goes beyond that and that will be a good timing to think of new investment in the future, but for the time being, it is not necessary to make additional investment to strengthen the capacity. Last but not least, SoftBank and KDDI, I think they make some announcement about this NTT law abolition and also, NTT in various contact information are being progressed. So I will actually make one comment about this stuff. So the basic is being that wireless would be advanced and the backbone, all of them are using the fiber optics and then the 5G and 6G when those era comes. And then the distance become much closer when that time comes. Therefore, the fiber optics would become more important in such situation. So this is use friendly and the tax paid by the citizens and other public collaboration, and they have been developing this asset based on the P4, the tax and other efforts. Therefore, under the special regulation law, this needs to be managed appropriately. And then what's been insisted by NTT in terms of technology development, they said they cannot make announcement, however, NTT Law and the holdings. And the NTT East and West, these are the subject for that law. And outside of that, it's not subject for the law, so the development doesn't have to be done there. As long as they are group companies of NTT, they can do the same development things. Therefore -- so, I think they can do some technological development, but I think they are using that as their excuse or maybe the vertical dominant. They have an asset vertically dominant. In other words, let's say, all the petrol station are monopolize and then only they are manufactured by themselves subject for the petrol provision or maybe they can raise the price of oil and then, yes, that can be managed or supported by the telecommunication law. But the NTT DoCoBo is 100% subsidiary to NTT. So there is totally irrelevant to the consolidated revenue. So, if I am the NTT CEO, I will raise the price. So it's not the matter based on the verbal commitment. And NTT Group, it shouldn't be integrated, but they broke that promise. So, their verbal commitment or declaration cannot be trusted at all. Therefore, as for the NTT Law, I think you should leave it as is. That is our Rakuten's comment. And then that is all from the business side updated by the financial results and now moving to the financial strategy that will be covered by Hirose-san.

We have noticed that there has been some technical issues, the live streaming showing some delays. Line 1 seems to be experiencing this. So for those who are on line one, can you please switch to server 2 to continue watching this live broadcast. Thank you. Also, today's sessions are going to be archived. We'll be following up with an announcement of how to access them. Thank you. Next will be the financial strategy. Mr. Hirose will do the presentation.

Hello, all. Thank you. I'd like to speak a little about the financial strategy. First, this is our commitment. We have made an announcement on the early redemption of ¥68 billion subordinated bonds at the first call date, December this year. There's a remainder of ¥8.6 billion. We're going to be making a redemption at the first call. Our announcement is to do that this year in December. So to explain locked in situation right now the EBITDA is, as Mr. Mikitani already explained, it continues to improve. Also mentioned previously, the consolidated EBITDA has turned profitable. And as you can see, it has been growing steadily. And in terms of the financial businesses rather we're going to be aiming to turn profitable with a non-FinTech during this quarter. Moving onto the capital business alliance with Mizuho Securities, once again, Rakuten FinTech structure is shown here. We're looking into maximizing the synergy of FinTech and also further enhancing the management base, the investment from me securities and the amount of ¥87 billion for additional 29% of Rakuten Securities. You can see how the other, the system, the organization has been organized. As was explained announced today, we have enhanced the existing partnerships we have had with Mizuho Securities. We remain positive on the potential listing of the Company. Now I'd like to talk about the path to self-funding. First, we want to make drastic increase with the cash flow through mobile business and we want to grow the internet services FCF and grow CF from FinTech. EBITDA has to be grown in a robust manner and throughout organization-wide effort is going to be made for overall cash flow improvement. As mentioned, there's going to be -- FinTech performance is going to be pushed forward and will be followed up. This is how we're going to become self-funded. Proactive management of bond maturity, which might be one of your concerns, as we see it, by using equity related financings to reduce gross debt. That is our main focus. And also we're proactively managing the debt maturity under. And we're looking at the best timing for maturity. We continue to work on the matter as shown here. So that was very brief. That concludes the presentation on our financial strategy. Thank you.

Good afternoon everyone. In the last earning call, we announced our AI strategy and roadmap. Today, I'm very excited to share with you we are off for a great start. We're integrating AI into everything we do in an initiative called AI-nization. Rakuten is in a unique position to realize this vision for three reasons. First, we have a unique data asset. We have domain knowledge across multiple industry combined with the customer context over 25 years. And we have the world knowledge and the best technology through the collaboration with OpenAI. Second, Rakuten has the reach to millions of consumers online and offline through Rakuten Credit Card, Rakuten Pay, and Rakuten Points network; and lastly, Rakuten is known for good at execution with the discipline and determination, we can build the flywheel to reach consumers and continue to build a better model to serve our customers with better and faster services. The core to our strategy is Generative AI. Generative AI works like a human brain and human brain sometimes could use some external tools like a whiteboard for brainstorming a notepad for capturing the ideas, and generative AI like can use some external tools. And we use a technique called retrieval augmented generation to connect the generative AI with external tools. And one of the most important tools is semantic search. We have building semantic search on top of Deep Learning Foundation for over a year. The essence of Deep Learning Foundation is to capture everything in a concept, in a technology called embedding. Embedding can be used to represent any item, a query, a product in efficient mathematical form. We are starting with Rakuten Fashion and here's an example. Last summer, I want to go to a fireworks festival in Edogawa. And before I went to the festival, I went to Rakuten Fashion for what clothes I should wear. And it's such a long query and normally you won't get any result. But Rakuten Fashion gave me plenty of results. As we can deliver more relevance results to our user, users are searching more, and as they're happy with our result, they are coming back more often. As a result, they are purchasing some more from Rakuten Fashion. By the numbers we have seen the searches session increased by 3%, and sessions per user increased by 4%. And sales from search on Rakuten Fashion increased 5%. But that's just the beginning. Embedding is such a fundamental technology. It captured a sense of characteristics of any item. You can represent an item, a person, a product in so many dimensions efficiently, by analyzing what people purchase online, what store visit offline, we can compute embedding in probably the world's most efficient way through Rakuten data. We are looking at leverage this embedding technology to help people to find anything on Rakuten services through search, ads, and recommendation. I want to end with what I begin. We are on a mission to augment human creativity with the power of AI. We are combining human expertise across multiple industry with the latest cutting-edge technology through tools such as semantic search and which through retrieval, augmented generation. So, we are combining -- we're delivering this technology together with all the expert in multiple areas. We want to create value for our consumers and merchant and bring value to our society. This is just the beginning. We are very excited about the future. We're so happy to be on this journey with you. Thank you very much. A - Unidentified Company Representative: Thank you. That concludes the financial results report. Thank you for joining us at Rakuten's 2023 third quarter financial results meeting. From here, we're going to be taking questions from the members of the media. These are the speakers attending from Rakuten side. I'd like to explain the flow for Q&A. We have Japanese into English and vice versa. Simultaneous interpretation made available. Please choose the language of your preference. Please do not choose to mute the original voice. During the interpretation, providing interpretation, you'll be hearing the original voice at a lower level. [Operator Instructions] Please limit your questions to those related to financial results as well. And also please ask only one question. If you have any questions, please raise your hand. Thank you. From Sankei Newspaper, Mr. [indiscernible]. Thank you.

Thank you. [indiscernible] from Sankei. Yesterday, at the other financial results announcement yesterday, Rakuten has mentioned that the platinum band there is going to be back haul line and they would like to extend their support on this. So it looks like there is a stronger bond given the other day announcement. Mr. Ting Cai, can you please share your thoughts on this? So you have to choose between SoftBank or NTT?

Well, that is that. It's not just SoftBank. How many companies? It's not just three. It was over 400. We have local cable companies, many local companies too. So other than non NTT Group, all the other companies are against the idea. So the network that was built using taxpayers' money, their aim is to do vertical integration. I thought they really -- I am surprised at how they came out at that. But I think from a communications situation, I think this is a very risky move and that's why that we are aligned with the direction that these three companies are working towards. And in a general sense, it is important to talk about having a competitive landscape rather than just one company monopolizing. So again, this is another common concept.

Again, I have only heard of this through what has been reported in the media. So what possibilities are there like to talk not just with SoftBank, but KDDI, and NTT Docomo?

There should be cooperation as well as com competition. But I don't think that, there needs to be unnecessary competition. So in many ways, I look forward to having a good communication with the other players. Thank you.

Thank you very much. Next question is from Yomiuri Newspaper. [indiscernible] over to you.

I think I may repeat some question because my network is unstable and the mobile subscribers increased. So as for the fresh report as of October, it is about 198,000 net increased. So it's accelerated, how do you analyze the factor of this acceleration? Is there any major driver to push this up? And if any, I would like to know that. So is this a kind of a tentative factor? So the reaching 8 million to 10 million in the future, you need to sustain this momentum and accelerate. So the sustained momentum and accelerate, is it visible today? Or in order to accelerate the growth, what will be the most important factor? And how do you view this?

So there are three factors for this acceleration. The first one is the churn rate reduction. And the network quality improvement is one of the reasons to lower this churn rate. So, the number of churn, so in reality, 1.3%, but when it did, it was higher at 1.8%, so it's improving now. So now we see, we have a net increase, but in many people are staying and using our services, so low churn rate. In October, our churn rate was 1.72%. So comparing us to three other major players, we are on par with them. That is one of the factors. And the second factor is the on the SAIKYO plan and the contents bundling, we started these initiatives. And the number of subscribers has been increasing. That is the second factor. And another factor is, so the smartphone is a product available in nationwide, but it's sometimes specific to certain region. For example, in your living area, that is very important if the coverage is okay with your region. So at the region based sales and the structure are established and CMM is established, so the marketing level has improved. Those are another reason. So every day so the hurdle is there, so I'm working on that. And also how to sell products, we are mainly selling it online, but now we started using the real shop as well. And then we have a various unique channel to sell. Well, usually, they have an agency and sell through there, but we are trying many new things. And the third one is about B2B contract increase and B2B business. And if the ARPU goes down, it doesn't make sense. Therefore, we are selling this to the B2B. So the people working in Rakuten Group and also the merchant of Rakuten and those who are engaged in the Rakuten, I think about 1 million people are engaged in our business. So we should leverage this kind of relationship with Rakuten to have the meaningful B2B contract, so that we can recognize revenue. So that is the third factor. So the most recent performance, maybe there are some fluctuation, but it's not slowing down, but accelerating. I think we are gaining that momentum today. Thank you.

Our freelance Mr. Ishino.

First question. With that revision of SPU, this is going to be a big advantage for people who have Rakuten Mobile. So how effective is this going to be and for you to gain more users for Rakuten itself? And the second part of my question is with the platinum band, you have mentioned earlier in your presentation but you'll be using existing antennas, and you're simply attaching these units that would enable that connectivity at 7 million bps. So is it entirely going to be done that way? I'm asking this question because, the major three carriers, when it comes to the 7 million, 8 million, 9 million, they're using much bigger antennas units, but yours, your antenna are relatively small. So just a simple question, is that going to suffice? So these are the two questions from me.

What other companies are doing is something I cannot really comment, so I'll refrain from saying anything about it. So the radio head, the antenna. The power of these that we have is really at the top level within the industry.

Hello. Yes. So, the existing antenna, what we are doing is we'll be using 2 RRH on the same antenna. Of course, there are, for 700 megahertz, there will be a new radio head and a new antenna. But the location, the pole, the DU, the CU will be same. So from CapEx perspective, it's very minimal and very easy to deploy. And plus also, we are -- from acquisition perspective, it will be much easier because we plan to use same pole and same height of antenna.

The quality of our radio head.

Yes.

So good to, you said it's a little bit rather small but it's powerful enough.

Yes. So by physics, 700 megahertz antennas are larger slightly. But what we are, for 1.7, what we are using is, has good enough antenna gain, 17 dBi. Plus also it supports 4 by 4, which is also kind of unique for Japan because all of our sites are 4 by 4. So what it means, it has much better sensitivity.

I would like to paraphrase that. He's saying its compact, but it's very powerful. That is what we have. So it's not larger the better, I think.

Thank you. And about my question on SBU.

Yes. We just have to do this and see what happens. But we're giving 5x the points every day to everybody. I think this is quite attractive. So unlike other programs what other programs do is that, there's no monthly fee but for the mobile users, they get ¥980 per month. So considering that compared to the other programs, this program is quite attractive. So in the future we can reach to 15 million people, 20 million people using Rakuten Mobile. If that can be achieved, then Rakuten Ichiba, the distribution scale is going to go up by that much as well 30%, 50%. So, we think that there's going to be a big synergy potential. Also, another advantage of this is that this Rakuten plan is quite cheap, right? So compared to what other vendors are doing, they have giga hold plans. That's monthly price is ¥7,000, ¥8,000. But if they switch to Rakuten it's maybe ¥3,000 per month, and you get lots of points. So, you gain a law from just simply switching.

Then next from News Speaks, Hatani over to you. Hatani from News Speaks is speaking.

So, the location to answer questions and I have a question about SPU initiative, and 80% will gain some advantage or no change. I think that was what you presented. But after you make announcement from November 1st, and there are some people saying that this is the other largest churn taking place. And how do you view about this kind of reaction?

Takaharu Ando speaking. Well, some people say there're negative voices immediately after the announcement was made. But as I had me monitoring that after one week, I think we haven't heard that kind of a voice anymore. And from the user point of view, they are very smart and they keep purchasing items from our service and as for the other merchants and then partners, and we made a pre-explanation about this SPU program and we haven't heard that kind of negative reaction almost. And then increasing the mobile subscribers, and then we would like to increase the more distribution or the GMS throughout this efforts. So that is the current situation. So what we hear from the field. So, I think, the people are taking this in a positive way. Well, when you make a change, whenever you make a change, there are some pros and cons immediately after the change. Therefore, the negative comment from there, negative mindset people and we have to capture them and then with other services, for example, using AI, and then we going to improve the quality of the services so that we will be able to satisfy those people as well.

We have limited time. So we would like to take two more questions from the members of the media. Mr. Ishchio a Freelancer.

So about the NTT law, all these government, local government buildings that are using NTT Internet, if those can be leveraged, I think the overall Internet connection is going to be better in Japan. Do you have any thoughts on that?

True. Basically is ATT base station, regional stations, excuse me, we're borrowing their communication servers of what NTT has. Now, we have to move on to edge computing. So using of edge and how you use it is going to be essential. So AI contents, maybe we can implement these into those. Right now, the latency is at 40 millisecond, 30 milliseconds, but we want to be able to reduce that to just a few milliseconds. By the way, what Rakuten Symphony is doing, which is Germany -- German one-on-one is at 3 milliseconds, which previously was considered unthinkable or unachievable, but it has been achieved there. And therefore, in that regard, we can deregulate more and so we can use these existing functions to our advantage. If we can do that, then the Japanese wireless connection is going to be the fastest, one of the fastest and the most useful systems in the whole world. So computer console games, even without these hardwares, you will be able to do a lot more with mobile devices. So for edges, I think there's going to be a great benefit and it's going to be a huge occurrence if those could be made available. Thank you.

From NHK [Indiscernible] over to you.

[Indiscernible] from NHK is speaking. And I have a question to Mikitani-san. So the mobile subscribers are increasing and also the other value is increasing, but thebond redemptions will start from the next year, and the core of your ecosystem would be placed onto the mobile businesses. And now you started some structural change and I would like to hear about your commitment or determination in this change?

So, as Hirose-san, explained earlier, so in a various format thanks to the support or the commitment from the other banks and this bond redemption, there is no problem at all, that's how our view. In addition to that, in various format, Rakuten group ecosystem to be regulated. And so far we have been just watching closely on the P&L, but with wisdom and knowledge, we would like to improve our cash flow, and that's what we have started. So that is a big portion. So 900,000 business partners corporation do we have a partner and most of the people live in Japan has Rakuten IED. So we should leverage this mechanism, well establish, and for this, even in this refinance and then more investment it has been reducing drastically. So as I mentioned before, so the corporation with other companies and then what we need to borrow is something we need to borrow. And then we would like to reduce the amount of CapEx. On the other hand, well, looking at the globe, it was not covered in today's presentation. So the players in the global market paying attention in this Rakuten Symphony, I think it was covered in editorial in Nikkei newspaper and Symphony Service in December. And that will be starting in Germany in December. So, the industrial structure so far, the phone operator is oligopoly and then other operator oligopoly as well. So these are 2x2 oligopoly and we have made a big challenge trying to open the door to that environment. So, the world paying attention on our Symphony so if we make this and then looking at the industry here in Japan, and that will become a bigger positive factor. And also even in Japan plant, I think this would serve as a positive factor. So we need to make Rakuten Mobile business successful and also our technology to be sold in a global market, and also the world mobile or the network will be running on Rakuten platform is something we will like to achieve in the future.

Thank you very much.

Thank you. This concludes the media Q&A session for the financial results meeting. Thank you to everyone for joining. Thank you for joining us for Rakuten Group's FY 2023, Q3 financial results announcement. From here, we would like to hold a Q&A session to take questions from members of analysts and investors. These are the speakers. I would like to explain the system. [Operator Instructions] And we would like to open the floor to the analysts and investors for questions. Mr. Nagao from BofA Securities.

Thank you. I'm Nagel. I have two questions. I think, this is the first time you clarify the timing to talk about 8 million to 10 million targets. So this is the first time you have included that number in your deck. So from 10 million to 12 million probably because of KDDI relations, I think that makes sense and January to March is going to be a very strong business period. So I think that, there is going to be some business performance improvement. But working towards that 8 million target, it might be too early, but I was wondering how you plan on running the other promotions? How you intend to promote that measure? How should I break at that? I have another question.

Go ahead and ask your second question.

Thank you. Related to my first question, I have a question about SPU. So you are giving much benefit to the Rakuten Mobile, now you have about -- you have over 40 million users of the system. You will have local marketing initiatives, but you will also, say, if you can bring in 10% of, if you can gain on 10%, that's going to help grow your ecosystem that much. So, I was wondering if this is your future direction for how you want to grow the Rakuten Ecosystem?

Yes, basically speaking, we want to enhance the other sales channels that we already have. It's not just about increasing the number of storefronts, but it's more about welcoming more people to sell Rakuten Mobile and reaching out to more users too. So marketing is all about people, promotion, place, price. So these are the 4P's that you learn in business, school. So it's about enhancing the place for us. Rakuten Ichiba and other Rakuten family components are being used. So we can enhance the, Rakuten Mobile outside of these major city centers. So we're doing more in the western region within Japan, we're also looking into growing these number at local community levels as well whereas, previously, we used to focus more in metropolitan areas such as Tokyo. So we're now entering the phase of focusing more on micro strategy, more smaller scale communities. Network quality is getting better and better as we go. And I think you're using our mobile phone as well. But, basically, you have good coverage no matter where you go compared to that. And then we have 8 KDDI roaming enhancement. And I think this is going to be launched in April. We'll have the platinum band available. And software, generally speaking, will be improved. And this will mean less packet loss. It's going to be a very stable communication we can provide to our end users. We have SPU that's going to be a big promotional initiative. So this is the direction. And we also have some other, ideas which I'm not sharing right now, but, say that those are going to be rolled out at a later time. But this is our strategy to enhance our sales channel, and to grow our customer base, and also be creative in our promotions. We're making micro improvements every day to reach that goal. About your question on SPU. So don't you think this is really good? It's a very attractive offer. At the very beginning after our initial announcement, some SPU situations where you were not reaping the benefit under people who were reselling what they have already purchased. Or this was actually putting us into red. So there were many people who had that view on this initiative. But this is an initiative that would be effective in reaching the mass. And we want to increase, improve the cost benefit. So again, these people, if they join the, Rakuten Mobile, their usage, the cost is going to be low, and there will be reaping the benefit from the points. So I think it's going to be a gradual change, but it will be an improvement. Thank you.

Then move on to the next one from JPMorgan Securities, Hideo Fujimoto.

Thank you very much. From JPMorgan and Credit Research Fujimoto is speaking. I have two questions. The first question is about next year, the bond redemption and about the financing situation. And with major banks, what kind of discussion have you conducted so far? If you can tell any, please share that with us and then your finance activities. This year, looking at the cash flow of refinance and the non-finance and the borrowing and repayment, it's about ¥200 billion above. And the CP repayment it's ¥140 billion. So in total, ¥360 billion repayment is done. That's how I read your financial situation. So if you repay this amount of the borrowing to the banks and maybe your relationship to them may have changed. That's my assumption. And then next year, when you redeem your bond, is there any possibility that you will be having additional borrowing from the bank? That is my concern and that is the first question. And the second one is commitment. You mentioned that there is a commitment from the bank in your presentation. Are you talking about the commitment line? And the commitment line today, how much is it? And then what will be the contract duration? It's something I would like to know. Those are the two questions.

So Hirose from finance will be speaking about the relationship with major banks. We have a good relationship, and they are quite supportive to our businesses. And as for next year, the bond redemption, as mentioned before, so non-finance, the debt to be financed and we have a bill reserve project, and we will be progressing that on the other hand. So the refinance necessary refinancing will be planned. So including bank loan, so the diversified the financing approach will be considered. So bank loan repayment, maybe some of them are misled. So the bridge loan that we used to borrow and then from the last December, Q2, we have already repaid. So maybe this part is kind of noisy. So as for the ordinary and the borrowing from the bank in terms of long-term loan so we are the repaying them based on the contract terms. And the other bond financing and equity financing, combining them, the other short-term is the return. And the bank commitment line ¥150 billion is the commitment line, and there is no change. So we have not used this, so this is a vacant. And in the detail, the portion cannot be disclosed because of the contract.

Sorry, commitment line contract duration, if possible, could you tell us?

Commitment line, so it is annually the renewed and that will be the renewed in this coming summer. So basically, as for financing, what I can say for one is, Rakuten Mobile investment amount with the power of technology, we are going to control the investment amount for Rakuten Mobile with that EBITDA of Rakuten Mobile would become the -- we want to make it to breakeven as early as possible and then we can generate profit after that. Another point is, so other than the cash flow improvement other than that is something we need to do as a business operation. So maybe this is a kind of a creative idea. So in that part, several hundred, the billion yen of cash flow improvement can be done. So if we achieve that and that would be used as a source for repayment and others equity will be accepted in a subsidiary double including that. So I think we have a various options for financing measures. However, the most important point is to improve the cash flow at mobile business, that's all. So we have other mechanism established or developed in other marketing card business. So if we have any opportunity, I would like to explain that.

Next from Citigroup Securities, Tsuruo-san, can you please make sure you're unmuted?

This is Tsuruo. I have two questions. There were some technical issues with the communication, so I have missed some of the presentations. So maybe, I'll be asking question that has been answered about the mobile, the net increase. You have said that the recent results were very strong. So can you maintain this growth momentum in the next couple months in November, December? And what do you expect for the January? Please let me know your thoughts. And also I was wondering how many -- of this total number, how many went are the contracts for the other corporations? Individual or corporate, we don't really disclose that information, so my apologies. However, there's no point in doing cheap corporate deal. So, 111,000 people, these are basically the BCP SIM, so we have to exclude that. So please look at the figure in that way. But so with corporate membership growing, they can experience the network we have and also we want to see a trickle effect of individuals also adjoining the network. Our services low cost to start with -- So that's why with corporate, we want to keep pushing for the growth of other corporate users. Recently, the growth has been very steady, so we expect -- for the November and December we expect the pace, the growth pace to be the same, and also for the next three months in the early year of course, we want to keep growing these figures too. But that will just depend largely on the competitive environment too. But rather than seeing this as a one-off or temporary momentum. Believe it or not, there's -- this has been very well planned, so we're reaching our estimated planned figures. That's amazing to hear. My second question is about capital investment. Again, I might have missed some of the information because of the poor connectivity. So the corporate investment has been decreased, as you can see here. So what is the background of this, and also what is expected for next year and the following year? Are you saying that big corp investments are not going to be necessary for facilities? We're still in the process of building the final budget, but I think it's going to be greatly reduced. That is our expectation. I can't say by how much or how many percentage, but there is going to be a great reduction that will come largely from KDDI collaboration, and also with other platinum band rollout at ¥54.4 billion. Unlike our competitors, I don't know, maybe I should say this, but you simply attach this. It is an attachment to an existing facilities and we can cover both bandwidths without having an impact on the capacity. This is our approach. So if we're doing 10,000 stations, but again, we already have the base equipment, it's simply attaching these units, and this is the beauty of using mobile technologies, I think. But in some cases, say maybe we'll use 5G, there are more that could be brought on by using these technologies. So yes, the other capital investment is going to go down greatly. But we're still in the process of making that plan. Our target is to, I can't say bring reduced by 50%, but we would like to get close to that number.

Due to time constraint from investors or analysts and the next question is the last question. So from HSBC Nielson, unmute yourself and start asking your question.

Thank you. Good afternoon. I have two questions, please. The first is on the mobile monthly cost. I understand you are aiming at average of 24 billion next year. My question is how do you fund the increase in customer acquisition costs? So I think next year that should increase. So is that to be funded by the decline in roaming costs or are there any other costs you can take out of the mobile operation? The second question relates to Symphony. Could you give us an update on where you see the most near-term opportunity for contract wins in Symphony? Thank you.

Well, we have no plan to do a massive marketing, but we like to redefine how we sell the mobile contracts. Like we are the only company like 60%, 70% of our contract is coming from web, which is like I think very small for other companies. So, channel innovation is a key and we would like to pursue various different options in order to do it. A mobile business is going there. It's not easy product to sell. Of course, we are going to enhance our web capability, but we would like it to be very innovative. And without increasing our customer acquisition costs, it is going down, as a matter of fact. It is going down significantly. And also, our corporate phone business is a very profitable business. So we would like to grow our mobile significantly. Neil, what was the second question? Oh, Symphony. So, I think, Symphony has basically three components. One is radio. The second is cloud. And third is operating software, operating support software. And for the radio, on top of Rakuten, we are going to launch 101 service in December, which is going to be a significant milestone, not only Rakuten Mobile in Japan, but very big MVNO is going to start using our radio service, and migrate all of the MVNO user to MNO. So it is a very, very big business. And then, it is going to be a very good technology. And the cloud is, we have two clouds strategy. One is cloud for telecom. And the second is independent cloud. Independent cloud now all Google Cloud Platform, GCP each cloud is Rakuten IO cloud. So, it is accelerating and we are seeing enterprise cloud users growing significantly on top of our telecom. And operating in a support software, the fact that we have OSS and the radio company under the same umbrella is very, very important, because whatever people say, what is very important for all telecom companies is how to bring down total cost of operation, TCO. So just changing the legacy hardware to software, it is not enough. Of course, you can substantially reduce CapEx. But more important thing is how you can automate all these operations, commissioning and scaling and basically rebooting and everything. We are automating everything. And that's the combination. AT&T is significantly using our OSS software, so as Nokia and other companies. And this is going to big sales opportunity for us. But I think, one of the big tipping point about Symphony is coming in one month, which is a launch of 101 M&O service in Germany.

Thank you. That concludes the Q&A session for analysts and investors. I would like to ask Mr. Mikitani to provide closing remarks.

Sorry, I've been having cough a bit, I'm hanging on to -- I am hanging on. So with the balance sheet, Rakuten Securities included one plus one is going to be main three. That is what we're doing with the securities matter and also with the working capital improvement. How we do that?

Maybe say ¥30 trillion is moving around within our ecosystem from left to right, right to left. So there are many ways of moving the other, the working capital in a positive direction. Also regards to marketing costs. In order to grow our businesses, in some cases, we were really forcing ourselves to give away more points. So the amendment or changing the SPU system is simply just rationalizing it, which makes more financial sense. And also, AI is going to be key from now on. It was mentioned in the presentation that in semantic search. The semantics search helps the other sales of 5% increase. So this 5% increase, if you want to actually have that kind of financial results, it usually incurs a lot of cost. So ecosystem enhancement is going to be key in achieving that success in sales without having to spend so much more investment. And same with Rakuten Ichiba, AI is going to be used more aggressively. And that's going to be a profitable scenario for us as Rakuten Group, but also for our partners too. They will be able to leverage the AI technologies. So with the open AI collaboration, AI is going to be leveraged within our system. From financial to distribution, we cover these vast business areas. And AI is going to give us a potential upside of 20%. There are two targets for AI. Using AI, we streamline the marketing, the target is 20%. And also another thing is to use AI we're going to improve the work efficiency by 20%. These are our pillars and we have been devising some -- we have launched some projects to work on this, which means a total of 40% streamlining. So as you can imagine, this is going to help us with our profitability as well. Thank you.

That concludes the FY 2023 Q3 financial results announcement for Rakuten Group.