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Questions & Answers
Financial Results for the 3rd Quarter of the FY2011 ending December 31, 2011
3rd Quarter Results
- Other revenue for the July to September 2011 quarter fell slightly compared with the April to June 2011 quarter. Does this represent a decline in poor reception compensation revenues forecast at the beginning of the period? Or is it due to other factors?
- The decline in other revenue is primarily attributable to lower poor reception compensation revenues. This reflects the termination of analog poor reception countermeasure contracts following the complete migration and changeover to terrestrial digital broadcasting on July 24, 2011. Other factors had little or no impact on the decline.
Outlook for the 4th Quarter and Beyond
- With certain costs being carried over from the first 9 months of 2011 to the October - December quarter, expenses are expected to increase. What are the specific details of these expenses?
- Advertising and promotion expenses that were virtually unused during the first half of FY2011 due mainly to the impact of the Great East Japan Earthquake will be applied mainly to campaign mascot ZAQ television commercials. Personnel costs are also projected to rise as we boost the number of staff at call centers and other areas.
- There are impressions that the depth of monthly average revenue per unit (ARPU) decline is expanding. What are your thoughts on ARPU trends in the future?
- The market continues to face increasingly intense competition. In addition to telecommunications carriers, various media companies are now generating competitions with over-the-top services (TV broadcast access via high-speed Internet). Under these circumstances, the introduction of products at highly competitive prices is becoming increasingly essential. Rather than focus solely on a policy of discount pricing, J:COM is placing every emphasis on releasing products of long-term contracts that lead to preventing the cancellation of contracts by existing customers, as well as to increasing the total number of subscribing households by attracting new customers. While ARPU may decline, plans are in place to boost revenue by increasing the overall number of subscribing households.
- As you work toward implementing your medium-term business plan next fiscal year, what impact do you anticipate from the upgrading and expansion of call centers on profits?
- J:COM is currently formulating its budgets for the next fiscal year. Personnel at call centers were increased by 170 by the end of the July to September 2011 quarter. J:COM intends to maintain this level throughout the next fiscal year and beyond.
- What are your plans regarding the use of free cash flow? And, in the absence of any specific proposals, including M&A, what is your policy on returning profits to shareholders?
- J:COM will continue to pursue potential M&A opportunities. As in the case of the recent acquisition of YOKOHAMA CABLE VISION Inc. (YCV), J:COM will allocate free cash flow where required. In addition, to foster the growth of Media Business Unit and to realize J:COM Everywhere initiative, it is important that J:COM maintains its ability to invest through such method as M&A in areas where the company is currently not engaged in.
With respect to returning profits to shareholders, J:COM is looking at a dividend payout ratio well above 30% in FY2011. Looking ahead, JCOM plans to place measures to ensure that shareholders remain satisfied in their investment in the Company, while the Company prepares for future investments, growth opportunities, and crisis risk management concerns.
