Net Additions of KDDI( au M / 55.8% au 93.7%, Tu-Ka:-37.9% 1.03M / 39.3% au 54.6%, Tu-Ka:-15.2% 29.22M / 29.4% au 28.9%, Tu-Ka 0.

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Roland Chase
8 years ago
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1 1.1. Net Additions of KDDI( au au Tu-Ka) + Tu-Ka share 100% 80% 60% 40% 20% 0% -20% Tu-Ka Migrants to au Keeping Same Phone Number MNP Net Adds of au au MNP Non-MNP Net Adds of au (including Module-type Terminals) Net Decrease of Tu-Ka Net Adds Share ( au +Tu-Ka) 000subs 1, % /'06 6/'06 9/'06 12/'06 3/'07 6/'07 9/'07 Full-year / FY H / FY Net Adds / Share Total subs / Share 2.75M / 55.8% au 93.7%, Tu-Ka:-37.9% 28.19M / 29.1% au 28.2%, Tu-Ka 0.9% 1.03M / 39.3% au 54.6%, Tu-Ka:-15.2% 29.22M / 29.4% au 28.9%, Tu-Ka 0.5% Note: The graph of the net adds share excludes EMOBILE and the 1st half share includes it, as its number was disclosed on a quarterly basis. 9

2 1.2.. Breakdown au Net Additions (yoy) Net additions of MNP for 1H were +395k. On a basis that excludes Tu-Ka migrants to au, the MNP-related net additions contributed to the year-on-year net additions. MNP Net Adds 1H/FY total: 1,427k 2,616k 1H/FY total: 1,787k 2,021k ,000 1,500 2,000 Module-type Net Adds Non-MNP Net Adds MNP Net Adds Tu-Ka Migrants 000 subs Note: ( ) refers to net adds in the Japanese market. 10

3 1.3. au Churn Rate 2.0% 1.5% 1.0% 1.04% 1.00% 1.07% 0.95% 0.97% 1.03% 0.5% Up 0.08points yoy 0.0% 1Q 2Q 3Q 4Q 1Q 2Q FY FY2008.3(E) Full-year <1.02%> <1.04%> Note: Churn rate is calculated for ordinary handsets which exclude module-type terminals. 11

4 1.4. au Sales Commissions yen 40,000 Average commissions /unit* *New purchases & upgrade models 35,000 30,000 1Q 2Q 3Q 4Q 1Q 2Q FY FY FY FY2008.3(E) 1Q 2Q 3Q 4Q 1Q 2Q Sales commissions Billions of yen Average commissions/unit yen 37,000 38,000 37,000 35,000 37,000 35,000 36,000 36,000 Number of units sold 000 units 15,550 3,270 3,520 4,110 4,650 3,530 4,080 15,700 12

5 1.5. Trend of au ARPU mins ,810 6,700 6, Total ARPU WIN ARPU 9,070 MoU 8,850 8,610 8, ,380 6,430 6, Advances by Carryover 8,160 8,000 6,150 5,580 5,400 5,180 4,960 4,890 4,780 Total 4,840 4,700 4,570 4,320 4,350 4,270 4,100 Voice 1,970 2,000 2,030 2,060 2,080 2,130 2,050 3,490 3,450 3,430 3,350 3,270 3,220 ta FY2008.3(E) 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q FY FY FY FY yen 10,000 8,000 6,000 4,000 2,000 0 Full-year FY FY2008.3(E) Total ARPU of Voice of Data 6,610 4,590 2,020 6,150 4,100 2,050 yoy change Total ARPU % of Voice % of Data % 13

6 1.6. Update on WIN 59% of au users are with WIN at end-september, of which as high as 76% of customers sign up for Packet Flat-rate plans. 100% Growth of WIN Subs Total subs 000 subs 25,000 81% 80% 79% 78% 77% 77% 76% 80% 60% 40% 8,280 Packet Flat-rate take-up ratio 9,460 10,770 12,520 14,549 15,753 17,063 18,750 20,000 15,000 10,000 20% 5,000 0% WIN au sub ratio 3/'06 6/'06 9/'06 12/'06 3/'07 6/'07 9/'07 3/'08 E 36% 40% 44% 49% 53% 56% 59% 63% 0 14

7 2. Boost All-Round Product Attractiveness Promote differentiation by leveraging competitive advantage in infrastructure to boost all-round product attractiveness in terms of handsets, charges and content. Handsets Charges Double-Teigaku-Light (Packet Flat-rate) plan Content &Applications LISMO EZ Chaku-Uta-Full INFOBAR 2 Launch 9 Autumn & Winter 07 models au Purchase Program Everybody Discount EZ NewsFlash Infrastructure cdmaone CDMA2000 1x 1xEV-DO Rev.0 BCMCS Sept xEV-DO Rev.A CY1998 CY2002 CY2003 Evolution Dec

8 3. Reorganization of 800MHz Band (1) The reorganization of current 800MHz will be finished by July 2012 under the government policy with the objective to solve (i) the fragmented bandwidth assignment and (ii) uplink/downlink configuration that is opposite with other countries. Total capacity allocated to KDDI is 15MHz each uplink/downlink and remains unchanged before and after the reorganization. Reorganization of 800MHz band KDDI NTT DoCoMo Current situation a b c c a b PDC bandwidth returned by KDDI. PDC bandwidth returned by KDDI. Downlink base station terminal) Uplink terminal base station 960 [MHz] From July 2012 Uplink terminal base station Downlink base station terminal) (Not officially confirmed) Secure bandwidth assignment to pair with 700 MHz UHF 960 [MHz] 16

9 3. Reorganization of 800MHz Band (2) Secure nationwide coverage and additional capacity for subscriber increase with 2GHz and new 800MHz band for the current 800MHz band reorganization. Handsets that support dual band (current 800MHz and 2GHz band) and tri-band (including the new 800MHz band) will enable the handover between bands. As of end-september, 11.80M of these terminals are in use. 2GHz FY 2007 From July 2012 New 800MHz Current 800MHz Terminated 15MHz over new 800MHz replacing current 800MHz Population density low high low low high low Handover Image during the 800MHz Reorganization 2GHz band New 800MHz band Inter-band Handover Current 800MHz band 17

10 4. Measures to Reduce Handset Costs Launch 3 models of Rev. A handsets developed upon KDDI Integrated Platform as part of the Autumn & Winter 07 model lineup. Aim to further strengthen cost competitiveness in mobile phone development to deal with more complex and sophisticated software. au Handset Procurement Cost Create New Integrated Platform FY05.3 handset procurement cost as standard of Ratio of WIN handset sales 100% 80% 60% 40% 20% KCP KDDI Common Platform User interface Application BREW (KCP) Middleware Wireless comm. control Qualcomm OS Qualcomm MSM chipset Unique area by makers Device driver device KDDI Integrated Platform ( KCP + ) Middleware Wireless comm. control User interface Application New Qualcomm OS Qualcomm MSM7500 TM BREW (KCP) Common device Device driver Differentiated device 50 FY FY FY FY (E) 0% Standardized areas Standardized Partially standardized Nonstandardized 18

11 5. au Purchase Program New purchasing option (1) Purchasing methods until now: By reducing the initial cost burden of purchasing a handset through a handset subsidy, the popular uptake of mobile service has increased, which has contributed to the lowering of charges and the advancement of services. There will be an ongoing need for customers to switch to newer handsets and schemes are needed to encourage the use of new services etc. However: Insufficient explanation to customers concerning handset subsidy. Perception of unfairness concerning frequent need for upgrading handsets. Perception that the current system brings unnecessary switching of handsets. Purchasing methods from now on: Easy-to-understand handset subsidy schemes (Establish handset user contractual periods with clear description of the handset subsidy). Add extra options on the cheaper discounted charges available after the fixed period. Also offer cheaper discounted charges with no handset subsidy. 19

12 5. au Purchase Program New purchasing option (2) Launch au Purchase Program, which enables customers buying an au handset to choose a purchasing method suited to their needs from November 12, au Purchase Program Course Name Target Purchase Support subsidy to users Full Support Course New scheme based on incentive model For customers who wish to keep the initial cost of their handset purchase low. yes 21,000 Simple Course Separation model without subsidy No * Including tax. For customers who consider lower monthly bill is more important than upgrading a handset Contractual Period for Handset 2 years No Rate Options handset-type Other Details Current Rate Plans 8 plans Applicable: basic charge discounts. Full Support Cancellation Fee required for early cancellation. Cancellation fee for a fixed-term discount waived. Monthly points rate increased upon usage. Simple Plan 2 plans * Basic charge: S 1,050 L 2,625 Call charges: S 15.75/30 sec. L 10.5/1 min. Note: Simple Course customers can select rate plans other than the Simple Plan. 20

13 6. Termination of Tu-Ka Service / Tu-Ka Plan to terminate Tu-Ka service at end-march 2008 based upon a smooth user-migration to au keeping the same phone number; total who switched at 0.27M in 1H, making aggregate total of 2.40M (since October 2005). Tu-Ka Total Subs 000 subs 5,000 4,000 3,000 2,000 1,000 0 Migrants to "au" Keeping Same Phone Number Post-paid Tu-Ka subs Pre-paid 2, ,091 1,457 2,370 1,770 3,528 2,131 2,296 2,402 3,125 1,959 2,739 1,525 2,341 1,128 1, , /'05 12/'05 3/'06 6/'06 9/'06 12/'06 3/'07 6/'07 9/'07 21

Net Additions 1.1. <65.8%> <24.7%> <88.4%> <26.1%> Net Adds share. Net Adds. Share of : Net Adds Total subs 80% 60% 40% 20%

Net Additions 1.1. <65.8%> <24.7%> <88.4%> <26.1%> Net Adds share. Net Adds. Share of : Net Adds Total subs 80% 60% 40% 20% 1.1. Net Additions Market share 80% 000subs 800 60% 600 40% 20% Net Adds Net Adds share 400 200 0% 3/'05 6/'05 9/'05 12/'05 3/'06 6/'06 9/'06 0 Share of : Net Adds Total subs Full-year/FY2006.3