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  6. 2Q FY2019 Results Briefing

QAs from earnings release meetings and others

November 8, 2019: 2Q FY2019 Results Briefing

(*) This is a summary of questions and answers took place at the Briefing.

Question: Your revised full-year profit financial targets seem conservative, considering your profit growth in the first half.
Answer: We recognize that our financial results have been well so far; however, we should be conservative as there is an uncertainty about how much NTT Docomo’s interconnectivity charge, flat-rate per Mbps and which is expected to be revised at the end of this fiscal year, to decrease from last year.
Question: Please give us your comment on SI business situation.
Answer: Market situation is quite favorable and we continue to see strong demands. 1H19 systems construction order received didn’t increase year over year, yet this is only because SI revenue and order received for a period fluctuates due to the timing of recognition. The number of projects is on an increasing trend.
Question: Please give us your comment on Cloud business which 2Q19 revenue growth was quite strong.
Answer: 2Q19 revenue growth was strong as we recognized several large scale projects using IIJ GIO Infrastructure P2 Services and multi-cloud projects. Multi-cloud adoption among Japanese enterprises has been penetrating and we offer closed network connectivity to other cloud vendors such as Microsoft, Google and AWS and comprehensive monitoring and operating services covering an entire clients’ system including other vendors cloud services, on-premises systems etc.
Question: IIJ has already been providing IIJmio Mobile Service eSIM Plan as one of your full-MVNO services. Please give us your comment on full-MVNO service strategy including eSIM.
Answer: As a full-MVNO, our competitive advantage is an ability to develop mobile services by our own, independent from mobile carriers such as NTT Docomo. eSIM is one of such services and we also offer SIM life cycle management and SoftSIM by leveraging our full-MVNO infrastructure. As for eSIM, there has been more and more eSIM compatible devices such as new iPhone and Google Pixel 4, and we believe there should be more in the future. We could offer services that only MVNOs can provide, such as bundling mobile carriers’ services and eSIM services together.
Question: Please give us your comment on your engagement in local 5G areas.
Answer: A number of players are interested in local 5G as the allocation of spectrum is expected to take place soon. Since the construction and operation of core network is needed to operate local 5G, we, who have reliable network technology and operation expertise, are quite often asked for consultation and partnership. As one example, we were asked to join the local 5G project of SUMITOMO CORPORTATION and cable TV operators.
Question: What is your view on Rakuten Mobile, Inc.’s entry to MNO?
Answer: They seem to be having difficult time as they had to delay their full-scale mobile phone services launch due to installation of mobile network’s base stations and virtualization. We’d like to refrain from making comments as the details of their services have not been announced.
Question: For your consumer mobile business, did you see any last-minutes demand before consumption tax rate went up and revised Telecommunications Business Law was enacted in October?
Answer: September is usually a busy month for the Japanese mobile market and our consumer mobile sales was rather strong. However, it's difficult to say if such strong sales was due to the last minutes demand.
Question: Please update me on a particularly large enterprise mobile client’s migration that had impacted the subscription numbers.
Answer: Due to that migration, we’ve lost approximately ten thousand subscriptions per quarter. While we had such negative impact in 2Q19, along with accumulation from new demands, the total subscription continued to increase. The negative impact from that migration is expected to almost end in 3Q
Question: Please give us your comment on business progress of DeCurret Inc. When do you expect DeCurret Inc., to turn positive?
Answer: DeCurret launched spot trading services from April 2019 and leverage services from August. Trading volume for the leverage services, which service launch was slightly delayed, has been growing. As for when their business turn positive, we refrain from making definite comments as it correlates with the cryptocurrency market and they are still in start-up phase.
Question: The expected number of newly graduates joining next April is 207, which is quite a jump from this year’s 171. What is your policy on hiring?
Answer: As an Internet technology oriented company, we have always been focusing on hiring engineers, especially newly graduates, and training them through basically on-the-job training.

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