Executives: Masayoshi Son - Chairman and Chief Executive Officer Ken Miyauchi - President and Chief Operating Officer Yoshimitsu Goto - Executive Corporate Officer Kazuhiko Fujihara - Executive Corporate Officer Kazuko Kimiwada - Corporate

Officer
Analysts:

Operator: Thank you very much for waiting ladies and gentlemen. Now we would like to start the SoftBank Group Corp earnings results announcement for the nine-month period ended December 31, 2016. First of all, I would like to introduce today's participants. On the front row from left, we have Masayoshi Son, Chairman and CEO; and Ken Miyauchi, President and COO; Yoshimitsu Goto, Executive Corporate Officer; at the back row, from left, Kazuhiko Fujihara, Executive Corporate Officer and Kazuko Kimiwada, Corporate Officer. This meeting is live broadcast over the Internet and can be heard by telephone.

Now I would like to invite Mr. Son, Chairman and CEO, to present you the earnings results and business overview. Mr. Son, please.

Masayoshi Son: Good afternoon, ladies and gentlemen.

My name is Son. Thank you very much for joining today. So recently I’m thinking right after the foundation of the company, we are always wondering about the cash management by the end of the month so that every month cash management in the achievement of the budget was kind of big part of my brain or big part of my heart. 10 years later since then, we have listed our company and not one month by one month like the way we came to see three months or one year so that we are able to see a little bit longer term of the period. Recently, what happened to this year, what happened to this quarter is not really the focus but rather we are focusing on the 10 years later how we’re going to form our company 10 years later, 30 years later? So I’m seriously thinking to sustain the company or the Group towards 300 years so that we would like to sit such the foundations to sustain 300 years while I’m still young and we would like to also consider and pass the torch to the success.

Before that, what kind of foundation is necessary, what kind of format that do we need to set, that’s something that I’m spending my times these days. So from the sales of Softbank2.0 is something that in our mind and acquisition of ARM was one of the biggest step for the SoftBank Group towards Softbank2.0. And starting from there, we are trying to be ready to be more aggressive and that is why that we studied for the Softbank Vision Fund and we are preparing for the final close. We are making quite a good progress and now we are in a very much last phase of the Softbank Vision Fund closure. And because of [indiscernible] point of view, we are in the quite period so that I cannot discuss any of the details on Softbank Vision Fund at this moment from the regulatory point of view meaning that we are very much ready and now that we are quite sure to be able to launch this fund.

So it’s becoming more and more realistic. And this is something it is very important – playing a important role for SoftBank to grow 10 years, 30 years and 300 years. So today, during this announcement that we will discuss and present, the progress in the last three months or period and as I mentioned earlier I cannot discuss the details of the Vision Fund but I think we can touch on a little bit of the concept of the fund. So this is the SoftBank which entering into the new phase and I hope you can feel some of those and also we will welcome your occasions afterwards. So just let you know in advance not fully takes questions please, no U.S.

politics please, that’s something that I don’t want you to ask me about. Even you ask me anything relates to politics, I’m not in the position that I can make any comments so please note that in advance. This is to present you the business of the SoftBank, just to remind you. Thank you very much. SoftBank, as I mentioned a little bit here, what is SoftBank you may wonder, what SoftBank does, what is the business domain of SoftBank? Recently, this company acquired ARM, is this the chipset company? In its way from the core business of SoftBank, that may be – many people may surprised and questioned about.

But since its foundation, SoftBank never changed in terms of information revolution. We’ve been present the information revolution all the time since its foundation. Great person, Mr. Ryoma Sakamoto, who I respect most what he devoted himself to was for the Meiji Restoration at a time he was also a good [indiscernible] source and also sometimes they change to [indiscernible], sometimes he changed to the ships and also he made a lot of savings and also touched on some frameworks for the law and regulations. Afterwards, he became the person to set jurisdictions and the framework for the Meiji Restorations.

That became, later on, new constitution for the new government of Japan. So even though the form or poster may change, but he was always devoting himself to the change of the period, change of the country. So SoftBank, we have started, we issued distribution of PC software in the beginning and after then we have also started some publications and then started the internet business, now entering into the mobile internet at a time we acquired Vodafone K.K. Some people said why SoftBank acquiring the mobile telecommunication which is totally away from the core business, but actually in my mind, in my big picture, actually Alibaba changed my policy. Actually I was always consistent towards the information revolution and the mainstream for that revolution is always one thing which is the chipset with the microcomputer.

At a year of 19 or maybe I was 17 or 18 sometime later teens, I first saw the photo of microcomputer chipset. In that time, there was no such word of singularity but this chipset actually will exceed the human brains and human intelligence, that’s something that I imagined of and also I was so impressed, and actually my tears came out from my eyes and I never changed my desires. I’ve been devoted myself into the information revolution all my life, so that has changed from PC to mobile and now mobile to Internet of Things. So everything pair of glasses, pair of shoes, washing machines, automobiles, everything is going to be built with the internet. So the core or the center is going to be changed to the IoT and I always tried to be in the center of those trend and try to aim in such a business every time.

So always trying to be the latest edge of the technology and we are challenging towards that. That’s the kind of a company the SoftBank is. And we need to accelerate this information revolution. To accelerate, we have set the foundation for the Softbank2.0. So that’s main policies of our company and now that I would like to share with you our consolidated results of the latest three months period.

As we can see, our business performance is doing very good. In one word, it’s very good, making a good progress. And net sales down 0.3% but as we can see Domestic, Yahoo, Distributions everything doing great. Sprint, this is a company in United States and their net sales in dollar base it’s increasing but because of the impact of strong yen, we had some decrease there. So maybe we should consider in dollar base or should we considering in Japanese yen base because we are Japanese company.

I think that’s depending on how you see but that’s the kind of a reason why. And EBITDA increased by 9% in breakdown, Domestic Telecom, Yahoo everything is doing in good progress. Sprint, regardless of the currency, Sprint EBITDA is increasing, everything doing great. EBIT, up by 18% and breakdown here, in the earnings results, two, three time periods ago, Sprint probably was expecting that the U.S. bankrupt and you never be able to see any solutions for that.

But in my mind, in my head, it’s a matter of fact, I was already so sure that Sprint is going to become the driving force for the Group’s growth and I’m becoming more and more confident. And now you can see the result, you can see in numbers. Sprint operating income, EBIT is now almost three times. So its sales up 18% of which the biggest portion of the incrementals are coming from the Sprint. And I believe this status or this situation is going to grow even farther.

And after the ARM acquisition or the Sprint acquisition, we have seen the net debt increase. However, EBITDA is also increasing at the same time and also the large investment going forward is going to be going through the fund, so that borrowings or the net interest bearing debt to EBITDA is going to decrease going forward. If it’s [indiscernible] it may be too good from my understanding because that means that we need to pass on the gross opportunity. So we would like to keep the healthy level of leverage is better for the business. So within healthy range, which is between 3.0 to 3.5 times is something idea also that we can put to some guess but at the same time that we can grow at the same time.

So that’s the kind of a level that I’m thinking as a comfortable level. And we would like to coming down to 3.10 times level sometime in the future. 3.5 times I said, but in my mind, in my calculation this is zero times because we have marketable securities with us which I already listed and with that amount actually we have more than what we have borrowed. So we can make it zero if we wish to so that’s why that I’m so comfortable with this number. And next, we like to go into the status of major segments.

First, Domestic Telecommunications, EBIT went up 9% so it is going smoothly and the number of subscribers is also growing smoothly. 540,000 increase year-on-year. In addition to that, SoftBank mobile on Yahoo Japan business are deepening their collaboration. So Yahoo shopping is now growing greatly and users of Softbank mobile and Yahoo shopping business corporation is enhanced, so we have a campaign of giving 10 times points which started this month. And as a result, this has just started but according to a latest information, we are seeing very good results.

So three months later, I believe I will be able to tell you the content what is good about it. And before mobile, fixed broadband, ADSL was started. Fixed broadband to make internet faster, ADSL was started. At ADSL at the start, that was one the early technology to start but now this is being replaced with optical fiber, FTTH and to link to the home. This business is growing greatly and I believe that this will continue to grow 2.6 times year-on-year is the current level.

So I believe these will further grow and this is something that we can grow by generating profit at the same time as a result of free cash flow also is growing. After tax after CapEx, this is a cash income that remains. From an accounting perspective to the many ways of expressing revenue like EBITDA or adjusted EBITDA, operating income, ordinary income, net income, there are many ways of expressing the accounting terms of whether that is based on U.S. GAAP or IFRS or the Japanese accounting standards. There is plenty of [indiscernible] the way you measure is different but the final fact that remains ultimately is cash.

Regardless of what happens, that is the fact and cash in the last three years, free cash flow is growing dramatically. That is where income made in one year, nine months for 424.9 billion cash income is yen rated. For the full year, for domestic income only 500 billion free cash flow was our projection but now as of today, I make an upward revision. So the free cash flow 20% compared to net sales is the largest ratio in the world. Our Domestic Telecom business is one of the major businesses with one of the best business efficiencies in the world.

Many people said that SoftBank may go bankrupt. SoftBank’s telecommunications is facing crisis but in terms of free cash flow the ultimate profit, we are able to generate profit. So Domestic Telecom business is growing and we continue to grow steadily as Mr. Miyauchi is doing a good job as a President. He will continue to do so going forward and I’m quite confident about it.

And another important domestic business is Yahoo Japan. Yahoo in the U.S. face a variety of difficulties but Yahoo Japan within the Yahoo Group is the only entity increasing profit and growing every year. Yahoo Japan has several profit models but when the project release advertising revenue, advertising revenue which is search ads and display ads, both are growing 10% growth year-on-year. So this is how this has improved.

And another important pillar is e-commerce. E-commerce revolution was something that I announced three years ago. As I said, Yahoo Japan, I myself I took the leadership to make a transformational business model of Yahoo Shopping and in three years the number of merchants increased by 16 times. I’m not going to mention the names of competitors, but these are 10 times compared to the number of merchants of competitors, 10 times more that of competitors. E-commerce revolution actually changed the business model and then as a result of three years, there was increase of 16 times, 10 times compared to competitors.

Before that, for 10 years, there was no growth at all but all of a sudden there was increase of 10 times compared to competitors. As a result, net sales also doubled. So we could establish on model for our next five or 10 years E-commerce, Yahoo Japan shopping, growth model is made. So we have to further increase execution and realize this and then quite confident that we are able to do that. The most challenging business was Sprint.

Now, SoftBank was often heard that we will be making a big loss because of Sprint and also it was said that SoftBank is going to acquire Sprint and T-Mobile’s 2B against the 2 big bang [indiscernible] AT&T and try to make it three competitors world. And that was the original thought at that moment but unfortunately that moment the regulatory in United States was not accepting that idea. So that the first strategy did not happen, so that the Sprint had to go by itself, so maybe we shouldn’t have both of that. I regret my decisions about back then because my assumption was that the merger in between those two is going to be accepted but that was wrong. So I lost my confident that moment and I really didn’t like the world anymore and I made a lot of thinking and my hair gone too.

And [indiscernible] that was kind of feeling I had that moment even in earnings results announcement I said that there is a long journey to go. The situation was so bad. It was a kind of terrible track record back then. Network quality was the worst, net additions the worst, acquisition was the worst, margin the worst, free cash flow was all red and actually money is flowing out, more and more debt. So that was the situation the Sprint was so that we made so much effort and we have suffered a lot.

And with the decisions of acquiring the company, many people said that we’re going to suffer even more longer and nobody is going to buy it, so we had no choice but we have to turnaround by itself with the four turnaround strategy. First of all, its network improvement, the net adds improvement, cost reduction and diversified financing methods. So those four strategy was actually led, I myself also in vote as a Chief Network Officer, [indiscernible] was leading sales and the cost of reduction but when he comes to network, he was not the expert so he asked me and because I have been saying that I’m taking a responsibility for that, so that’s why I said that I can lead that. And even today, I myself is having a call every week to discuss the detail of the network design with Sprint members and also checking the progress of that status starting from 10 o’clock till 12 o’clock at night every week I myself as a Chief Network Officer that I’m involved in the conference call. Normally, the Chief Network Officer is an engineer in the normal management responsibility.

So what they do is they’re trying to get the budget for CapEx, trying to get the money first of all and need to get the budget first, secure the budget. So that’s the first thing the Chief Network Officer has to do and ask CEO for the budget. But me, I myself is owner and at the same time Chief Network Officer, so I always ask team, why you’re going to need such money? What you’re going to use it for? So that’s the kind of question we all needs to ask so that amongst the four competitors, we made the least CapEx. But actually we made fastest improvements in network quality amongst the four. It’s easy to say as a Chief Network Officer if you can split so much money and improve the network, that is easy because there are lots of vendors to provide you the equipments and the vendors they will be cooperative to improve the network, to structure and build the next generation network so they ask us to buy that.

But I just said, no. We all rejected the budget request and I myself involved in design from the scratch so that we could spend only least amount of CapEx but as a matter of fact that we were able to improve the network and we are becoming number one sometime soon. SoftBank Network is the best connectivity amongst the world. Here in Japan, you see SoftBank, Docomo, KDDI, three competitors are competing so peacefully to improve the network improvement. So you take it very common but if you go outside the country, if you go to the overseas, you surprise to learn that how good the Japanese network is and how good the LTE network is in Japan.

And you also amazed how lucky you are to be able to have such a great connectivity in Japan. That’s something that I first learn when I involved in the Sprint management. I understand that how the network is now good in terms of quality but without spending much money actually we just had the earnings result announcement in Sprint in recently and many people misunderstood because we are not spending enough money so that we cannot improve the network and I understand that but that’s totally wrong and a big misunderstanding. If you spend enough money, that doesn’t necessarily mean that you can make a big improvement. Of course that will make a good improvement but what makes SoftBank mobile the company with best free cash flow is that because we minimize the spending CapEx and creating a great network, that’s why that we became the best free cash flow operator amongst the world.

So the least spending and the best improvements in network, not only the improvement but also absolute number wise that we will be number one sometime soon. Me, as a Chief Network Officer, I can make this happen to become number one. I’m so confident with that and we believe that we have such a design ready to become number one in the market. And network hours, this is the number of the hours, are also increasing. This is awarded by the third party and as a result the Sprint made the best improvements amongst all.

And so the customer acquisition [indiscernible] leading team to make a big improvement here. Actually we’ve facing the net loss every month but now that we are seeing net as every month churn ratio also stays low. As a result, operating revenue is now hit the bottom and at the same time cost of reduction has been making a significant progress. Actually, the fixed cost annual basis, we were able to reduce by about ¥1 trillion level in the past four years. So annual fixed cost usually was about ¥3 trillion but now it’s been down to ¥1 trillion level.

So in the past four years, EBITDA has been doubled. So we made a complete turnaround. It was so challenging but now we’re seeing the turnaround. As a result, operating income it’s been red in every year or every period is now making a big turnaround and now we are seeing operating income of 1.3 billion in nine month period. In U.S.

history, this was one of the biggest turnaround ever. So it has been making a big loss and turning around this much is actually very rare example I believe. Free cash flow is also making a big loss but now its turnaround and now showing the positive figures. Liquidity, many people said that it’s almost bankrupting and no liquidity but here as you can see we have enough sufficient level. Even as of today, the people may think that the Sprint is jerking SoftBank’s results.

Sprint is the bottleneck for SoftBank. There are still such people in the market maybe or almost half of the people think that Sprint is the bottleneck of the SoftBank. That’s kind of the perception that people may have but actually the money that we spent for the acquisition of Sprint was ¥1.9 trillion and the Sprint is, this is a company and as of today the Sprint’s value is over ¥3 trillion now. So that we’ve been suffered most after the acquisition of Sprint but actually we have increased the value of Sprint 58% compared to what we have spent in the acquisition, so we have made more than ¥1 trillion here. Within a short and limited timeframe, listed value or equity value has increased by ¥1 trillion.

So that Sprint is no longer the bottleneck. So now that I believe this is the time you need to get rid of the perception that Sprint is the bottleneck of the SoftBank and I have more confidence. That is why we’ve entered the acquisition of the ARM, that’s why that we were able to make such a decision. So now that the Sprint is becoming not the bottleneck but now driver for the growth and I’ve been telling you from these results and as a result, that we came to the conclusion to acquire ARM. And on top of that as a result from there, we’ve already for the next game, which was to make decisions to sit the form for the Vision Fund so that Sprint is making a very good progress.

Now, next is about ARM. I’m happy that I could acquire. I’m really, really happy that I could acquire ARM, SoftBank before ARM and SoftBank after ARM, that is just like SoftBank1.0 and SoftBank2.0. There is a major difference SoftBank before ARM, what was it? In terms of number of users, the third largest telecom company in Japan and there is profit margin maybe topping of the road in terms of absolute amount, in terms of number of users, number three in Japan, number four in the U.S. Is there anything that we were number one? Yahoo Japan maybe number one in Japan but to be overwhelming number one in the world, I don’t think we had such a benefit so far.

But with ARM, finally ever since the establishment of SoftBank, there is something that we can become the number one in the world and for next 10, 20 or 100 years the most important business segment and that segment to be the overwhelmingly largest company to the top in the road is now possible. Everyone in the road now uses smartphones and 99% of smartphones I believe uses ARM. It is difficult to find smartphone which is not based on ARM. With this position with ARM, now going forward with SoftBank2.0, one very important strategy that we wanted to do just like [indiscernible] we have been able to take the corners of the board. But this is just the beginning of what I’m trying to do.

Chip in these nine months, 12.5 billion chips that were shipped. On annual basis, this will be 16 or 17 billion units. Local population is 7 billion, so everybody in the road in one year per person, it means that everybody in the road but more than 2 ARMs per year or 2.5 ARMs per year. In terms of global population, people in their countries having difficulty in finding food, the elderly people who are babies, people who never buy electronic products but including that it is still 25 per capita in terms of global population. Having recognized that, I bought 2.5 ARMs in one year.

I don’t think people would think that way in one year, this year but you have more than that every year. [indiscernible] is higher than the average of the road, so that is how much we are buying ARM. And ARM has not penetrated into the lifestyles of everybody in the road with accelerating R&D to increase investment. Don’t ask me what is the purpose of investment? We are now working towards Softbank2.0, we have started preparations towards that and through the future ARM2.0 I will be personally involved in the strategy and business model. I’m just making the strategy and business model in smartphones and home electric appliances or cars, ARMs are useful but not only as super computers, next generation super computers are using ARM.

The next super computer of Japan post K will not be based on ARM in Europe as well, but next generation super computer will be based on ARM. All super computers in the road, models that will win is a competition for super computers in a road are all based on ARM. ARM is not a mere small piece of chip, but [indiscernible] horsepower is important, ARM is playing a role. So I’m really, really happy that I could ARM. And next, Alibaba.

16 years ago I invested into Alibaba. 16 years ago at that time in making that investment at that time in Japan. The top leaders of the business circles in Japan, when I started investing in a Chinese company Alibaba, what is that company with a name of a Alibaba. You cannot trust China. You will feel if you invest in China.

So many people questioned me. But at that time, I said, no, I don’t agree. I respect you very much, but my opinion is entirely different from yours, it’s entirely opposite from your opinion. I trust, I see things from the bright side. I can see things from a critical point of view, I’m sure China will grow.

Internet will grow in China and China itself will also grow. So I said I was aggressive and as a result, it was good that I could make this investment. Alibaba has grown to this size both in terms of total revenue year-on-year basis, growth is 54% and in terms of net income growth is 36% of free cash flow. I said this is our most important figure, 44% growth. Free cash flow in three months is more than ¥500 billion, ¥500 billion in three months.

If you multiply by four, how much is that? That is the current pace of growth. On top of that a 44% growth. From the bottom of my heart, I’m very happy that I could invest on Alibaba, but this will still grow and actually it is continuing to grow, so in the future Alibaba will continue to be one of the core companies of SoftBank Group. New investment is OneWeb. What is OneWeb you may wonder, so I would like to touch on a little bit on the OneWeb for today.

This is the next-generation low-earth orbit satellite communications company. For here, we may – we are to invest in hundred and some billion. Now that we are investing SoftBank Group, but once the fund is formally – officially launched then it’s going to be investing from the fund. The partner for the fund also agreed and eager to invest from the fund because of the time matters that we cannot really invest from the fund at this moment, but we would like to pick this company as the first investment from the fund. So usually we have 36,000 kms away from the earth, so that the 700 millisecond to 900 millisecond delay latency occurs.

Not only the voice but also data communication also caused latency. So that not quick response, but there are some difficulty speaking, but that will come closer 30 times, so the distance from the earth is going to be 1/30th, so that if you got closer then the 700 millisecond to 900 milliseconds latency is going to decrease to 20 milliseconds to 30 milliseconds, so 20 milliseconds to 30 milliseconds meaning just the latency is same as optical fiber. So even from the space, but actually that you will be able to realize the communication speed of LTE speed. So I want you to see this video please. [Video Presentation] So here you can see the earth over there, so from – 36,000 kms away from the earth, you see these geo-satellites, so from these satellites that we are making a communication, that is why we are so far away and also make a lot of delays too.

So that’s why that it is not convenient to use, but now this is coming closer to by 1/30th. So if you come closer by 1/30th, then you cannot cover with the limited number of satellites, so we need to increase the number of satellites first of all. And the number of satellites, we are talking about 700 to 800, which is the size of 1 meter, cheap, light, and that comes closer to the earth. And there if it’s back in status, noise is going to decreasing and the communication is going to be even more better quality, so that the large size, low latency communication is going to be happening here. The speed we are talking about is 200 megabyte for downlink and 50 megabyte – bps for uplink, so it’s almost the same as optical fiber.

So ADSL or LTE for mobile or the cables, actually we are talking about much, much faster speed here and also much, much less latency. So we can do the broadband from the space. And when it comes to that, from airplane, ship, or those faraway distance space that we can make connection or even in the very much that – those are the places where you didn’t have backbone in optical fiber or the distance areas, mountain areas because from the space you can make a connection. Here in Japan, we have luxury of the optical fibers and it’s available everywhere as I mentioned earlier SoftBank Hikari now that connected to the home as well, but when you look at the world, you cannot really find a place where that has this much of luxury of optical fiber even in United States if you go to the suburban area, not the optical fiber, but even cable is not connected. But if it comes from the sky, when it comes from the space, if you can enjoy the connection with the optical fiber level or how is that – or that were connected to the base stations or you can connect it to the car.

So here in the photo, it’s like a [indiscernible] the normal type of family car, on top of the roof, you can fit the antenna to make a connection. So the normal family cars – the photo is not very great here, but normal family cars or sedans will be able to mount with the antenna on top of the roof, so whereby you go you will be connected. And if this is a LTE base station, actually the roof of the car is going to become the LTE base station. So that it’s not the ordinary satellite phone, you don’t need to have a big large giant box, but inside of the car you will be able to utilize whatever you use, such as iPhone, Android smartphone, it’s going to be connected and you can talk. So wherever you drive without any interferences that you will be able to speak, if you go to the suburbans, if you got to the mountain area but still and car is going to be used as a connected car, so wherever you drive, you will be able to be connected any time.

So this is just one example, but with that I believe that the communication revolution is going to be happening here. So me being as a telecom operator, we can make a connection to 98%, 99%, but last 1% coverage, last 2% coverage. Actually about the same amount of CapEx is required to cover the 2%, last 2%, same amount as well. So we have spend in 98%, so the cost efficiency is not so good, so that is why the global telecom operator is actually giving up with the last 2%, that is why you cannot make a connection. But Japan, we never gave up, so that we are making much CapEx, so that we can make a connection everywhere, but in average, if you look at the global telecom operator, they gave up on the last 10% of the coverage.

But here if you can make a connection from the satellite, you can make a connection to last 1%. In China, in one telecom operator, they spend about some trillion yen annual basis in CapEx, U.S. operator only one company spent one point some trillion yen for CapEx, only in one year, ¥1.5 trillion, ¥1.6 trillion yen I would say. This one way, can you imagine how much CapEx is required to make a connection worldwide, in some of the fixed cost in CapEx for one year investment how much do you think? Only one company, they are spending ¥1 trillion, ¥2 trillion for one year only for one country. For this case to cover the global, the sum of the fixed cost in the CapEx is about ¥100 billion level, so much cost efficient we are talking about here.

If you can make that reasonable, why do you need a cable anymore, why do you need optical fiber anymore, why do you need mobile operation backbone is needed in other way why we need the expensive connections to make a connected car. With this OneWeb, the way you like to make another communication revolution so that we will be connected to the people around the world and we will become the major shareholders of this company or we already are major shareholders of this company. And other than this, we made several investments and the track record in the past 18 years, every year, we’ve been increasing the 44% of value, we are being profitable after the investment. You never see such a company around the world, I believe. With this size is this rate.

We believe that we are the one that we can achieve that. And people will ask me you are lucky because of Alibaba, so why don’t we exclude Alibaba from here, 44% becomes only 43%. So 44% to 43% even excluding Alibaba still we are achieving 43% of IRR. Then Sprint, which gave us a suffer or SoftBank Mobile, those are the less growing powers compared to the others. If you include that, that would just give us 43% of IRR.

Even excluding Alibaba, 43%, even excluding – including Sprint, but still 43%, so no excuse at all, but still we are achieving 43% of IRR. So we as a business operate our companies, which made the best margin ever, but also from the investment size, we are the global number one track record company. This is the story about the past, but with the SoftBank2.0 do we want to do was the most important part, which I mentioned in the beginning of this presentation. SoftBank has been making internet revolution of PC and we were always making investment in the latest edge technology of PC world. So one chip, built it in PC and PC connected and becomes internet.

With this PC internet, we made a investment in the technology around the operations and here we are. In the same chip, but not into the PC, but now put it into smartphone and smartphone to smartphone connection, make us available with the mobile internet. So that now that the – we are in mobile internet revolution for that, we made acquisition of Vodafone K.K. And the core of this internet or the core of this revolution is transferred from PC to mobile and now mobiles to PC – excuse me, mobile to IoT. And every devices will be mounted with chip and that will make another revolution of internet.

So all sorts of devices is going to be built with chip and that will connect it to internet and data is going to be accumulated in the cloud and the data accumulated in the cloud is going to be used as a deep learning, so the data in the cloud is going to be utilized for AI, you can analyze and you can make an assumption. And that is going to be singularity. And in the process of singularity, most important or the core role is played by chip. And once that every device is going to connected to internet in IoT and 90% of this IoT is now with ARM. Most important revolution of internet, revolution of information and the revolution of chip and this chip, 90% of the global market is now using ARM.

Smartphone areas, it’s is already 99%; IoT, 90% or over is going to be using ARM and that is a singularity. The chip actually – the capability became million times in 30 years and I believe they will be making another million capability improvements in the coming 30 years. So a million times capability will bring us all kinds of intelligence and the brains – human brains is going to be exceed by the chip intelligence. And so all – so and so the industry is going to be redefined, medicals, automobiles, social infrastructures, all kinds of industry is going to redefined and there – there will be a chip and 90% of those chip is going to be connected with our ARM chip. And then there will be a big, big bang happening, I expect.

We saw a big bang in PC, we saw a big bang in internet and I believe the next big bang is going to be even bigger with IoT and singularity, not probably everything, but all sorts of industries, the chip is going to human brains intelligences and that to be connected with wireless and connected in the cloud for super intelligence. Sorry to say a little bit aggressive things, but in the coming 30 years chip is going to be built in the shoes, so the chip in the shoes going to exceed our brains. Actually we are going to be less than shoes going forward in the future. That’s a very – a little bit – sorry, so we are going to lose against a pair of shoes or the pair of glasses, all kind of things. So the chip those pair of shoes itself maybe a very small things, but that chip is going to be connected to the cloud with wireless and then the cloud is going to make it – use it for the deep learning, then in the big picture in a total system so many things is going to smarter than the brain and again the whole industry is going to be redefined.

And then – now that Uber is redefining the car service market, Airbnb is redefining the hotel industry, Google is redefining the search industry, Steve Jobs with smartphone, redefined the mobile phone or cellphone, such redefinition – redefine is going to happening in all kinds of industries and all kinds of lifestyles. So this big bang is going to be much, much bigger big bang than the past big bang as if that the past big bang is just about the practice for this time big bang and to be ready for that. Already for that age, we need to set the foundation and that foundation is SoftBank Vision Fund. So that kind of conclusion I came to based on the preparations for the big bang. So this fund is not the short-term investment, short-term return for 3%, 4% something like that, it’s totally not that thing.

Usually 20% to 40% of share owning and become the major shareholder, also we will be on the boat and together with the entrepreneurs, together with the management, we would like to discuss the strategy, we would like to discuss a business plan, so that we can create the organic partnerships or Strategic Group and that will be the best way to set the Group. So with the same – we can share the same vision and create the group. In the past, there are the group companies or the family companies or the blood relationship or the brand sharing, that’s the kind of very traditional way in Japanese companies in the past, but in the those group companies not necessarily the number one company in the market. Number one in automobile, number one in chemical, number one in tiers, there are no such companies that make all number one, so it’s like number five, number three and number four, sometimes number one company, that’s the kind of group companies then. You have to make some compromise there, because this is a group company, you are not number one in this market, but we have to use you we are the group company, that kind of compromise happens, but we are not that way.

We are not stick to the brand by blood or nationality whatever you are, if you are potential to become number one, you will be the strategic group company and will make a synergy, that’s why we are strong. And once we made a success, we can exit and that’s why that we can the very strong and potential group, so it’s not only the investment and return groups, but we share the strategy, we share the vision and we setup the group. So that’s the kind of new way – of new system which we didn’t see in the past in the world and we are creating – SoftBank is creating such a new way of strategic group. The first system in the world, so that may be difficult to understand, but I believe we will be able to show you the very new SoftBank [indiscernible] SoftBank Vision Fund is actually – there are about $6.5 billion is the kind of total sum of the venture capital amount, so the $6.5 billion, but here we are talking about $100 billion only by one SoftBank Vision fund. So actually that we are bigger than the – some of the vision fund worldwide.

So that’s something that we are trying to create and why, because we want to make people happy with information revolution. So with this philosophy, we gather together and that is SoftBank. It became a little bit [indiscernible] and it’s not the ordinary earnings result announcement, but I hope you understand what do we want to do and I hope you share the same understanding. Thank you very much that is all for me.

Operator: Thank you very.

Now we would like to open the floor for questions. [Operator Instructions]

Unidentified Analyst: About domestic mobile telephone business, the numbers are very good, but ARPU is declining, the share is number three and I think your position remains flat. What is the future of your top earner in the next 30 year tenures? As a foundation, what is your position of mobile phones and how are you going to strengthen?

Masayoshi Son: Yes, I competition I believe is important. All the companies should compete with each other and price should compete. So with regards to ARPU, there is pressure of always going down.

If the service and the content is the same, there is a force as it relate to competition of dragging the price lower. That is what the customers are looking for. Against that if we are only going to reduce the price of course our profit will go down, so we must add something to that, what are we going to add is not only just be able to connect, but to increase additional service, to have more diverse menus. And the volume of telecommunication is increasing all of a sudden. So including videos, there must be more volume provide for people who want to use more, so unit price is declining, but people who want to enjoy volume we must be able to provide volume and also to add menus.

We will continue to do such efforts. We have been doing that so far but for the next 10 years, 20 years or 30 years, we have to spare no efforts and continue with that. In terms of continuity of the management and also to respond to the needs for price of the customers, we have to do that. About ARPU, in the future how much [indiscernible] do you think there will be in the future, I think you consider that what would be image in Japan. If it’s only about telecommunications, if the qualities are same and the volume is same, ARPU will continue to go down.

It is difficult to calculate what is the percentage of decline, but the additions and also customers – subscribers will increase, with that the profit [indiscernible] free cash flow, we have to continue to increase. So the larger 10 years from now, larger 30 years from now, that is what you are aiming for. In addition to that if I may add, number of people will not increase with IoT and ARM, everything will be connected. 1 trillion items will be connected, 1 trillion users will be connected. So the unit price may be low, but everything will be connected, unit price is low, but the volume will increase greatly.

So in particular, SoftBank Mobile or in Japan, Sprint in the U.S., the number of users, it is difficult to increase the number of users. The number of connections through IoT, I believe, we can overwhelming number one. And I believe with that we can further increase our revenue. That is the effect of ARM.

Unidentified Analyst: [indiscernible] I want to ask you about the share price.

Just a year ago, right after the earnings results, what was ¥4,332, six months ago you mentioned that you think that it’s really the buy and now you still feel the same way and you say the same thing?

Masayoshi Son: I think so, even now that I think so. Because our market cap – equity value of the Alibaba is about the same and we have so much other than Alibaba, we have ARM, we have Sprint, [indiscernible] it’s now going to grow and that’s coming free of charge.

Unidentified Analyst: Do you think there is such a--?

Masayoshi Son: Sorry, I think that the SoftBank shareholder is going to be even more happy, that’s how I feel but that’s up to how you decide.

Unidentified Analyst: One another question about Sprint, during the conference call you said you are having in every week from 10’o clock, six months ago you said you are having the call every day and have you changed the time or location?

Masayoshi Son: Yes. Sprint has already made a big improvement so it’s no more every day call [indiscernible] management and its showing becoming a more and more confident about business.

So he is leading but only for the network. I still involve deeply for the discussion.

Unidentified Analyst: So the core year is still excited?

Masayoshi Son: Yes. I’m having so much fun at night 10’o clock or Saturday or Sunday time. So if I’m not excited, I cannot do that but I’m always looking forward to have such a call and I’m excited about that.

Unidentified Analyst: Thank you.

Operator: [indiscernible]

Unidentified Analyst: In your past investments, you have been able to increase value but for future investments I would like to ask a question. At the end of last year, you made a announcement of making large investment to U.S. to promote employment but under the new administration Mr. Trump for protectionists there are lot of concerns in the rule.

Despite the situation, in what areas do you - you’re making investments under the new Trump administration to make your investment?

Masayoshi Son: I’m free from making political comments but at least what I can say is that better relation is going to take place in many ways in the U.S. and the President himself is seeing that in public. With deeper relation, this means that that will create a lot of business opportunities. In addition to that, as I have been saying, similarity with bank will come to play. So there will be a lot of new business opportunities and of course new employment will also be created.

Unidentified Analyst: To be more specific on [indiscernible] regulation, what do you mean?

Masayoshi Son: That is still to come. He was just – he is a new President and the administration just started to regulate and your procedures are necessary but he is saying that he would do that. I’m looking forward to that.

Unidentified Analyst: One more question with [indiscernible] Alibaba by investing jointly into the U.S. what is your purpose?

Masayoshi Son: Alibaba and [indiscernible] so both are making investments by themselves and they are making their own decisions.

Unidentified Analyst: But they are very close as a strategic group, so is there any opportunity by each team, if it is possible to invest together and do business together?

Masayoshi Son: They may give priority [indiscernible] opportunity.

Unidentified Analyst: [indiscernible] I have two questions, Sprint Marcelo, I think he was visiting Tokyo recently, what was the discussion you had with him? Was that the T-Mobile challenge?

Masayoshi Son: We had a SoftBank board meeting and there was business update of Sprint and Marcelo explained about the progress of the turnaround. Also we had Simon from ARM was visiting us same day and also Rajeev, CEO of the Vision Fund, was in the board meeting to update both members of the business. So three of them each was making updates to the board member.

Unidentified Analyst: Any case that you’re going to buy [indiscernible] after the ARM?

Masayoshi Son: I’m not going to make any comments on individual items.

Operator: [indiscernible]

Unidentified Analyst: At the end of last year, you said you’re going to invest 5 trillion to Mr. Trump and that acquisition [indiscernible]. You are also making investments into China and India, and the SoftBank company born in Japan and your profit, sales is growing in Japan. So any major investments in Japan to increase employment since you developed the company in Japan but you are investing more into overseas. Why don’t you return those profits into Japan?

Masayoshi Son: Yes, of course, I will make investments in Japan.

Unidentified Analyst: As SoftBank KK under Mr. Miyauchi, our investments enhance our business by itself but through our fund is there any good deals in Japan?

Masayoshi Son: We would like to actually consider such opportunities. First, if we invest in an American company and to expand as their own business, let’s say that company once they make a joint venture in Japan, that maybe another form of investment, a case like Yahoo Japan. I think such model will increase in the future and as a result that will create more employments. And with those model originated in Japan in places where we started of course we want to open doors to such opportunities as well.

We want to actively consider such opportunities. The regional business model in Japan [indiscernible] about NAND flash. I’m interested to do such a business. I’m free from making comments about individual cases but in Japan there are many good technology, there are many founders of new technology in Japan so you want to keep watching such opportunities.

Operator: [indiscernible]

Unidentified Analyst: [indiscernible] Tokyo.

When Mr. Trump won Presidential election, you was the first businessman from Japan to meet him and also talk about the investment plan in the United States. What that trying to be closer to Mr. Trump? Was that positive for you or was there any negative side by meeting Mr. Trump?

Masayoshi Son: I went to meet President in United States, I met President Obama as well, I met Prime Minister in India, I met Prime Minister in UK, also Prime Minister in Japan as well.

So top leader of each countries that I would like to meet also President Putin I met recently. So whenever there is any opportunity I would like to meet the top leader of the country and also need to understand the regulatory, laws is going to be there. If we want to invest in those countries and also need to understand get the return from the investment and that we need to comply with the law and regulations, so that’s something that they require more communication. And by making investment into the country if the country can make developments from there, then that will be the win-win relationship, so that’s why that I believe it’s natural to come and visit them.

Unidentified Analyst: So there was [indiscernible] order and there are more and more events or the demonstrations happening in United States and wasn’t that drag – and will that dragging the business in the United States?

Masayoshi Son: As mentioned earlier, I cannot make any comment about the politics and there are lots of complicated issue there, so that it’s not simple answers, there is no such simple answers.

But from our point of view, singularity or chip revolution, mobile revolution, smartphone revolutions, that will bring us a lot of opportunity in every countries and the U.S. is center of those countries and I believe opportunity comes first from the United States compared to the others. So there we would like to be making active in terms of investment.

Unidentified Analyst: One another question, so you mentioned about the deregulation in United States which will bring you more opportunities for the business. Deregulations on telecom industry in United States, do you expect on that? And with that, do you think that you’ll be able to have another challenge for T-Mobile merger?

Masayoshi Son: Telecommunication business can be one of the agenda for the deregulation and we are involved in telecommunication business so that we will welcome if there is such deregulation happens in telecom industry, telecom business.

When it comes to the merger of T-Mobile, that was two years ago or three years ago we just saw the one option one way so we are always the buyers and we’re targeting towards T-Mobile. We were so set our directions to that but now we may buy, we may sell maybe simple merger. We may be dealing with T-Mobile, we may be dealing with totally different people, different company because the Sprint management, Sprint business itself is becoming driving force of our growth by its own standalone basis so that we can also run Sprint a standalone basis. So we can do that or we may be able to enhance that enterprise value by having a partnership. So there are so many options available and we are looking into that and we believe – we would like to explore all the possibility and we are open for any options and that we would like to discuss that going forward.

Operator: [indiscernible]

Unidentified Analyst: [indiscernible] Nomura Securities. My first question is about OneWeb, in the U.S. its centered on the space but not so much in Japan and I felt sorry for that but now you’re going to do that. Qualcomm in the speech said that the consolidation company started in 2018 [indiscernible] would be in 2019 or so but SpaceX is a competitor made application of [indiscernible]. So with both consolidations, the recent opportunity, it may be sufficient to be observed by installations that is how you think?

Masayoshi Son: In the U.S., it is usually speaking natural to provide – give permissions to several companies and OneWeb faster than anyone else development is progressive and faster than anyone else, the roads application was filed.

So they have a right in advance to provide soft data to the space and not only in the U.S. but to all the countries in the world service will be provided. And in that sense, OneWeb is the only entity in the road that applied for the right, the advance of others and technology wise also this is the most advanced company in terms of technology as well.

Unidentified Analyst: And my next question is about ARM, deep learning and discuss about IoT. But while we say – those involve CPU or – in terms of deploying the [indiscernible] will that be better or is that a cloud basis by using Edge, is it better to do deep learning from that position and that maybe better in future.

What do you think of that?

Masayoshi Son: Absolutely as you say.

Unidentified Analyst: Then, in that case, I think things would be very interesting.

Operator: [indiscernible]

Masayoshi Son: So we are very sorry, but due to the time constrain, we would like to end the session after taking questions from two more people including the person making the question right now.

Unidentified Analyst: My name is [indiscernible] from CNN. The potentials or possibilities for the Sprint T-Mobile, are you expecting that you will be able to make that realize because of the Trump administration?

Masayoshi Son: I cannot make any comments directly on that but many companies are very active on margins or acquisitions and I’m hearing that such activities are happening.

So the industry may be working towards that because of the expectation on Mr. Trump’s, President Trump’s administration. In terms of deregulation and he has openly discussed the deregulation so that I’m expecting that there are many discussions on that.

Unidentified Analyst: So $50 billion investment in U.S. and how much of those will be invested from the original discussion, original plan, the $50 billion breakdown.

Masayoshi Son: The $50 billion was something that we were thinking but because of Vision Fund that we are start planning in the past few months, so that’s something that we start to discuss recently for this $50 billion.

Unidentified Analyst: And then lastly $50 billion of which – how much it will be coming out from the SoftBank Group and how much it will be coming out from SoftBank Vision Fund? What is that location?

Masayoshi Son: That’s the period that we cannot discuss anything on so that bear with me, I cannot make any comments on that. Because of the regulations point of view we are in a quiet period, I cannot discuss any of the numbers.

Unidentified Analyst: So when the investment will start?

Masayoshi Son: We will start. The last question please.

Unidentified Analyst: My name is [indiscernible]. I have two questions. About Vision Fund, this fund and you’ve accelerated your strategy and SoftBank - and compared to SoftBank direct investment, are there any limitations created by investment through this fund. This is my first concern. And the amount is entirely different from what we use to invest.

So cases where you wanted to invest in the past but you were not able to will probably invest in such cases is not necessary to give us individual names but are there any sectors that would be possible to invest with the fund?

Masayoshi Son: Basically compared to our investments in making our own in terms of responsibility or return, the way of thinking is the same. But in the past there was limitations on lot of money so investments were made mainly in areas close to our core business, so that is where we were spending the money. That was the limitation that we had but if we had more money to invest, then I should have invested into the company or should I invested in that company, there are many such examples. If I had more money, if at least had 100 billion excess major companies in this industry I had investment opportunities in almost all of these companies. Immediately out turns the burst of net mobile we are actually negotiating and we saw it was a bad opportunity because of lack of fund.

There are many cases which we couldn’t make the investment but now with the similarity IoT as a core, I said a big bang of similarity will happen and the sealing of limitation as a matter of money is expanded. So not going to invest in areas close to our business, but there may be areas far from our business but areas which we can expect growth. We can be more actively investing into such companies, so different than speed of investment will be possible.

Unidentified Analyst: When you say five areas, what would be such areas for example healthcare, we’ll have science?

Masayoshi Son: So far [indiscernible] was the center of life science but now by using deep learning of similarity, by doing so it is – would be possible to analyze DMA and predict diseases and contribute to the treatment of such diseases. That is an extension of information revolution which is not an extension of biotechnology.

From that area, it is possible to contribute to medical care. This is an entirely new opportunity. In the past, SoftBank, it was a little far away to be able to make investments but we assured that that is an area that we would expect growth. It is possible to use this fund to invest in such areas. Thank you.

This is just one example.

Unidentified Analyst: And last question, [indiscernible] you’re going to be 60 years old. You had a 50 year plan at the age of 19 you said your plan was to perfect the business in 50s. But I think your business is still expanding. So your 50 year plan with the new SoftBank to that, are you going to extend your plan 59 years old?

Masayoshi Son: By establishing the Vision Fund for the next 100 years for SoftBank to be able to grow the foundation to do so, the model to do so, I think it was established in a sense.

Now it’s time to execute, put into practice. The business model or organizational model in making the model I think [indiscernible] answer to the question and now for the next 10 years, I have to put into practice and at the same time develop my successors. That is important for me for the next decade. Thank you very much. Thank you very much.

There are lots to come. I want to speak two days or three days more and I have to explain more and more, but because of the time constrain, I would like to close the meeting now. Thank you very much for joining.

Operator: Thank you very much. This concludes the SoftBank Group Corp earnings results announcement for the nine month period ended December 31, 2016.