DraftMedium Term Business StrategyMedium Term Business Strategy

DraftMedium Term Business StrategyMedium Term Business Strategy

FY3/2012 FY3/2012 -- FY3/2015FY3/2015

Febr ar 2012February 2012

Medium Term Business Target

Growth Strategy 2015

g

Growth Strategy 2015

Investment Summary

2

Medium Term Business Targetg

3

Previous 3Previous 3--Year Financials Review Year Financials Review

Revenue increased by 65% to over 200 billion yen

AchievementsAchievements

Transformation to positive recurring profit Reducing revenue and EBITDA dependence on fixed business

FY3/2009(pro-forma)

FY3/2012(estimates)

Revenue 122.9 billion122.9 billion yenyen 203.0 billion203.0 billion yenyenMobile (% share)Fixed (% share)

61.4 billion yen (50%)61.5 billion yen (50%)

161.0 billion yen (79%)42.0 billion yen(21%)

EBITDA 2.2 billion2.2 billion yenyen 63.0 billion63.0 billion yenyen

( ) y ( ) y ( )

44 0 billion en (70%)Mobile (% share)Fixed (% share)

- 18.5 billion yen20.6 billion yen

44.0 billion yen (70%)19.0 billion yen (30%)

Recurring profit -- 31.4 billion31.4 billion yenyen 12.5 billion12.5 billion yenyen

4

ecu g p o 31.4 billion31.4 billion yenyen yy

Revenue Growth ComparisonRevenue Growth Comparison（（33--Year) Year)

Highest 3-Year revenue growth of 65.2% during FY3/2009 to FY3/2012EHighest 3-Year revenue CAGR of 18.2% during FY3/2009 to FY3/2012EHighest 3 Year revenue CAGR of 18.2% during FY3/2009 to FY3/2012E

Absolute 3-Year Revenue Growth 3-Year Revenue CAGRAbsolute 3-Year Revenue GrowthFY3/2009 - FY3/2012E

3-Year Revenue CAGRFY3/2009-FY3/2012E

A

20.6%

65.2%

6.4%

18.2%eAccess

Company A

eAccess

Company A

4.4% 1.5%Average Average

-4.7%

1.5%

-1.6%

0.4%Company B

Company C

Company B

Company C

5

-10% 0% 10% 20% 30% 40% 50% 60% 70% -5% 0% 5% 10% 15% 20% 25%

Source: public information

EBITDA Growth Comparison (3EBITDA Growth Comparison (3--Year) Year)

EBITDA 3-Year growth increased over 28X during FY3/2009 to FY3/2012EEBITDA 3-Year CAGR also increased over 200% during FY3/2009 to

Absolute 3-Year EBITDA Growth 3-Year EBITDA CAGR

FY3/2012E

Absolute 3-Year EBITDA GrowthFY3/2009-FY3/2012E

3-Year EBITDA CAGRFY3/2009-FY3/2012E

28 6X

14.0%

205.9%

48.0%

2763.6%eAccess eAccess

Company A

28.6X

Company A

3.1%9.4%Average Average

C B

-2.0%

0.7%

-5.8%

2.1%Company B

Company C

Company B

Company C

6

-40% 10% 60% 110% 160% 210%-500% 0% 500% 1000% 1500% 2000% 2500% 3000%

Source: public information

Medium Term Business Target (3Medium Term Business Target (3--Year)Year)

Growth FocusGrowth FocusIncrease revenue to 350 0 billion yen from 203 0 billion yen (up 72%)Increase revenue to 350.0 billion yen from 203.0 billion yen (up 72%)EBITDA growth to be driven by mobile businessRecurring profit to 3x to 40.0 yen billion from 12.5 billion yen

FY3/2012(estimates)

FY3/2015(estimates)

Revenue 203.0 billion203.0 billion yenyen

Mobile (% share) 161.0 billion yen (79%)

350.0 billion350.0 billion yenyen

325.0 billion yen (93%)

EBITDA 63.0 billion63.0 billion yenyen

Fixed (% share) 42.0 billion yen (21%)

90.0 billion yen90.0 billion yen

25.0 billion yen (7%)

Mobile (% share)Fixed (% share)

44.0 billion yen (70%)19.0 billion yen (30%)

R i fit 12 5 billi12 5 billi 40 0 billi40 0 billi

80.0 billion yen (89%)10.0 billion yen (11%)

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Recurring profit 12.5 billion12.5 billion yenyen 40.0 billion40.0 billion yenyen

Subscriber Acquisition Target Subscriber Acquisition Target

FY3/2009 FY3/2012E FY3/2015E

Mobile 1.4 million1.4 million 4.0 million4.0 million 6.6 million6.6 million

Net Addition: +2.6 million Net Addition: +2.6 million

Fixed 2.6 million2.6 million 1.6 million1.6 million 0.9 million0.9 million

Total 4.0 million4.0 million 5.6 million5.6 million 7.5 million7.5 million

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Capital Spending Plan Capital Spending Plan

FY3/2010 ~ FY3/2012E

FY3/2013E ~ FY3/2015E

Accumulated 3-Year capex plan 130.0 billion130.0 billion yenyen 100.0 billion yen *100.0 billion yen *

Complete area expansion to 93% population coverage

Network upgrade to LTE to 75Mbps & 112Mbps

Complete underground & subway station coverage

Backhaul upgrade to 100% all IP

100% d dCapex focus

Network speed upgrade to 42Mbps (DC-HSPA)

100% underground subway tunnel investment

Area coverage to expand g pto over 95% population coverage

* C t fi d t i l d* C t fi d t i l d

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* Current capex figures do not include* Current capex figures do not includeplatinum band & migration capexplatinum band & migration capex* Capex figures to be revised after * Capex figures to be revised after

platinum band allocationplatinum band allocation

ProPro--forma Summaryforma SummaryExpect revenue to increase 72% to 350 0 billion yen from 203 0 billion yenExpect revenue to increase 72% to 350.0 billion yen from 203.0 billion yenOperating profit to increase 2x to 50.0 billion yen from 25.0 billion yenRecurring profit to increase 3x to 40.0 billion yen from 12.5 billion yen

S i

FY3/2009(pro-forma)

FY3/2012EFY3/2010(pro-forma)

FY3/2011(pro-forma) FY3/2015EUnit:

million usersbillion yen

Subscribers 4.04.0 4.74.7Mobile (% share)Fixed (% share)

1.4 (35%)2.6 (65%)

5.05.0 5.65.6 7.57.52.4 (51%)2.3 (49%)

3.1 (62%)1.9 (38%)

4.0 (71%)1.6 (29%)

6.6 (88%)0.9 (12%)

Revenue 122.9122.9 176.5176.5 195.6195.6 203.0203.0 350.0350.0Mobile (% share)Fixed (% share)

113.6 (64%)62.9 (36%)

139.1 (71%)56.5 (29%)

161.0 (79%)42.0 (21%)

325.0 (93%)25.0 (7%)

61.4 (50%)61.5 (50%)

EBITDA 2.22.2 44.544.5 64.564.5 63.063.0 90.090.0-18.520 6

Mobile (% share)Fi ed (% share)

18.2 (41%)26 3 (59%)

40.3 (62%)24 2 (38%)

44.0 (70%)19 0 (30%)

80.0 (89%)10 0 (11%)20.6Fixed (% share) 26.3 (59%) 24.2 (38%) 19.0 (30%) 10.0 (11%)

Operating Profit -- 2222..44 11.811.8 19.219.2 25.025.0 50.050.0

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Recurring profit -- 31.4 31.4 0.60.6 8.98.9 12.512.5 40.040.0

Growth Strategy 2015gy

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Growth StrategyGrowth Strategy

S 3

Subscribers/Revenue

Step 3Main Stream Carrier

Growth Strategy 2015

Step 22015~

Area coverage 99%Ch ll bil

Step 1

Smart phone Strategy Challenge mobile mainstream market

Step 1Strengthen Mobile Broadband Position

2013~2015ShopsHandset

2012~2013 LTERetentionBranding

HandsetMarketing

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2012~2013 2013~2015 2015~

Addressing Existing Challenges Addressing Existing Challenges

Capacity issues due to increasing t ffi S d titi

Network

ARPU Price competition & increase in

traffic. Speed competition

ARPUdilution

Price competition & increase in MVNO subscribers

Churn Rising churn

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Strengthen Mobile Broadband Position

LTERetentionRetention Marketing

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LTE Strategy LTE Strategy

112112 MbpsMbpsLTE

1st

DC-HSPA 75 Mb

112112 MbpsMbps

42 Mbps

1st

HSPA+

HSPA 75 Mbps

21 Mbps

1st

HSUPA

7.2 Mbps

1st

flat rate Mobile broadband

3.6 Mbpsnetwork leader

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HSPA HSUPA HSPA+ DC-HSPA LTE2009/11 2011/1 2011/3 2012/3

LTE Area Coverage Plan

Pl t l h LTE i M h 2012

Speed

Plan to launch LTE in March 2012Expand area coverage to 70% by March 2013

75/112Mbps

LTE

75/112Mbps

42Mb

HSPA+/DC HSDPA 70%

42Mbps~21Mbps

HSPA+/DC-HSDPA 70%

HSPA 93%14Mbps HSPAp

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100% IP Backbone •EMOBILE G4 area is compliant area to downlink speed Max 42Mbps. (Some areas:Max 21Mbps or Max 14.4Mbps）** Nation-wide around 70%, Metropolis and government-decreed city: around 99%, Underground: 100% (end of 2012)

Mobile Broadband Market GrowthMobile Broadband Market Growth

15.0 millionMobile Broadband Users

8.0 million1) Speed upgrade

Target Customers

) p pgMigrate low/medium speed MBB users to high speed users (7 2/42Mbps⇒75Mbps)(7.2/42Mbps⇒75Mbps)

2) New customersAttract new MBB customers from new entry users fixed

4.0 million6.6 million

from new entry users, fixed broadband & FMC

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FY3/2012 FY3/2015

ARPU andARPU and Churn ImprovementChurn ImprovementTarget to red ce monthl ch rn to belo 1 5% le elTarget to reduce monthly churn to below 1.5% levelTarget to recover ARPU back to around 3,000 yen level

4,000(ARPU: yen)

Churn improvement target ARPU recovery target

3,4003,250

3,100

3,500around 3,000 yenaround 3,000 yen

3,1002,950

2,8602,730 2,730

2 500

3,000

1.37%1.40%

1.54%1.44%

1.50%

1 4 %

2,000

2,5001.29% 1.45%

below 1.5%below 1.5%

1,500

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1,0001Q

FY3/112Q

FY3/113Q

FY3/114Q

FY3/111Q

FY3/122Q

FY3/123Q

FY3/12FY3/15

1QFY3/11

2QFY3/11

3QFY3/11

4QFY3/11

1QFY3/12

2QFY3/12

3QFY3/12

FY3/15

Churn Analysis and Retention PlanChurn Analysis and Retention PlanReduce churn (below 1.5%) with initiatives targeting threemain causes (speed, coverage and price)

R t ti Pl

(%)100

N t l

1.5%

Others

1.0%

Retention Plan80

Naturalchurn

Tariffs 4,980 yen(7.2Mbps)

3,880 yen(42Mbps)

40

60

Churn to Area 93% 95%improve indoor

20

other carriers

Speed 7.2Mbps

improve indoortunnel coverage

42Mbps/

EM churn0

Churn reasons t th i

LTE

19Source: EMOBILE former user survey (n = 400 people who churned in the last 18months)

to other carriers

Smart phone Re-entry Strategyp y gy

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Smart phone Market GrowthSmart phone Market Growth

Expect smart phone market to reach over 50% penetration in Japan’s mobile market

(million）120 60%

80

100

40%

50%

60

80

30%

40%

40 20%

20 10%

21Source: MM Souken

0FY3/2009 FY3/2010 FY3/2011 FY3/2012 FY3/2013 FY3/2014 FY3/2015 FY3/2016

0%

Smartphone user Featurephone user Smartphone user ratio

Smart phone ReSmart phone Re--entry Strategyentry Strategy

Shops Plan to expand EMOBILE shopsShops Plan to expand EMOBILE shops

Preparation of LTE smartphoneHandset

Strengthen branding and marketingMarketing

Focus and target specific customer segments to expand smartphone subscriber base

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expand smartphone subscriber base

Marketing andMarketing and Sales Channels Strategy Sales Channels Strategy

FY3/2009 ~ FY3/2013E ~ FY3/2012E FY3/2015E

Complete coverage of major electronics retailers nationwide

Investment in EMOBILE carrier shops & multi-carrier shopsM k ti nationwide

Product awareness marketing of Pocket Wifi

carrier shops

Marketing investment in preparation for LTE

Marketingand

channelsinvestment focus

Small investment in corporate brand

Strengthen branding & product marketing

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Shop StrategyShop Strategy

Increase EMOBILE h

Primarily lti i h EMOBILE shopsmulti-carrier shops

800 t800 stores

Multi-carrier shops

EMOBILE shops

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End of FY2012

End of FY2013

End of FY2014

End of FY2011

Franchise Shop and EMOBILE Shop Images

L t ’ k

Merits of franchise shops

Leverage partner’s know-how of store operation

Low initial cost for store developmentdevelopment

L i tLow running cost

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Investing in Marketing and BrandingInvesting in Marketing and Branding

Marketing Strategy

Increase company’s brand recognition

Strengthen product brand position as “No. 1 Wi-Fi”

Marketing preparation forMarketing preparation for LTE & smart phone launch

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Investment SummaryInvestment Summary

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Investment Summary Investment Summary

Strong commitment to Medium Term Business Target

Target to achieve 6 6 million mobile subscribers in 2015Target to achieve 6.6 million mobile subscribers in 2015

Aim to increase operating profit 2x and recurring profit 3x

Strengthen mobile broadband position & marketing

Enter smart phone market with target customer segments

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p g g

This presentation has been prepared by eAccess Ltd (“the Company”) ThisThis presentation has been prepared by eAccess Ltd (“the Company”) ThisThis presentation has been prepared by eAccess Ltd. ( the Company ). This This presentation has been prepared by eAccess Ltd. ( the Company ). This presentation contains forwardpresentation contains forward--looking statements, which are subject to risks, looking statements, which are subject to risks, uncertainties, and assumptions. This presentation is being presented solely for uncertainties, and assumptions. This presentation is being presented solely for your information and is subject to change without notice. No representation or your information and is subject to change without notice. No representation or warranty, expressed or implied, is made and no reliance should be placed on the warranty, expressed or implied, is made and no reliance should be placed on the accuracy, actuality, fairness, or completeness of the information presented. The accuracy, actuality, fairness, or completeness of the information presented. The CompanyCompany accept no liability whatsoever for any losses arising from any accept no liability whatsoever for any losses arising from any information contained in the presentation.information contained in the presentation.This presentation does not constitute an offer or invitation to purchase orThis presentation does not constitute an offer or invitation to purchase orThis presentation does not constitute an offer or invitation to purchase or This presentation does not constitute an offer or invitation to purchase or subscribe for any shares of the Company, and no part of this presentation shall subscribe for any shares of the Company, and no part of this presentation shall form the basis of or be relied upon in connection with any contract or form the basis of or be relied upon in connection with any contract or

it tit tcommitment.commitment.

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