KDDI Corporation

Q1 operating revenue increased 5.1% year-on-year, adjusted operating income increased 21.1%, and adjusted net income increased 21.6%. Progress versus full-year forecast was 23.2% for operating revenue, 26% for adjusted operating income, and 26.5% for adjusted net income. Mobile communication revenue was a key profit driver, while promotional expense reductions also supported earnings. The company reaffirmed its full-year adjusted operating income target of JPY 1,210 billion. For the Rakuten roaming contract, management said the current agreement ends at the end of September; the Q1 year-on-year revenue impact was about JPY 800 million, and the company has not included post-September roaming in full-year guidance, aside from limited rural-area service.

Saishoji framed the quarter as a strong start to the fiscal year, emphasizing that growth was broad-based across segments and that KDDI is executing its LTV-focused strategy. She highlighted stronger mobile quality metrics, steady progress in growth areas, and ongoing governance/security strengthening after recent issues. Her tone was confident but disciplined, repeatedly stressing that the company will keep investing and improving quality while staying within its full-year plan.

Saishoji said the company’s core free cash flow and operating cash flow margin remained stable, with operating cash flow margin at 21.6%, supporting growth investment. She noted 11 divestments decided so far this fiscal year, generating about JPY 150 billion in cash, and said KDDI will continue reviewing business portfolio efficiency and strategic rationale. On financial business, she pointed to a JPY 3.7 billion YoY decline in operating income driven by expected factors including rising rates; Katsuki added roughly JPY 2.4 billion of mark-to-market losses on fixed-rate housing loan assets were already embedded in the plan.

Analysts focused on three issues: the Rakuten roaming agreement, the possibility of a second round of price increases, and how KDDI will accelerate growth and allocate capital. Management said the Rakuten roaming contract ends at the end of September, with limited rural-area cooperation continuing, and that the company did not include post-September roaming revenue in guidance except for a small amount from those rural areas. On pricing, Sasaki said no second price hike has been decided, but KDDI will keep optimizing plan mix and monetizing quality. On capital allocation and divestments, Katsuki said decisions are made on economic rationale, not special circumstances, and KDDI may return cash to shareholders if there is no attractive investment pipeline, though the current focus is on funding AI and other growth investments.