Fixed-line Telecommunications Segment

Financial data

(Millions of yen)
	FY2009	FY2010	FY2011	EOQ in FY2011
	FY2009	FY2010	FY2011	Q1	Q2	Q3	Q4
Net sales	363,632	348,692	356,562	85,876	87,011	90,387	93,288
EBITDA^*1	64,373	67,016	85,693	17,941	18,591	21,738	27,423
EBITDA margin (%)^*2	17.7	19.2	24.0	20.9	21.4	24.1	29.4
Operating income	18,968	23,065	38,006	6,662	6,942	10,285	14,117
Operating margin (%)	5.2	6.6	10.7	7.8	8.0	11.4	15.1
Capital expenditure (acceptance basis)	29,589	17,979	36,236	5,112	6,363	9,095	15,666
Depreciation and amortization (excluding amortization of goodwill)	36,767	35,293	36,634	9,104	9,242	9,290	8,998

[Notes]

*1EBITDA = operating income (loss) + depreciation and amortization (including amortization of goodwill) + loss on disposal of fixed assets included in operating expenses.
*2EBITDA margin = EBITDA / net sales.

Overall results

Net sales increased by 7,870 million yen (2.3%) year on year to 356,562 million yen, and operating income increased by 14,941 million yen (64.8%) to 38,006 million yen.

Inter-segment sales increased due to network provision to Group telecommunication companies such as SOFTBANK MOBILE, and contributed to the segment's overall revenue growth. On the other hand, net sales to third-parties decreased, primarily as a result of the continued decrease in revenue from relay connection voice services such as MYLINE, and despite an increase in revenue from the OTOKU Line direct connection voice service.

The increase in operating income was mainly due to the increase in net sales, combined with a decrease in lease expenses on equipment for the OTOKU Line service.

SOFTBANK TELECOM, the core company of the Fixed-line Telecommunications segment, is working to expand its corporate business base, primarily through OTOKU Line. The number of OTOKU Line installed lines and ARPU both grew steadily in fiscal 2011. The number of OTOKU Line installed lines reached 1,671,000 lines as of the end of fiscal 2011 with corporate contracts accounting for 84% of the total. OTOKU Line ARPU for the fiscal 2011 fourth quarter was 6,930 yen, a 110 yen increase from the same period of the previous fiscal year.

[Note]