DCM Ntt Docomo, American Depositary Shares (delisted)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Information furnished in this form:

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Earnings Release		January 27, 2017
For the Nine Months Ended December 31, 2016		[U.S. GAAP]

 

Name of registrant:		NTT DOCOMO, INC. (URL https://www.nttdocomo.co.jp/ )
Code No.:		9437
Stock exchange on which the Company’s shares are listed:		Tokyo Stock Exchange-First Section
Representative:		Kazuhiro Yoshizawa, Representative Director, President and Chief Executive Officer
Contact:		Koji Otsuki, Senior Manager, General Affairs Department / TEL +81-3-5156-1111
Scheduled date for filing of quarterly report:		February 2, 2017
Scheduled date for dividend payment:		—
Supplemental material on quarterly results:		Yes
Presentation on quarterly results:		Yes (for institutional investors and analysts)

(Amounts are rounded off to the nearest 1 million yen.)

1. Consolidated Financial Results for the Nine Months Ended December 31, 2016 (April 1, 2016 - December 31, 2016)

(1) Consolidated Results of Operations

(Millions of yen, except per share amounts)

(Percentages above represent changes compared to the corresponding period of the previous year)

2. Dividends

3. Forecasts of Consolidated Financial Results for the Fiscal Year Ending March 31, 2017 (April 1, 2016 - March 31, 2017)

(Millions of yen, except per share amounts)

(Percentages above represent changes compared to the corresponding previous year)

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This earnings release is not subject to the quarterly review procedure as required by the Financial Instruments and Exchange Act of Japan. As of the date when this earnings release was issued, the quarterly review procedure on financial statements as required by the Financial Instruments and Exchange Act of Japan had not been finalized.

1. Forecast of results

Forward-looking statements in this earnings release, such as forecasts of results of operations, are based on the information currently available and certain assumptions that we regard as reasonable, and therefore actual results may differ materially from those contained in, or suggested by, any forward-looking statements. With regard to the assumptions and other related matters concerning forecasts for the fiscal year ending March 31, 2017, refer to “1. (3) Prospects for the Fiscal Year Ending March 31, 2017” on page 12 and “5. Special Note Regarding Forward-Looking Statements” on page 21, contained in the attachment.

2. Resolution of share repurchase up to prescribed maximum limit

The forecasts of “Basic Earnings per Share Attributable to NTT DOCOMO, INC.” for the fiscal year ending March 31, 2017 are based on the assumption that DOCOMO will repurchase up to 220,000,000 shares for an amount in total not to exceed ¥500,000 million, as resolved at the board of directors’ meeting held on January 29, 2016.

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CONTENTS OF THE ATTACHMENT

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Earnings Release for the Nine Months Ended December 31, 2016

1. Information on Consolidated Results

(1) Operating Results

i. Business Overview

The environment surrounding our business has changed significantly. In Japan’s telecommunications market, competition has intensified due to the government’s pro-competition policy, market entry by Mobile Virtual Network Operators (MVNOs) and other factors. In addition, technical advancements in areas including cloud services, IoT ^*1 , big data and artificial intelligence (AI), and new policy developments such as the full liberalization of the electricity retail market, have brought about active competition and collaboration with new players from other industries, accelerating competition in new markets that transcend the conventional boundaries of the telecommunications business.

Amid these changes in the market environment, positioning the current fiscal year ending March 31, 2017 (FY2016) as the year in which we intend to make “a vibrant leap toward further growth” beyond income recovery, we aim to achieve the various medium-term target indicators we announced for the fiscal year ending March 31, 2018 (FY2017) one year ahead of the schedule. In connection with the management of our business, in order to provide ever-improving value to our customers, we are promoting the two pillars of “reinforcement of our telecommunications business” and “expansion of our smart life business and other businesses” centered on our “+d” value co-creation strategy, through which we pursue the creation of new values by evolving our collaborative activities with a wide range of external partners.

In the three months ended December 31, 2016, we implemented new initiatives, such as the creation of new billing options for customers using feature phones and “Kids’ Keitai” handsets designed for children, and the launch of our “docomo Child Raising Support Program,” which offers additional benefits and convenience to families with children and helps families make precious memories. As part of our “+d” initiatives, we started the “docomo Drone Project” with the aim of solving social issues involving the using drones and promoted the following initiatives in collaboration with various partners toward the commercial launch of such services in the future:

For the nine months ended December 31, 2016, despite a decrease in equipment sales revenues and a negative impact on mobile communications services revenues caused by the further expansion of our “Kake-hodai & Pake-aeru” billing scheme for the purpose of increasing returns to our customers, operating revenues increased by ¥86.1 billion from the same period of the previous fiscal year to ¥3,469.6 billion, mainly due to the recovery of telecommunications services revenues as a result of the growth of the packet consumption of our “Kake-hodai & Pake-aeru” billing plan subscribers, the expansion of smartphone use and the demand for tablets and other products purchased as a second mobile device for individual use, and the growth in the number of “docomo Hikari” users, as well as the growth of our smart life business and other businesses such as “dmarket” and other content services.

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Operating expenses decreased by ¥70.7 billion from the same period of the previous fiscal year to ¥2,627.3 billion, owing primarily to a decline of depreciation expenses as a result of our change in depreciation method used and a decrease in cost of equipment sold and initiatives to pursue further cost efficiency, despite an increase in expenses associated with the expansion of “docomo Hikari” revenues and the growth of revenues from our smart life business and other businesses, as well as an increase in expenses associated with the initiatives for enhancing returns to our customers such as “docomo Child Raising Support Program.”

As a result, operating income increased by ¥156.8 billion from the same period of the previous fiscal year to ¥842.3 billion for the nine months ended December 31, 2016.

Income before income taxes and equity in net income (losses) of affiliates was ¥846.2 billion and net income attributable to NTT DOCOMO, INC. increased by ¥97.0 billion from the same period of the previous fiscal year to ¥589.4 billion for the nine months ended December 31, 2016.

Consolidated results of operations for the nine months ended December 31, 2015 and 2016 were as follows:

<Results of operations>

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Note: Voice revenues include data communications revenues through circuit switching systems.

<Operating expenses>

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ii. Segment Results

Despite a decrease in equipment sales revenues and the negative impact on mobile communications services revenues caused by the further expansion of our “Kake-hodai & Pake-aeru” billing scheme for the purpose of increasing returns to our customers, operating revenues from telecommunications business for the nine months ended December 31, 2016 increased by ¥51.2 billion, or 1.9%, from ¥2,762.8 billion for the same period of the previous fiscal year to ¥2,814.0 billion, as a result of the growth of the packet consumption of our “Kake-hodai & Pake-aeru” billing plan subscribers, the expansion of smartphone use and the demand for tablets and other products purchased as a second mobile device for individual use, and the growth in the number of “docomo Hikari” users, of which there were 2.97 million as of December 31, 2016.

Operating expenses from telecommunications business decreased by ¥76.7 billion, or 3.6%, from ¥2,146.5 billion for the same period of the previous fiscal year to ¥2,069.8 billion due primarily to a decrease in depreciation expenses as a result of our change in depreciation method used, a decrease in cost of equipment sold and initiatives to pursue further cost efficiency, despite the increase in expenses associated with “docomo Hikari” revenues as well as an increase in expenses associated with initiatives for enhancing returns to our customers, such as our “docomo Child Raising Support Program.”

Consequently, operating income from telecommunications business was ¥744.2 billion, an increase of ¥127.8 billion, or 20.7%, from ¥616.3 billion for the same period of the previous fiscal year.

<<Key Topics>>

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Number of subscriptions by services and other operating data were as follows:

<Number of subscriptions by services>

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Notes:

Average monthly revenue per unit, or ARPU, is used to measure average monthly operating revenues attributable to designated services on a per user basis. ARPU is calculated by dividing telecommunications services revenues (excluding certain revenues) by the number of active users to our wireless services in the relevant periods, as shown below under “ARPU Calculation Method.” We believe that our ARPU figures provide useful information to analyze the average usage per user and the impacts of changes in our billing arrangements. The revenue items included in the numerators of our ARPU figures are based on our U.S. GAAP results of operations.

Average monthly communication time per user.

Sum of number of active users for each month ((number of users at the end of previous month + number of users at the end of current month) /2) during the relevant period

Revenues from communication module services, “Phone Number Storage,” “Mail Address Storage,” “docomo Business Transceiver” and wholesale telecommunications services and interconnecting telecommunications facilities that are provided to Mobile Virtual Network Operators (MVNOs) are not included in the ARPU calculation.

Smart life business—

<Results of operations>

Operating revenues from smart life business for the nine months ended December 31, 2016 were ¥382.0 billion, an increase of ¥8.1 billion, or 2.2%, from ¥373.8 billion for the same period of the previous fiscal year, due mainly to an expansion of content services revenues such as “dmarket” and other content services, despite a decrease in revenues from our subsidiaries.

Operating expenses from smart life business were ¥323.3 billion, a decrease of ¥1.5 billion, or 0.5%, from ¥324.8 billion for the same period of the previous fiscal year, due mainly to a decrease in expenses associated with revenues from our subsidiaries and despite an increase in expenses associated with the growth in content services revenues.

As a consequence, operating income from smart life business was ¥58.7 billion, an increase of ¥9.7 billion, or 19.7%, from ¥49.0 billion for the same period of the previous fiscal year.

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<<Key Topics>>

Other businesses—

<Results of operations>

Operating revenues from other businesses for the nine months ended December 31, 2016 amounted to ¥294.9 billion, an increase of ¥29.3 billion, or 11.0%, from ¥265.6 billion for the same period of the previous fiscal year, driven mainly by an increase in the number of subscriptions for our “Mobile Device Protection Service” and the growth of revenues relating to IoT businesses.

Operating expenses from other businesses were ¥255.4 billion, an increase of 10.0 billion, or 4.1%, from ¥245.4 billion for the same period of the previous fiscal year, as a result of rises in expenses associated with the expansion of revenues from our “Mobile Device Protection Service” and other services.

Consequently, operating income from other businesses was ¥39.5 billion, an increase of ¥19.3 billion, or 95.8%, from ¥20.2 billion for the same period of the previous fiscal year.

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iii. CSR Activities

We aspire to help build a society in which everyone can share in a prosperous life of safety, security and comfort, beyond borders and across generations. We believe it is our corporate social responsibility (“CSR”) to fulfill the two aspects of (i) “Innovative docomo,” to solve various social issues in the fields of IoT, medicine, healthcare, education and agriculture through the “co-creation of social values,” an initiative that we plan to pursue together with various partners to create new services and businesses, and (ii) “Responsible docomo,” to thoroughly ensure fair, transparent and ethical business operations as a foundation for the creation of such values. Accordingly, we will strive to realize a sustainable society while expanding our own businesses.

To create a better future for the earth together, in October 2016, we decided on our “DOCOMO Group’s Environmental Declaration,” which sets the group’s environmental vision, and our “Green Action Plan 2030,” which sets our environmental goals through FY2030.

The principal CSR actions we undertook during the three months ended December 31, 2016 are summarized below:

<Innovative docomo>

<Responsible docomo >

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iv. Trend of Capital Expenditures

<Capital expenditures>

We pursued more efficient use of capital expenditures and further cost reduction, and expanded the area coverage of our “PREMIUM 4G” service to construct a more convenient mobile telecommunications network. As a result, the total amount of capital expenditures increased by 10.2% from the same period of the previous fiscal year to ¥399.4 billion for the nine months ended December 31, 2016.

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(2) Financial Review

i. Financial Position

ii. Cash Flow Conditions

For the nine months ended December 31, 2016, net cash provided by operating activities was ¥924.9 billion, an increase of ¥80.0 billion, or 9.5%, from the same period of the previous fiscal year. This was due mainly to an increase in cash inflows from customers in relation to collections of installment receivables for customers’ handset purchases, which are included in decrease in receivables held for sale.

Net cash used in investing activities was ¥668.1 billion, an increase of ¥291.6 billion, or 77.5%, from the same period of the previous fiscal year. This was due mainly to increases in cash outflows for purchases of short-term investments and short-term bailment for consumption to a related party.

Net cash used in financing activities was ¥429.2 billion, an increase of ¥152.8 billion, or 55.3%, from the same period of the previous fiscal year. This was due mainly to an increase in cash outflows for payments to acquire treasury stock.

As a result of the foregoing, the balance of cash and cash equivalents was ¥179.6 billion as of December 31, 2016, a decrease of ¥174.8 billion, or 49.3%, from the previous fiscal year end.

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(3) Prospects for the Fiscal Year Ending March 31, 2017

The environment surrounding our business has changed significantly. In Japan’s telecommunications market, competition has intensified due to the government’s pro-competition policy, market entry by Mobile Virtual Network Operators (MVNOs) and other factors. In addition, technical advancements in areas including cloud services, IoT, big data and artificial intelligence (AI), and new policy developments such as the full liberalization of the electricity retail market, have brought about active competition and collaboration with new players from other industries, accelerating competition in new markets that transcend the conventional boundaries of the telecommunications business.

Amid these changes in the market environment, in connection with our management of our business, we are promoting the two pillars of “reinforcement of our telecommunications business” and “expansion of our smart life business and other businesses” centered on our “+d” value co-creation strategy, through which we pursue the creation of new values by evolving our collaborative activities with a wide range of external partners. Through these endeavors, we expect the following prospects for the fiscal year ending March 31, 2017.

Operating revenues are estimated to be ¥4,610.0 billion, an increase of ¥82.9 billion from the previous fiscal year, driven by an increase in telecommunications services revenues resulting from the expansion of our smartphone user base and a growth of demand for tablets and other devices purchased as a second mobile device for individual use, an increase in optical-fiber broadband service and other telecommunications services revenues due to the projected growth of “docomo Hikari” users and the growth of our smart life business and other businesses such as “dmarket.”

On the expenses side, although we project an increase in expenses associated with the growth of revenues from smart life business and other businesses and the expansion of “docomo Hikari” revenues, operating expenses are expected to decrease by ¥74.1 billion to ¥3,670.0 billion, owing primarily to a decline of depreciation expenses as a result of our change in depreciation method used from the declining-balance method to the straight-line method, as well as a decrease in cost of equipment sold and initiatives to pursue further cost efficiency. Accordingly, operating income for the fiscal year ending March 31, 2017 is estimated to be ¥940.0 billion, an increase of ¥157.0 billion from the previous fiscal year.

As we are not currently aware of any factor that may have a material impact on our projected results of operations, we have not revised our forecasts announced on October 28, 2016.

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2. Other Information

(1) Changes in Significant Subsidiaries

None

(2) Application of Simplified or Exceptional Accounting

None

(3) Change in Accounting Policies

Change in depreciation method

Previously, DOCOMO principally used the declining-balance method for calculating depreciation of property, plant, and equipment. Effective April 1, 2016, DOCOMO adopted the straight-line method of depreciation. Data traffic has recently grown due to increased use of smartphones. As a way of addressing the rising data traffic, DOCOMO provides LTE-Advanced services, using the carrier aggregation technology which enables higher speeds and capacities for the LTE services. With the introduction of the carrier aggregation technology, DOCOMO is able to use its frequencies more efficiently, bringing stability to DOCOMO’s operation of its wireless telecommunications equipment. As a result, DOCOMO believes that the straight-line depreciation method better reflects the pattern of consumption of the future benefits to be derived from those assets being depreciated. The effect of the change in the depreciation method is recognized prospectively as a change in the accounting estimate pursuant to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 250, “Accounting Changes and Error Corrections.”

The change in depreciation method caused a decrease in “Depreciation and amortization” by ¥109,236 million and ¥39,806 million for the nine months ended December 31, 2016 and for the three months ended December 31, 2016, respectively. “Net income attributable to NTT DOCOMO, INC.” increased by ¥74,717 million and ¥27,227 million for the nine months ended December 31, 2016 and for the three months ended December 31, 2016, respectively. “Basic and Diluted earnings per share attributable to NTT DOCOMO, INC.” increased by ¥20.01 and ¥7.33 for the nine months ended December 31, 2016 and for the three months ended December 31, 2016, respectively.

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3. Consolidated Financial Statements

(1) Consolidated Balance Sheets