March 25, 2016
6TOKAI Holdings CorporationCnKats
suhiko Tokiita, Presideent & CEOO(Code No.
N 3167 Tok
kyo Stock Exxchange Firrst Section))
To whom itt may conceernumber of Su
ubscribers underu
Hikarri Collabora
ation Modell Surpasses 200 Thousand in theNuCom
mmunication
ns Business
T
TOKAI Com
mmunications Corporattion (Headqquarters: Sh
hizuoka Citty, Shizuoka
a; Presidentt& CE
EO: Katsuh
hiko Tokita; “TOKAI Coommunicatiions”), a wholly owned subsidiary of TOKAI
Holddings that handles the Group’s infoormation annd commun
nications buusiness, has surpassed
200 tthousand su
ubscribers (as( of the ennd of Februa
ary 2016) under the Hiikari Collab
boration
modeel1. TOKAI Communica
ations has b
been aggresssively rollin
ng out this model sincee February
2015
5 as the mosst important initiative for strength
hening sales and profitts in the bro
oadbandbusin
ness.
1. Progreess of Hikari Collaborattion
C
Customer trransfers to Hikari Colllaboration contractscarre proceedinng at a moderate paceowin
ng to factorss including a lack of con
nsumer reco
ognition and strict trannsfer proced
dures that
increease the burrden for cusstomers (wee estimate th
he average national traansfer rate2 at 19.0%).
AAmid this businessbenv
vironment, TOKAI Com
mmunicatio
ons has surp
passed 200 thousand
subsccribers as ofo the end off February 2
2016, and itts 26.2% traansfer rate is higher th
han thenatioonal averagge. Although
h the pace iss slightly beehind the innitial targett, progress isi generally
in linne with plann.
nt Sales Proomotion Exp
penses for H
Hikari Collaaboration Sh
hould be Lim
mited to the Present2. UpfronTermTThe consolidated earniings forecasst for the fisscal year ending Marchh 31, 2016 that wasrelea
ased on Mayy 8, 2015 included 3.0 b
billion yen ini sales promotion costts for Hikarri
Collaaboration, sos operatingg profit foreccast is 7.8 billion
byen, a year-on-yeear decline of 1.2
billioon yen.
T
That said, ouro profit ta
argets for th
he fiscal yea
ar ending MarchM31, 20016 looks acchievablegivenn that Hikaari Collabora
ation progreessed in line with plann, profit grow
wth in the LPL gasbusin
ness (whichh provides th
he most sta
able cash flo
ow of our buusiness portftfolio), and steadysprogrress is being made on improving
ip
profitability
y in the Aquua business (bottled waaterdelivvery), which
h we expect tot be a core sales and profitpgenerator in the ffuture. We alsoabelievee
our ttargets for thet fiscal ye
ear ending M
March 31, 2017,2
the finnal year of tthe current
mediium-term pllan, look achievable.

3. Further Progress
Sales operations for transferring customers to Hikari Collaboration are in full swing
following the establishment of a sales structure over the past year and a leveling out ofacquisition costs. Growth in new customer acquisitions through major consumer electronics
retailers, our main channel for acquiring broadband customers, is also brisk. We expect toreach 224 thousand subscribers by the end of the fiscal year ending March 31, 2016.
We plan to continue promotions toward our target of winning 380 thousand customers by
the end of next year (fiscal year ending March 31, 2017).
Beginning in January 2016 we also started winning customers through TOKAI SmartPlus, bundled services combining Tokyo Electric Power Company’s new electricity rate plans
with Hikari Collaboration (with a 300 yen discount per month).
With the broadband market saturating, we expect Hikari Collaboration to improve ARPU
and gross profit, as well as deter cancellations through bundling fiber optic services withother products. As such, TOKAI Communications should contribute to Group-wide sales andprofit growth. From a strategic standpoint, considering the medium- to long-term, ourcustomer base of over one million households (including Hikari Collaboration customers) canalso be expected to become customers in the new field of IoT3 services, which is expected to bea profitable area.
4. Impact on Earnings
No changes have been made to the most recent consolidated earnings forecast for thefiscal year ending March 31, 2016.
1

Hikari Collaboration model: ISPs and other companies use the fiber-optic lines of NTT toprovide fiber-optic services to customers under their own brands.
2

Transfer rate: Percentage of Flet’s customers that have transferred.

3

IoT: Internet of Things

Contact: Yoshihiro Taniguchi
Public Relations and Investor Relations Office
TEL: +81-(0)54-669-7676
Email: overseas_IR@tokaigroup.co.jp

NumberofSubscribers
underHikariCollaborationModelSurpasses
200ThousandintheCommunicationsBusiness㻹㼍㼞㼏㼔㻌㻞㻡㻘㻌㻞㻜㻝㻢
TOKAIHoldingsCorporation

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Rate oftransferto
HikariCollaboration

NumberofHikari Collaboration
subscribers(new+transfers)

26.2䠂

205

(unit: thousands)

22.7䠂

Transfers
New

173

ᙜ♫
TOKAI

54National average
඲ᅜᖹᆒ

42

19.0䠂

117

15.8䠂

TOKAIestimate䠄ᙜ♫᥎ᐃ䠅

ᖹᡂ27ᖺ12᭶ᮎ
End Dec. 2015ᖹᡂ28ᖺ2᭶ᮎ
EndFeb. 2016

2258

131

151

95
4
EndMar.2015

53
EndJun.2015

EndSep.2015

EndDec.2015

EndFeb.2016ᖹᡂ27ᖺ3᭶ᮎ
End Mar. 2015ᖹᡂ27ᖺ6᭶ᮎ
End Jun. 2015ᖹᡂ27ᖺ9᭶ᮎ
End Sep. 2015

ͤ1 Transfer rate: Percentage of Flet’s customers that have transferred.
ͤ2 National average transfer rate: based on Q3 FY03/16 results
supplementary materials released by NTT on February 5, 2016

Theperformanceforecastsandforwardlookingstatementsinthismaterialarecalculatedaccordingto
currentlyavailableinformation,andincludepotentialrisksanduncertainty.Pleasebeawarethatdueto
thechangesinvariousfactors,thereisapossibilitythatactualresultsmaydiffermateriallyfrom
projectionsandotherforwardlookingstatementsmadewithinthesematerials.

For inquiries regarding these materials, please contact us at the following.

TOKAIHoldingsCorporationPublicRelationsandInvestorRelationsOffice268,Tokiwacho,Aoiku,ShizuokaCity4200034
TEL䠖+81(0)546697676
FAX䠖+81(0)542751110
http://tokaiholdings.co.jp
E-mail䠖overseas_IR@tokaigroup.co.jp