Annual Results for FY2017
May 9, 2018
TOKAI Holdings Corporation(Securities Code: 3167)

Highlight of
Financial Results in FY 2017 andEssential Points of FY 2018
Katsuhiko Tokita
President & CEO
TOKAI Holdings Corporation1

Highlight of financial results in FY 2017
The first year of the medium-term management plan “Innovation Plan 2020 JUMP” announced in May
last year has progressed steadily◎ Net increase from the beginning of period was 310,000 customers (+12.2%)that form our revenue base.
– Steady growth of customer acquisition in LP gas business, CATV business, new LIBMO, etc.
Yearly net increase of customers was 39,000, more than 6 times compared with 6,000 customers
which was the yearly net increase of customers in the previous period.
– Furthermore, the revenue base was expanded as planned because of additional 270,000
customers resulting from the completion of two M&A projects.

◎ Increased revenue of 7.4 billion yen (+4.2%) compared with the previous
period because of 186.1 billion yen in sales and increased number ofcustomers, etc.
– In the aspect of profit, profit decline was anticipated due to spending of costs for future growth at
the beginning of period, and the result was almost as planned.

◎ Further progress in continuous improvement of financial strength.
– Equity ratio was 36.3%, increase by 1.8pt from the end of the previous period.
– Interest-bearing debt balance was continuously reduced, and interest-bearing debt/EBITDA ratio
was maintained at 1.9 times compared with at the end of the previous period.

2

Further growth while meeting expectation
Share price increased by 25% from the beginning of FY 2017, which outperformed the averageincrease of the Nikkei Stock Average (13%) in the same period.
Share price of 1,078 yen was high evaluation exceeding 21 times of PER and 14.79 times of theFirst Section of the Tokyo Stock Exchange average.
140

Relative comparison by setting the closing price at the beginning of FY 2017 as 100
Our Company
当社
Nikkei Stock

March 30, 2018
1,078 yen

日経平均
Average

130* EPS 51.18 yen x PER 21.0 = 1,078 yen in FY 2017

124.8

120

110

113.0

April 3, 2017864 yenMarch 30, 2018
21,454 yen
100

90
4/3 3
Apr.

5/1 1
May

6/1 1
Jun.

April 3, 2017
18,983 yen

6/2929
Jun.

7/28
Jul.
28

8/2828Aug.

9/2626
Sep.

10/25
Oct.
25

11/24
Nov.
24

12/22
Dec.
22

1/2525Jan.

2/2323Feb.

3/2626Mar.

3

Essential Points of FY 2018

4

The medium-term management plan for twofold
increase in four years compared with FY2016
Aggressive medium-term management plan aiming at growth of 339.3 billion yen of sales, increaseby 1.9 times compared with FY 2016; 22. 5 billion yen of operating profit, increase by 1.8 times
compared with FY 2016 and more than 4.32 million customers, increase by 1.7 times comparedwith FY 2016
Plan of 2.6 times higher interest-bearing debt/EBITDA ratio, 31.6% Equity ratio and 13.0% ROE withthe emphasis on capital efficiency(Unit: 100 million yen)

FY2016FY2017FY2018FY2019FY2020Result

Plan

Plan

Plan

Plan

1,786

1,894

2,020

2,244

(1.9 times)

3,393

Operating profit

128

114

140

162

(1.8 times)

225

Current net earnings

73

64

79

87

(1.6 times)

115

1,611

1,698

1,738

1,912

(1.8 times)

2,834

1.9 times

2.0 times

1.7 times

1.8 times

2.6 times

Equity ratio

34.5%

33.9%

35.6%

34.9%

31.6%

ROE

15.2%

11.1%

12.8%

13.0%

13.0%

256

288

299

372

Sales

Total assets
Interest-bearing debt/EBITDA ratio

Number of customers(10,000 customers)(1.7 times)432
or more5* Figures in ( ) represent comparison with FY 2016.

Four Key Messages of IP20 “JUMP”
In the period of four years starting from FY 2017, implement strategies toaccelerate growth according to the following four key messages:

1. From Defensive to Proactive Management
2. Progress M&A
3. Prioritize profit growth and ROE
4. Shareholders are always a priority
6

Success of investment expanded in the previous period
and achievement of the highest profit in the past
Active spending of cost in advance in the previous period resulted inaccumulation of the number of charging and expansion of revenue base.
Reversing the tendency to increased profit in the year of a transition stage
toward the final fiscal year of IP20 “JUMP”(Unit: 100 million yen)

Sales
Operating profit
Current net
earnings

FY2016FY2017FY2018ResultResultProspect

1,786

1,861

1,956

128

110

140

73

66

79
7

Important activities in FY 2018
◎The customer base will be continuously
expanded, and the establishment of new
overseas business bases be planned.
◎With M&A for the city gas business decided at
the beginning of FY 2018, steady progress of
M&A will be continued.
◎An organization dedicated to ABCIR+S will beestablished, and change and growth of businesswill be pursued.
8

Continuously expanding customer base and planned
establishment of new overseas business bases.
Subsequent to the great net increase of the customer base in the previous period, active effort will be also made inthis period with the plan of net increase of 65,000 customers in a year.
Effort in overseas business will be made to establish the forth new business base subsequent to the threebusiness bases in Shanghai, Taiwan and Myanmar.
Expansion of LP gas business to Okayama and Gifu in theprevious period
Implementation of two M&A projects (Tokyo and Okayama)
in CATV businessShanghai in
China(2012)

Gifu
PrefectureTokyo

OkayamaPrefecture

ShizuokaPrefecture

Area expansion(LP gas)Yangon in Myanmar(2015)

M&A(CATV)

TaiwanCustomer base
expansion
Number ofcustomers

Taipei in

FY 2017

FY 2018

2.88
million2.94
millionToward establishmentof the new forthbusiness base(2013)

9Expectation for the future resulting from M&A of
two CATV companies in the previous period
The IP20 “JUMP” has a plan for active implementation of strategic M&A and alliance investment of
100 billion yen for four years.
Great expectation for the future growth of CATV business because of M&A of two companies in FY
2017
Tokyo Bay Network Co., Ltd.
Tsuyama-shi(with 260,000 customers)

TV Tsuyama Inc.

Provision of various
kinds of service of
our Group

Chuo-ku

Koto-ku(with 10,000
customers)

Kurashiki-shi(Tokyo's 23 wards)(Okayama Prefecture)

Wedding
ceremonies

Insurance

Electricity

LP gasService provided by our Group
City gas

Nursingcare

Housing

Aqua

Low-cost mobile service

Security

10

Internet

Already decided M&A in gas business this period
As announced, conclusion of contract on transfer of gas business in Shimonitamachi in Gunma
Prefecture, and succession from April 2019.
In addition to gas business, proposal on various kinds of service related to life with our Group’s
vision of TLC (Total Life Concierge) is made to contribute to the achievement of better life.
M&A and alliance will be continuously promoted in FY 2018.

Residents of Shimonitamachi

Wedding
ceremonies(TCS)

Insurance(TOKAI)

LP gasElectricity

City gas
Aqua(TOKAI)“Total Life Concierge”
Housing(TOKAI)

Low-cost mobile service(TCOM)

Internet(TCOM)

Nursing
care(TLP)

Security(TOKAI)

CATV
(TCN)

Currently, 26 M&A projects with the value of 190 billion yen are under consideration. 11

Growth of our Group in information and communications field
Growth of information and communications services as a pillar of the Group while responding tochange and needs of social environment

1978

Entry into information and communications
services for corporate customers

1996

Entry into information and communications
services for individual customers

2011

MemberServiceCreation of comprehensive customer database
Start of “TLC Member Service” common to theGroup

Full-scale entry into low-cost mobile
service

2017

Information and communications
services for individual customers

Information andcommunications services
for corporate customers◆Sales (FY 2017 result)

31,704 million yen◆Sales (FY 2017 result)◆Number of customers (as of March 2018)19,191 million yen

2,052 thousand customers

12

Technology innovation of ‘ABCIR + S’
A (AI), B (Big Data), C (Cloud), I (IoT), R (Robotics)＋AI

Ｓ (Smart Phone)

Cloud

Big data
Network

Robot

IoT
AI speaker

13

Expansion of utilization ratio of smartphone◆ Rapid expansion of smartphone utilization rate from 32.0% four
years ago to 71.3%.
2016

2012

All agebrackets

32.0%

71.3%
(+39.3%)

By age

10s
20s

2012
36.7%
68.4%

30s

49.0%

40s
50s
60s

28.8%
13.7%
4.7%

2016
74.3%

96.8%
92.1%
79.9%

Change＋37.6%＋28.4%＋43.1%＋51.1%＋49.4%＋27.0%

63.1%
31.7%

Source: “Survey report on use time of information and communications media and information behavior
in 2016” by Ministry of Internal Affairs and Communications

14

Increase of time spent on smartphone◆ Averaged time smartphone users spend on their smartphone is
1.5 hours on weekdays and 2 hours on holidays (per day).
We live in an era in which we obtain great deal of informationfrom the Internet.
Weekday

All agebrackets

Holiday

97.1 min.

136.8 min.

10s

160.3 min.

269.8 min.

20s

141.0 min.

188.6 min.

30s

82.2 min.

117.5 min.

40s

82.9 min.

112 min.

50s

68.6 min.

78.9 min.

60s

46.5 min.

60.7 min.

Source: “Survey report on use time of information and communications media and information behavior
in 2016” by Ministry of Internal Affairs and Communications

15

Change of consumers’ purchase trigger◆ “Internet” is becoming an important information source tochoose products and services along with “explanation bysales staff”.
Matters considered when choosing products and services％

1

Information from family members, friends andacquaintances

52.4%

2

Website47.7%

3

Leaflet / Brochure

44.6%

4

Explanation by sales staff

41.1%

5

TV / Radio CM

27.0%

6

Advertisement of newspaper, magazine, etc.

19.8%

7

Article of newspaper, magazine, etc.

16.8%

8

TV / Radio program

13.5%
Source: “Basic survey on consumers’ attitude in 2016” by the Consumer Affairs Agency

16

Rise of introduction rate of
EC (Electronic Commerce)◆The introduction rate of EC in Japan is 5.4%. The rate in the US which is ahead ofJapan is 7%, and the rate in China is more than 15%. Growth and expansion will be
still expected in the future.

6%

Transition of the introduction
rate of EC in Japan

5.43%

Introduction rate of EC in 2016(by classification)
Classification
1

5%

2

4%

3

2.84%

4

3%

5

2%

6

1%
0%
2010

2011

2012

2013

2014

2015

2016

Office supplies, stationeriesHome electrical appliances,PCs, etc.
Books ，image/music
softw areGeneral merchandise,furniture, interior
Clothing/outfits, generalmerchandise, etc.

％
33.61%
29.93%
24.50%
18.66%
10.93%

Cosmetics, medical goods

5.02%

7

Cars, motorcycles

2.77%

8

Food, drinks, alcoholic
beverages

2.25%

9

Other

0.75%

Total

5.43%

Source: “Establishment of foundation related to information and service in our economic society in 2016 (market research related to
e-commerce)” by the Ministry of Economy, Trade and Industry

17

Disruptive Innovation

Marketingcapacity(exiting strength)

ABCIR＋S×・A (AI)・B (Big Data)
・C (Cloud)・Ｉ(IoT)
・Ｒ(Robotics)＋
・Ｓ(Smart Phone)

By utilizing ‘ABCIR + S’, with customers,"Deeply Connected" is established.
18

Establishment of an organization
dedicated to “ABCIR+S”
Setting up of “Head office for next-generation business strategy” at TOKAI Holdings.

Head office for next-generation
business strategy at TOKAI
Holdings

Each TOKAI Group
Company

Consideration of ABCIR + S crosssectional utilization model for theGroup

Streamlining inbusiness field

Consideration of new business
Sophisticated customer contact point
Consideration of information utilization
strategy

Consideration ofsophistication by
utilization in business
field

Aiming at change and growth by cross-sectional utilization of informationand communications technology by the Group19

Financial Results in FY 2017 andPoints of Business Performance
Prospect in FY 201820

Active business expansion by
spending cost in advance◎ To create the trend of new record of the highest profit in FY 2018 and onward, activities for growth were actively
conducted such as expansion of areas, introduction of new communication service, and spending cost, etc. inadvance for prevention of cancellation, etc.
◎ As a result, number of customers which are Group’s revenue base greatly increased.
◎ In the aspect of profit, although spending of cost in advance as described above, etc. increased by 3.7 billion yen
compared with the previous year, profit increased to 1.8 billion yen thanks to increased number of customers, andthe revenue base for the next period and onward was established.
(Sales/profit: million yen, earnings per share: yen)
Result of thecurrent period

Previous period

Initialestimation

Comparison with the previous
periodChangeChange rate(%)

Comparison with initial
estimation
ChangeChange rate(%)

186,069

178,631

189,400+7,438+4.2- 3,331- 1.8

Operating profit

10,971

12,75011,410- 1,779- 14.0

- 439

- 3.8

Ordinary profit

11,191

12,775

11,360- 1,584- 12.4

- 169

- 1.5

Current net earnings

6,620

7,337

6,450

- 716

- 9.8

+170

+2.6

Earnings per share

51.19

64.46

50.88

- 13.27- 20.6

+0.31

+0.6

Sales

21

Great net increase of 310,000 customers
from the beginning of the period◎

Net increase of customers in existing business excluding M&A was 39,000, increase by more than 6 times compared to 6,000
customers which was the yearly net increase of customers in the previous period.

◎

Additional increase of 273 thousand customers by M&A of Tokyo Bay Network and TV Tsuyama◎

The plan was achieved as prospected at the beginning of the period which will lead to revenue increase by the increased number ofmonthly charging cases in the future.
Gas+ 19 thousand customers

CATV+ 298 thousand customers

Aqua+ 11 thousand customers(Unit: thousand
customers)

2,445

2,415

2,519

Net increase of

312 thousand

2,876

customers(increase of 12.2%)

Other

312
2,564

2,558

2,537

Net increase
pace of more

273

than 6 times

72

30

FY2011FY201273
FY20131920

6FY2014FY2015FY201639
FY2017

Net increase number of customers (existing)
Net increase number of customers (M&A)
Number of customers at the end of the period

22

Promotion of growth investment on the
background of equity enhancement◎ Additional 1.8-point increase of equity ratio because of conversion of convertible bonds andinclusion of current net earnings◎ Although free cash flow decreased temporarily due to actively expanded investment of 3.7 billion
yen, M&A investment of 1.2 billion yen, etc. in addition to spending of cost in advance to acquire
new customers and introduction of new services, interest-bearing debt was continuously reduced,
and the interest-bearing debt/EBITDA ratio was maintained at the same level as the previous period.
Equity ratio

34.5

%

➡

End of March 2017

Interest-bearing debt balance
Operating cash flow
Investing cash flow
Free cash flow

54.1

billionyen

End of March 2017
billionyen

26.7

Period ending in March 2017
billionyen- 11.0Period ending in March 2017
billionyen

15.7

Period ending in March 2017

Interest-bearing debt/EBITDA ratio

1.9

times

Period ending in March 2017

36.3

%

End of March 2018

➡
➡
➡
➡
➡

51.0

billionyen

End of March 2018billionyen

20.9

Period ending in March 2018billionyen- 11.5Period ending in March 2018billionyen

9.4

Period ending in March 2018

1.9

times

Period ending in March 201823

Points of financial results in FY 2017 (costincrease and effect)◎ In the previous period, cost spent in advance for growth, etc. was increased by 3.7 billion yen compared with theprevious period. As a result, number of customers increased which established the base for future revenue growth.
◎ With regard to effect of increased profit because of increased number of customers during the period, initiallyestimated 1.1 billion yen increased to 1.8 billion yen, resulting in establishment of revenue base which leads toincreased profit in the next period and onward.
Spending of cost in advance (comparison with the previous period) and its result
Item
InitialResultCost to establish newbases- 0.3 billion yen - 0.2 billion yen

Cost to acquire customers- 0.4 billion yen - 0.8 billion yen

New customer acquisitionfee- 0.4 billion yen - 0.7 billion yen

LIBMO sales promotion- 0.5 billion yen - 0.7 billion yen

Gas business- 0.3 billion yen - 0.5 billion yen

Communications and other- 0.6 billion yen - 0.8 billion yen

Influence of increased spending of cost in advance- 2.5 billion yen - 3.7 billion yen

Increased profit because of increased number ofcustomers, etc.

+1.1 billion yen

Area expansion in gas
business, etc.

Start of newcommunication service
Prevention ofsuspension/cancellation＋1.8 billion
yen

Increase of LP gas unit consumption- billion yen＋0.3 billion yen

Other- billion yen- 0.2 billion yen- 1.4 billion yen-1.8 billion yen

Consolidated operating profit compared with theprevious period

Expansion of LP gas business to Okayama Prefecture (Kurashiki) and
Gifu Prefecture (Tajimi)
Number of newly acquired customers of LP gas business, 41 thousand
customers -> 47 thousand customers, increase of 6 thousand customers

Number of LIBMO customers, net increase of 27 thousand customers
Number of LP gas service suspension, cancellation, 33 thousand
customers -> 28 thousand customers, reduction of 5 thousand customers
Number of BB service suspension, cancellation, 124 thousand customers-> 115 thousand customers, reduction of 9 thousand customers

LP gas business, CATV business, Hikari Collaboration Model,
communications services for corporate customers

24

Success of expanded investment achieved
the record-high profit this period.
◎

As a result of increased number of customers in the previous period and the current period, the increased profit of 2.1 billion yen canbe expected because of the increased number of monthly charging cases associated with the increased number of customers, etc.,
and the increased profit of 2.9 billion yen can be expected because cost to be spent in advance, etc. will decrease by 0.8 billion yen
from the previous period in the current period.

◎

Cost will be continuously spent in advance in the current period to increase the number of customers in a steady manner, andestablishment of base for increased profit will be promoted toward FY 2019 and FY 2020 surely and steadily.
(Unit: million yen)

Estimation of thecurrent period

Result of theprevious period(FY2018)(FY2017)Comparison with the previous
periodChangeChange rate

Sales

195,600

186,069+9,531+5.1%

Operating profit

13,96010,971+2,989+27.2%

Ordinary profit

13,88011,191+2,689+24.0%

Current net
earnings

7,920

6,620

+1,300+19.6%

60.48 yen

51.19 yen

9.30 yen+18.2%

Earnings per share25

Point of increased profit in FY 2018
◎ As a result of increased number of customers (increase of 312 thousand customers in FY 2017 and increase of 65
thousand customers in FY 2018), the total number of charging cases in FY 2018 will increase, which will result in
estimated 2.1 billion yen of increased profit.
◎ Although the enhancement of customer base will be continuously promoted, of the cost to be spent in advance,
cost specific to the previous period, etc. will decrease by 0.8 billion yen.
110
Factor of increased profit(hundred million yen)

141

Gas

Factor such as spending of
cost in advance (hundred

CATV

+0.6

million yen)

bittion yen

130

Communication
MVNO

Area expansion
in gas business

+2.1

Base

2.88

Other

+ 0.4

- 0.1

121

Number ofcustomers

14.0

+ 0.5

+0.5

130

111

+ 0.1

Hikari+0.1
Cottaboration
bittion yen
modet
Communications
services forcorporate
customers

120

2.94
millioncustomers

bittion yen

Factor specific to theprevious period, etc. (hundred

131

+0.9
bittion yen

million yen)

140

Number ofcustomers

Increased profit because ofincreased number of customers,
etc. which was 1.8 billion yen in
FY 2017 is expected to be 2.1
billion yen in the current period.

Increased number ofcustomers, etc.

Prevention ofcancettationGas＋0. 7 bittion
yenConsumption ∆0. 3 bittion
yen

+0. 5
bittion yen

LIBMO
+0. 4
sates
bittion yen
promotion-0. 1
bittion yen

Information

Other

0. 3 bittion∆

yenmillioncustomers

110

11.0

101

In FY 2017, cost spent in advance, etc. was increased by 3.7
billion yen compared with FY 2016.
In the current period, of cost for the previous period, although 0.8
billion yen is excluded since it was a temporary factor,
establishment of revenue base will be continuously promoted for
分類
3
分類 1
分類 1
increased profit in the following period and onward.

100

FY2017
分類 1
Result分類 2

分類 5

FY2018
分類 5Prospect26

Continuous and stable dividend policy◎ In FY 2017, as already announced, under the policy to pursue continuous and stable dividend, thelevel of yearly 28 yen/share was maintained as ordinary dividend including 6 yen of commemorative
dividend in FY 2016.
◎ In FY 2018, the same level of 28 yen/share is planned.

28 yen/share 28 yen/share 28 yen/share

30

6

21

20

11

12 yen/share 12 yen/share 12 yen/share

12 yen/share

10

6

6

6

6

14 yen/share

14

14

14

14

FY2017FY2018(prospect)

11

8
11

1

6

6

6

6

6

FY2011FY2012FY2013

FY2014FY20150Interim dividend

Term-end dividend

FY2016

Commemorative dividend27

LP Gas Business28

Steady improvement of ability to acquire
new customers◎ Expansion outside the previous our area of Shizuoka Prefecture and Kanto District wasstarted in FY 2015.
◎ Since 2011 when our company changed into a holding company, the ability to acquire
new customers has been steadily enhanced through strengthening of the management
structure and the financial aspect year by year.
◎ In FY 2017, approx. 50 thousand customers were obtained, which was the increase by
15% compared with the previous period. In FY 2018, 60 thousand customers, increaseby 30%, in the existing and expanded areas are planned to be obtained.
◎ The ability to acquire new customers will be further enhanced since it leads to41
deterrence of competition with other companies.

34(Unit: thousand customers)

47

17

7

4

2

25
19

60

17

26

16

15

21

27

27

32

13

11
6

9

11

10

9

12

6

12

FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018(prospect)* The number of customers includes customers acquired through trade area acquisition etc.

Shizuoka

Kanto

29

Advantage in competition among
LP gas suppliers◎ In FY 2015, our Company began to have advantage in competition.
◎ In FY 2017, the number of acquired customers increased thanks to the active spending of cost, andat the same time, placing emphasis on cancellation prevention enhanced our competitive power (netincrease of 14 thousand customers). Competitive edge will be maintained in FY 2018.
35
32
27(Unit: thousand customers)

11
7

-16

16

12

9

-3

7
-4

5

4
-4

-

-

-16

2

-13

-15

14

12

4

7
-4
-

3

2

7
-5

-11

18

9

12

-4

-4

-14

-13

- 18

- 17

FY2017FY2018(prospect)

-19

- 16

- 19

- 20

8

1

22
20

7

4
3
-3

23

19

17

- 19

- 16
- 25

FY2011FY2012Acquisition (Shizuoka)

FY2013Acquisition (Kanto)

FY2014
Suspension (Shizuoka)

FY2015FY2016

Suspension (Kanto)

Number of net increase customers

30Information andCommunications Services

31

Further market expansion ofcloud-related service◎ Cloud-related service is attracting attention as future big growth is expected.
◎ Cloud connection service market in the market of network for corporate customers which was 5.3
billion yen in FY 2016 will be 19.5 billion yen in FY 2020, and 3.7 times growth is expected.

Prediction of market of cloud connection
service for corporate customers(Unit: billion yen)

19.5

3.7 times forfour years

5.3

FY2016FY2017FY2018(Source: Fuji Chimera Research Institute (September 2016), IDC Japan (January 2017))

FY2019FY202032

Growth by promotion ofcloud connection service◎ Provision of cloud connection service to connect on-premise system of customers with major public cloud service isactively promoted.
◎ By responding to the demand for cloud connection service, great enhancement of network service for corporate
customers is planned.
◎ In particular, for connection line with AWS, taking advantage of a “qualified partner of AWS networking competency”
first in Japan, great increase (+33%) from the previous year is planned in FY 2018.
Number of lines for communication service
provided by our Company

3,520

3,236

(Unit: line)

Number of AWS connection lines

4,120(Unit: line)

600

33%

2,662

increase

2,034

450
256

FY2014FY2015Service for communications
between bases

FY2016FY2017

Internet service

FY2018(prospect)

60

Solution service

Ethernet dedicated line

Ethernet Internet

Cloud connection solution

Connection of two bases by bandwidth guaranteed, highly
reliable dedicated line

Provision of high-speed Internet line with stable quality

Ensuring secure and high-quality cloud connection

Relation Ethernet

Data center connection Internet

AWS connection service

Wide-area Ethernet connecting multiple bases by layer 2 at
low cost

Provision of menus that meet various needs of customers

Various service to connect customers bases with AWS

Video transmission service

Transit

IBM cloud Direct Link connection service

Provision of high-quality and stable video transmission NW for
business operators

High-quality transit connection service for business operators

FY2014133
FY2011FY2016FY2015FY2018(prospect)

High-quality connection of customer’s bases with IBM cloud

GCP connection service

Service dedicated to optic fiber

Connection of customer’s bases with Google Cloud Platform

Provision of our high-quality optic fiber by simplex

33

Expansion of operations in new areas throughdevelopment support of “Amazon Alexa”, etc.
◎ Provision of skill development support service for “Amazon Alexa” was started by utilizing technology, knowhow
and experience obtained in cloud connection service.
◎ Voice order system for our bottled water delivery service was developed and the provision was started (2017/11/8
press release).
◎ Emphasis is also placed on new areas, and operation is expanded in information and communications services forindividual customers and corporate customers.
In addition to the provision of connection service forcorporate customers, operation is expanded by
new technology and new activities.

Customer

Skill for Alexa

Customer’s
service/system

Support of skill development
and introduction for Alexa

Alexa,
do ○xȂ!

Support for linkage
of existing service
with API

Effective development support utilizing
experience and know-how to develop
template for skill

Your customer

Relevant device

Information
Reservationdelivery

Smart
home

Order

will be actively
enhanced and
Education Video accumulated in
the future

Establishment and operation of
AWS environment necessary forskill development and operation

Consulting, analysis after development and introduction and support of improvement about skill for Alexa

One-stop provision of development and introduction of various functions (skills)
supporting “Amazon Alexa”

January 19, 2018 Nikkei MJ (Marketing Journal)

34

CATV Business

35

Expansion of the customer base for
CATV business◎

Our CATV business has become business with one million customers by now through expansion of bases by M&A (Tokyo and fiveprefectures in Japan), increase of the number of customers by marketing capacity which is the Group’s strength.

◎

In FY 2017, in addition to the increase of 25 thousand customers by sales activities to acquire new customers in the existing areas,
273 thousand customers were acquired through M&A, resulting in net increase of approx. 300 thousand customers.
July 2017
Shares of Tokyo Bay Network Co., Ltd. were acquired.
February 2018
Shares of TV Tsuyama Inc. were acquired.

(Unit: thousand cases)

Existing

M&A

November 2010
Shares of Dream Wave Shizuoka K.K. were acquired.
December 2009
Shares of LCV Corporation and KCT Co., Ltd. were acquired.

May 2003
Shares of EAST COMMUNICATIONS COMPANY LIMITED were acquired.
October 1999
The business of Atsugi Isehara Cablenetwork., Inc. was taken over.
April 1998
Shares of Ichihara
Community Network TV
Corp. were acquired.

1,032
thousandcustomers

298 thousand customers
M&A 273 thousand
customers
Existing 25 thousand
customers

September 2006
Provision of FTTH service
utilizing CATV optical
network was started.

October 1998
Provision of CATV internet
service was started.

9 thousand customers

36Our own fiber-optic network is thestrength in CATV business◎◎◎Looking toward the era of amalgamation of broadcasting and telecom systems, introduction of FTTH up to last one mile was started in
2006, and the introduction of optical fiber networks will be almost completed in all of our CATV areas by FY 2020.
This achieved high level of earning capacity in communications service, and this has become a source of Group’s competing power as
a network that can respond to advanced broadcasting of 4K and 8K in the future.
In the midst of growing expectation for a public comprehensive information and communications network and local media, by utilizing
our strength of community-based business, expansion will be promoted while considering capital alliance with other companies.

(Schedule for introduction of broadcast optical network)
FY 2017TCN(Completion of 100% optical communication network)

FY 2018
Broadcast andcommunication

Center establishment

Centerestablishment

EAST(Completion of 100% optical communication network)

TOCO Channel(Optical broadcasting was already started.)

Ichihara

Rate of optical communication network area,
90%

Rate of optical communication network area,
52%(Concurrent expansion of optical communication network)

Atsugi(Concurrent expansion of optical communication network)

LCV(New optical network for broadcast and communication)

Tsuyama(New optical network for broadcast and communication)

FY 2020

FY 2021 ~Set optical network

Starting inclusion of customers
only for broadcast into optical
network

Plan of completion
in FY 2024

Broadcast and communication
customers set optical network

Starting inclusion of customers
only for broadcast into optical
network

Plan of completion
in FY 2022

100%

100%

Broadcast andcommunication

Broadcast and communication
set optical network56%

Set optical network
69%

Centerestablishment(Concurrent expansion of optical communication network)

KCT

99%

FY 2019

Rate of optical communication network area,
65%

81%

86%

Center establishment
Rate of optical communication network area,
69%

74%

Centerestablishment
Rate of optical communication network area,
0%100%
Broadcast and communication set optical network

79%

Centerestablishment
Rate of optical communication network area,
18%

75%
Broadcast and communication set optical network

83%

Broadcast and communication set optical network

46%

76%

Start of optical network from the latter half of the year

Centerestablishment

100%
Broadcast and communication
set optical network

Center establishment
55%
Center establishment

80%
Broadcast and communication
set optical network

Plan of completion
in FY 2025
Plan of completion
in FY 2025
Plan of completion
in FY 2026
Plan of completion
in FY 2026
Plan of completion
in FY 2024
Plan of completion
in FY 2024

37

Prospect of business performance and future outlook described in this material are ourestimation based on information available as of this moment, and potential risk anduncertainties are included. Therefore, please note that actual business performance ispossibly very different from the described future outlook due to change of various factors.

For inquiry related to this material, please contact us as follows:
IR Office, TOKAI Holdings Corporation
11F Hamarikyu Intercity, Kaigan 1-9-1, Minato-ku, Tokyo 105-0022
TEL: (03)5404-2891
FAX: (03)5404-2786
http://tokaiholdings.co.jp
e-mail: overseas_ir@tokaigroup.co.jp

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