OKINAWA CELLULAR TELEPHONE COMPANY Q2 FY2026 earnings call

Consolidated Financial Performance

• Total consolidated operating revenue was 42.068 billion yen, a 920 million yen year-over-year increase
• Operating profit was 9.35 billion yen, a 450 million yen year-over-year increase
• Net profit attributable to the firm was 6.54 billion yen, a 420 million yen year-over-year increase
• EBITDA was 12.516 billion yen, a 198 million yen year-over-year increase
• Both revenue and profit are tracking ahead of original full-year forecasts

Mobile Brand Strategy and New Plan Impact

• The newly introduced au Value Link Plan has driven strong growth in new au subscriptions, with increased migration from UQ mobile to au and reduced migration from au to UQ mobile. Net churn for au has improved to near flat, with further positive trends seen in October
• New junior-focused and senior-focused value plans launched in September are performing well
• After discontinuing low-capacity plans for UQ mobile, standalone SIM customer acquisitions (the core competitive MNP battleground) declined, but management is shifting focus to targeting customers with medium/high-capacity needs. Early results from new initiatives are already showing improvement, with September seeing early signs of falling churn for UQ mobile
• Management is focused on increasing device bundle rates for UQ mobile, pairing plans with au Denki and Ponta Pass offers to boost retention and recover sales momentum
• The au segment churn rate remains stable at a low level; overall multi-brand churn rose slightly in Q2 due to UQ mobile standalone SIM customer attrition

New Business and Strategic Initiatives

• Okinawa Cellular will lead a special purpose company to participate in the Uruma City General Gymnasium construction and operation project, a 20 billion yen total project scheduled for completion in FY2029. The project will leverage the firm's communication technology to build smart sports infrastructure with AI camera analytics and real-time streaming
• The firm successfully demonstrated 5G SA for live streaming at the Naha O-tug-of-war festival, showing that 5G can be easily integrated into existing broadcast systems, proving strong commercial potential for broader 5G use cases
• A viral social media post and subsequent analysis of foot traffic during the Okinawa Shogaku High School Koshien victory generated widespread local media coverage, leading to numerous inquiries for the KDDI Location Analyzer foot traffic analysis service, which has strong growth potential supporting Okinawa's tourism industry

Sustainability and ESG

• Okinawa Cellular released its first integrated sustainability report in late September, disclosing both financial and non-financial information about the firm's commitments to Okinawa and progress against strategic goals
• The firm is partnering with two local organizations to submit Japan's first J Blue Credit application based on the restoration of the endangered Umi-shoubu seagrass, a blue carbon ecosystem that sequesters ocean CO2. Approved credits will be used to offset the three partners' CO2 emissions

1. Mobile: Total mobile revenue reached 22.59 billion yen, a year-over-year increase of 712 million yen, accounting for approximately 53.7% of total consolidated operating revenue. First-half net subscription additions hit 2,100, representing 21% progress against the full-year 10,000 subscription target. Revenue growth was driven by price revisions and strong performance of device warranty services, with sequential growth acceleration (4.1% year-over-year growth in Q2, up 1.6 percentage points from Q1).
2. Device Sales: Device sales revenue increased 316 million yen year-over-year. Higher device costs (including slightly elevated trade-in values for customer device upgrades) drove an 868 million yen increase in sales-related costs, mostly offsetting the revenue gain.
3. FTTH: First-half net subscription additions reached 2,000, hitting 50% of the full-year target on track. Migration of existing customers to the new 10 Gbps service has exceeded expectations for pre-orders.
4. au Denki (Electricity Retail): Revenue decreased 148 million yen year-over-year, driven by cooler July-August temperatures in Okinawa reducing electricity usage and fuel adjustment cost impacts. Q2 saw 600 net new subscriptions (total subscriptions now 77,700), returning to net growth after sales resumed in July. 60% of existing customers had pre-booked switches to the new au Denki plan by end-September, with most switches completed by November.

• Management maintained the full-year mobile net subscription addition target of 10,000, with no downward revision, and expects growth acceleration in the second half driven by the September new price plans
• Management maintained the full-year au Denki net new subscription target of 4,400, expecting new customer growth to accelerate in H2 as mobile sales efforts are expanded for the service
• FTTH will refocus on new customer acquisition in H2 to hit the full-year target, after successful H1 migration to 10 Gbps service
• 60% of existing au Denki customers have pre-booked switches to the new plan, with all conversions completed by end-November, which is expected to drive full-year profit improvement in the segment
• Management expects continued revenue and profit growth for the full year, with Q2 results tracking ahead of original forecast

• After UQ mobile discontinued low-capacity plans, standalone SIM customer acquisition (the core competitive MNP segment) has declined, and Q2 overall multi-brand churn saw slight deterioration from this segment, though early improvement was seen in September
• Device costs (including higher trade-in values for upgrades) increased significantly year-over-year, driving an 868 million yen increase in sales-related costs that partially offset revenue gains
• Cooler summer weather in Okinawa reduced electricity usage for au Denki, leading to a 148 million yen year-over-year revenue decline for the segment
• Mobile net subscription additions are only at 21% of the full-year target through the first half, requiring significant acceleration in H2 to meet the full-year goal

No question and answer section was included in the provided transcript.