9450.T

• Company Purpose & Positioning

  • Fibergate is the pioneer of the 'free internet apartment' business model in Japan, and has repositioned itself as a 'On-Premise Infrastructure Integrator' (its own coined term), expanding from only communication infrastructure to combined communication + renewable energy on-site infrastructure.
  • The company targets small and medium-sized enterprises and property owners, who are underserved by expensive large-scale vendors from major carriers and energy companies; 99% of Japanese corporations are SMEs, representing a large untapped market.
  • The long-term goal is to expand from on-premise communication and energy infrastructure to become a comprehensive on-premise infrastructure integrator, potentially including on-site water infrastructure in the future, following the model of private water management in France.

• Business Model Innovation for Renewable Energy

  • The company uses a partial fixed, partial usage-based pricing model for solar energy: up to 200kWh costs 2,200 yen including tax, with additional usage charged at extra rates, modeled after traditional mobile phone plans.
  • Fibergate combines residential communication infrastructure with cross-selling solar + storage systems to the same existing property customer base, creating a unique combined offering. The company developed a cost-optimized solution for small and medium-sized buildings that combines residential-grade batteries and inverters, operated in parallel and controlled via cloud, priced at ~1/3 of the cost of industrial-scale systems, filling a gap in the existing market that only offers either single-home or large industrial systems.
  • Energy systems require cloud-based control via communication infrastructure, which is Fibergate's core existing competency, and very few other firms offer combined communication and energy solutions.

• Corporate Growth Stages

  • The company entered its 5th growth stage last year after Wi-Fi commoditization led to a 80% drop in its PER and corresponding share price decline, forcing a strategic reset. This 5th stage is a preparation period for the 6th growth stage expected around 2029-2030, when major industry innovations (perovskite solar cells, all-solid-state batteries, NTT IOWN photoelectric fusion communication) are expected to create major new growth opportunities.
  • The 5th stage focuses on strategic pre-investment to position the company to capture this upcoming wave of innovation, which is expected to shift the energy market toward urban on-site self-consumption and turn entire buildings into distributed power generation facilities.

• Capital Allocation Plan

  • The company plans to allocate 10 billion yen in total over two years: 1 billion yen for shareholder returns, 5 billion to 6 billion yen for M&A and system investment, and 1.5 billion to 2 billion yen annually for equipment investment focused on communication infrastructure. The company needs major system investment because its existing in-house developed core system has reached its limits as the company has scaled.

• The company expects its current Stage 5 to be a multi-year preparation period, with continued pre-investment including M&A before the 6th growth stage around 2029-2030, when major industry innovation is expected to drive large-scale growth.
• The company targets to achieve segment profitability (black ink) for its renewable energy business this fiscal year, which is now in full commercial launch.
• B2C NURO high-speed individual internet service is expected to launch in the second half of this fiscal year, with revenue impact starting then.
• The partnership with Sony Network Communications for high-speed internet is projected to generate 3.6 billion yen in annual revenue and over 20% operating profit margin if the service reaches 100,000 subscribers, which is the projected take-up rate from Fibergate's current 700,000 total units.

No absolute financial results or revenue contribution percentages for individual product segments are provided in the available transcript. The company operates four core segments: 1) Home Use: Primarily provides free internet for rental apartment buildings, currently serving ~700,000 units. 2) Business Use: Provides Wi-Fi and digital communication solutions to commercial locations including retail districts, hotels, hospitals, nursing homes, events, and tourist attractions, with a high domestic market share for short-term event Wi-Fi. 3) Renewable Energy: Offers on-site solar + storage solutions under the SOLERIO brand, with full commercial launch starting this fiscal year. 4) Real Estate: Minor business focused on internalizing and monetizing previously external customer data through collaboration with existing realtor clients.

• The core home use internet business is in a red ocean competitive market, with pricing pressure that makes it difficult to pass on cost increases, leading to quality pressure and common public criticism of slow speeds across the industry.
• Commoditization of Wi-Fi has already led to a large drop in the company's valuation (PER fell to 1/5 of its previous level) and share price decline.
• The company faces manpower and skill shortages, as it needs staff with combined expertise in communication and renewable energy to support its new business and cross-selling strategy.
• Renewable energy projects have long lead times, so most current orders will not contribute to this fiscal year's results and will be recognized in future periods.
• Business Use business growth has slowed recently as the market shifts from simple Wi-Fi provision to full DX solutions, which requires new capabilities and has led to a transition period with slower growth while the company builds out required expertise.

Q: What are the goals and current status of the partnership with Sony Network Communications? / A: The free internet apartment market has become highly competitive, with widespread quality issues and consumer complaints of slow speeds. Rising demand for high-quality high-speed internet from residents has created an opportunity to add paid premium individual connections to existing buildings. Fibergate already has existing infrastructure in place, so no new capital investment is needed from NURO, and the service can be offered at below-market prices. Management estimates 20% of Fibergate's 700,000 current units will take up the service, which would generate 3.6 billion yen in annual revenue with over 20% operating margin.

Q: Will growing NURO penetration improve Fibergate's overall profit margin? / A: Replacing existing base internet service with higher-cost NURO infrastructure would compress margins, but growth in paid individual NURO connections will significantly improve overall profit margins. Market demand has shifted from just 'free internet' to 'high-speed free internet' so the partnership aligns with current consumer demand, forcing Fibergate to expand into B2C services that it did not previously focus on.

Q: What is the rationale for acquiring PDI, the solar EPC construction firm? / A: Previously, all solar construction was outsourced, with middleman margins increasing end costs and reducing Fibergate's profit. Bringing construction in-house allows Fibergate to capture all project margins, lower end prices to improve competitiveness, and build up specialized construction expertise ahead of the expected 2030 launch of perovskite solar cells. Electric construction has high regulatory and certification barriers, so acquiring an established firm gives Fibergate immediate capabilities that would be difficult to build from scratch.

Q: What steps is Fibergate taking to address manpower and capability shortages? / A: Fibergate reorganized its sales structure in July, merging previously separate home use and business use sales teams into three regional sales divisions that cover all business lines. Because all segments share the same customer base, this merged structure enables cross-selling of communication, energy, and business solutions, and allows on-the-job skill development for sales staff, improving average sales per employee. Internal organizational development is prioritized over external hiring given the tight labor market.

Q: What is Fibergate's stance on shareholder returns and share price measures? / A: Fibergate follows a 'three-way good' policy of splitting net income equally between shareholder returns, internal retained earnings, and growth investment. The company prefers fair equal dividends over share buybacks or share dividends, as share dividends are seen as unfair to large and institutional shareholders. The maximum sustainable payout ratio is ~50%, and the company will maintain dividends at least at current levels, prioritizing long-term growth through investment to drive sustainable long-term share price gains.