Risk Management

• Delays/difficulty in procuring base stations, network equipment, purchased products (mobile devices, etc.), or development materials from domestic/international suppliers
• Increased cyber attacks in retaliation for sanctions on countries in conflict
• Difficulty in procuring energy (fossil fuel, gas, etc.) due to political factors; impact of rising procurement costs on revenue
• Regulations excluding foreign products that pose a threat from core infrastructure (such as base stations)
• Delays in starting service due to prior inspection of core infrastructure by countries, etc.
• Tightened legal regulations in each country due to global data governance

SoftBank has offices and affiliated companies in Europe, America, Asia, and around the world, provides products and services to domestic and international customers, and procures telecommunications equipment, products for our customers, and development materials from a wide range of domestic and international suppliers. We work with many international suppliers in the telecommunications business in particular, creating the potential for substantial business impacts from issues such as confrontation between countries on the international stage, regional conflicts, terrorism, and military action. In addition, our telecommunications business uses large amounts of electricity at base stations, network facilities, data centers, etc. to provide our customers with a high-quality communication environment, and 5G requires more power than 4G. Based on these conditions:

In the short term, there is a possibility of global shipping delays for telecommunications-related equipment due to aviation or marine shipping restrictions imposed by countries in conflict or related countries, shortages of semiconductors for mobile devices, etc. due to logistical delays in affected regions, supply chain disruptions due to delays or suspension of suppliers' business activities caused by cyber attacks in retaliation for sanctions on countries in conflict, etc. These may have a large impact on SoftBank's telecommunications business.

In the medium- to long-term, there is a possibility of costs involved in changing suppliers or equipment for base stations or network equipment as a result of conflict increasing crude oil prices and leading in turn to cost increases for shipping, etc. in the supply chain, or changes in the international political landscape leading to changes to national policy or regulations. There is also a possibility that SoftBank's business development, financial condition, and performance will be impacted in the event that changes in the international political landscape lead to regulations or restrictions on suppliers and combine with global increases in crude oil prices, etc. to result in continued increases in power prices, or in the event that obstacles to energy procurement will lead to difficulty in providing a stable supply of services and products.

We are monitoring and gathering information on international situations, and laws and regulations in countries where it provides services as well as countries where suppliers are based, as well as consult with external experts as necessary to:
In the short term, we are working on distribution and diversification of suppliers to strengthen the supply chain by distributing risk in case of disruptions.
In the medium- to long-term, we work to reduce risk by continuing to work on research and development for practical use of next-generation batteries, working toward adoption of communications infrastructure with low environmental impact being developed by an affiliated company, and further coordinating with government and industry organizations in order to minimize the impact of rising power prices on our revenue on top of monitoring and gathering information on international developments.

• Increased power costs due to shift to renewable energy
• Damage to society's trust and confidence in SoftBank if customers, etc. decide environmental efforts are insufficient
• Increased tax burden due to adoption of carbon taxes
• Increased restoration/maintenance costs due to frequency and severity of natural disasters and resulting equipment damage
• Procurement delays/difficulties for base station equipment, etc. as a result of supply chain disruptions due to natural disasters linked to climate change
• Revenue impact from difficulty in procuring energy (fossil fuel, gas, etc.) due to climate change and rising procurement costs

SoftBank's telecommunications business uses large amounts of electricity at base stations, network facilities, data centers, etc. to provide our customers with a high-quality communication environment, and 5G requires more power than 4G. As we work toward reducing greenhouse gas emissions:

In the short term, there is a possibility that our business development, financial condition, and performance will be impacted by increased power costs due to the shift to renewable energy. In addition, there is a possibility that business operations will be impacted in the event that the SoftBank group's efforts or disclosures related to climate change are seen as insufficient, or in the event that we are unable to win the understanding of customers, employees, suppliers, investors, communities, nations, government agencies, etc.

In the medium- to long-term, there is a possibility of increased tax burden due to adoption of carbon taxes, etc. as well as a possibility of increased restoration/maintenance costs due to frequency and severity of natural disasters and resulting equipment damage. In the event that energy procurement costs continue to rise as a result of increased demand due to the shift toward renewable energy, there is a possibility that power procurement costs for base stations, data centers, etc. will be affected, impacting our business development, financial condition, and performance.

We aim to switch the power used for business activities to 100% virtual renewable energy^*1 by 2030^*2, the year targeted for achievement of SDGs. We are also working toward “Carbon Neutral 2030” to achieve virtually zero greenhouse gas emissions through the use of AI, IoT, and other cutting-edge technologies for energy conservation.

In the short term, we bolster our efforts and promote energy conservation by using renewable energy to reduce CO2 emissions for base station power consumption (which makes up the majority of the electrical power used in our business activities), transitioning to energy-saving equipment, and improving the efficiency of energy use by expanding the use of IoT and AI. We are making progress on greenhouse gas emission reduction by implementing energy conservation in steps, from 30% renewable energy for base station power consumption in FY 2020 to 50% in FY 2021 and 70% in FY 2022. We also offer information about our CO2 reduction efforts to help promote understanding of our efforts.

In the medium- to long-term, we continue to work to promote redundancy in the core network and secure communications during disasters using a moored balloon radio relay system in order to bolster efforts to prevent and mitigate disasters. In addition, as one initiative aimed at achieving carbon neutrality in 2030, we are currently working on the joint development of large-capacity, high specific energy density, and lightweight lithium ion batteries.