Asahi Net, Inc.

Business Details

ASAHI Net, Inc. operates in the single segment of the ISP Business. It provides internet connectivity services (ISP "ASAHI Net (ISP)") such as FTTH and mobile for individuals and corporations, wholesale IPv6 connectivity to other telecommunications carriers (VNE "v6 Connect (VNE)"), and a cloud-based educational support service ("manaba"). A key differentiating factor from competitors is that the company operates its own backbone lines and network infrastructure as a VNE operator. In FY2026 (ending March 2026), net sales were ¥13,517 million and operating profit was ¥1,791 million.

Recent Overview

Despite higher revenue, operating profit declined sharply by 23.6% year on year due to increased costs; a slight profit increase is expected next fiscal year

In FY2026 (ending March 2026), the company achieved higher sales of ¥13,517 million (up 3.4% year on year), but operating profit fell sharply to ¥1,791 million (down 23.6% year on year) due to a combination of factors: increased line procurement costs associated with the rise in FTTH contracts, higher depreciation and outsourcing expenses from the core system renewal, and increased promotional expenses. ADSL connectivity service was discontinued on January 31, 2026. In April 2026, the Representative Director, President and Executive Officer was replaced, transitioning to a new management structure. For FY2027 (ending March 2027), the company forecasts net sales of ¥14,000 million (up 3.6% year on year) and operating profit of ¥1,800 million (up 0.5% year on year), a slight profit increase. Capital expenditure is planned at ¥2,500 million. A revision to the pricing structure for some FTTH connectivity services is planned for February 2027.

Key Products

Growth Drivers

• Increase in FTTH connectivity service contracts: FTTH contracts continued to increase to 514 thousand IDs as of the end of March 2026, driven by expansion of the "Flet's Hikari Cross" service area and rising demand for whole-building subscription plans
• Increase in traffic for VNE "v6 Connect": Growth in the number of lines among partner operators and increased traffic per line (such as internet-exclusive sports broadcast streaming) boosted usage-based revenue, with net sales for FY2026 (ending March 2026) reaching ¥2,415 million (up 11.8% year on year)
• Strengthening of the fiber-optic collaboration model "AsahiNet Hikari": Expanding measures for individual and corporate customers as a stock-type business characterized by high unit prices and low cancellation rates
• Expanding demand for corporate IoT/M2M applications: Corporate LTE contracts for IoT/M2M applications utilizing the fixed IP address option have continued to increase
• Strengthening competitiveness through large-scale manaba development: Approximately 50 new features were released during the two-year priority development period starting in FY2025 (ended March 2025), enhancing quality assurance and university IR functions to retain existing customers and expand new orders
• Support for next-generation high-speed communication services: Began supporting "Flet's Hikari 25G," offering maximum upload/download speeds of approximately 25Gbps launched by NTT East, expanding the ultra-high-speed communication lineup

Risks

• Continued cost pressure: Increased depreciation and outsourcing expenses associated with the core system renewal are expected to continue into FY2027 (ending March 2027); cost of sales for FY2026 (ending March 2026) rose significantly to ¥9,407 million (up 8.9% year on year)
• Declining trend in manaba contracts and adoption: The number of institutions with full adoption continued to decline to 86 as of the end of March 2026 (down 2 institutions year on year), and contracted IDs fell to 761 thousand (down 7 thousand year on year), amid ongoing commoditization and polarization of the LMS market
• Capital expenditure burden due to increasing communication traffic: Expenditure on intangible fixed assets rose significantly to ¥1,851 million and on tangible fixed assets to ¥888 million in FY2026 (ending March 2026); capital expenditure of ¥2,500 million is planned for FY2027 (ending March 2027) as well
• Risk of corporate customer churn: A temporary increase in corporate customer cancellations toward the end of March 2026 was a factor that suppressed growth in FTTH contracts
• Risk of fluctuation in VNE traffic revenue: Revenue from v6 Connect is based on a usage-based charging model linked to VNO operators' traffic volume, making it dependent on traffic trends and the business strategies of partner operators
• Decrease in cash and cash equivalents: Cash and cash equivalents as of the end of March 2026 stood at ¥2,474 million, a decrease of ¥1,686 million from the previous fiscal year-end (¥4,161 million), as expanded investment activity pressured available liquidity