8 Jan 2003
Japanese mobile giant NTT DoCoMo has announced a spending cap for the fiscal year starting 1 April after its 3G service FOMA generated less profit than it had predicted on the back of weaker than expected demand. The cellco plans to invest between JPY800 billion and JPY900 billion (USD6.7 billion-USD7.5 billion) on networks and base stations, claiming that excessive spending on network expansion will not help it to promote 3G services. DoCoMo concedes that it will have to change public opinion regarding the usefulness of 3G and overcome FOMA’s poor image before it can begin to look at aggressively trying to attract new customers. FOMA was launched amidst much fanfare in October 2001 but has thus far failed to live up to expectations, signing up just 149,000 customers by the end of November 2002. DoCoMo had originally aimed to sign up 1.38 million users by March 2003 but late last year revised its goal to 320,000, a figure which still appears to be hopelessly optimistic. As a result of the company’s failure to meet its own subscriber targets, credit rating agency Moody’s yesterday downgraded its outlook on DoCoMo from stable to negative, adding, however, that the company’s Aa1 rating reflected its dominant market position and strong financial profile. According to Moody’s, the downgrade signifies that FOMA may find it difficult to replicate the success and dominance of DoCoMo’s current generation of services.