3G success boosts KDDI profit

9 May 2003

KDDI Corp [BSE: 9433.BE], Japan’s second largest fixed line and mobile operator, has reported a net profit of JPY57.4 billion (USD492.7 million) for the year ending 31 March 2003, over four times the JPY13 billion reported the previous year. EBITDA stood at JPY544.8 billion, while revenues fell 1.7% to JPY2.79 trillion, beating expectations of JPY2.77 trillion. The company said that the positive results were primarily down to the recent success of its 3G mobile services, and a series of cost cutting measures undertaken during the year. Its flagship ‘au’ mobile brand could claim around 14 million subscribers at the end of March, around 6.8 million of which were 3G subscribers, almost half of its total. KDDI has managed to sign up over 20 times the amount of 3G subscribers as its larger rival NTT DoCoMo, which claimed just 330,000 subscribers to its third generation FOMA service at the same date, thanks to a wider area of coverage and longer battery life of its handsets. KDDI hopes the new next generation mobile services on offer will counteract the increasing saturation of the market. It has also unveiled plans to invest JPY120 billion in the rollout of high speed internet services over the next five years, introducing services such as video-on-demand, to make up for shrinking spending in the mobile sector. KDDI expects to see even better results in the year to March 2004, predicting a net profit of JPY71 billion.