DoCoMo’s solid quarterly results fail to inspire investors

7 Aug 2003

Japan’s NTT DoCoMo [NYSE: DCM], the world’s second largest mobile-phone operator behind Vodafone, has reported revenues of JPY1.25 trillion and net income of JPY197 billion for the three months ended 30 June 2003, its fiscal first quarter. The announcement marks the first time that Japan’s dominant cellular company has reported quarterly earnings. Whilst it failed to give comparisons to earnings in the corresponding period of 2002, the results were ahead of its May forecast that revenues and net income for the year ending 31 March 2004 would reach JPY4.9 trillion and JPY618 billion respectively. Japanese investors were not overly impressed, however, with DoCoMo’s share price falling by 3.24% to JPY269,000 at the close of trading on the Tokyo Stock Exchange. Although the quarterly result amounted to approximately 32% of DoCoMo’s projected full-year profit, it was dwarfed by recent results from rival KDDI [9433.T] which earned more than 60% of its projected full-year profit in the first quarter.

DoCoMo is attempting to offset slowing growth in Japan’s mature mobile telephone market by increasing its average revenue per user (ARPU). To do this it has recently launched a number of new initiatives including the introduction of a camera phone for its FOMA high-speed wireless internet service, which is capable of taking photographs with greatly increased resolution. The operator said monthly ARPU from data services reached JPY1,900 in the three months to 30 June, up from JPY1,630 a year earlier. However, annual ARPU fell from JPY8,150 to JPY8,040, on the back of decreased revenues from voice services. At the end of July 2003 DoCoMo claimed 658,700 FOMA subscribers from a total customer base of 44.7 million.