Investors remain unimpressed by DoCoMo’s domestic performance

4 Feb 2004

Japan’s largest mobile operator NTT DoCoMo yesterday posted a net income of JPY137.8 billion (USD1.31 billion) for the three months to the end of December 2003, its fiscal third quarter. The operator, which was reporting quarterly earnings for the first time, said its revenues were boosted by increased sales of camera phones and connections to its FOMA third-generation (3G) mobile service. Nevertheless, DoCoMo lost market share to its main rival KDDI Corp, which signed up more new mobile users in 2003, a fact which has not escaped the attention of the investor community; following its announcement DoCoMo’s shares fell by 1.3% to JPY223,000 on the Tokyo Stock Exchange, meaning they have now fallen by more than 15% since October 2003. During the same period KDDI stocks have risen in value by around 2%.

DoCoMo’s total revenues for last nine months of 2003 reached JPY3.83 trillion, with net income coming in at JPY494 billion. Monthly average revenue per user (ARPU) fell to JPY7,730, from JPY8,200 in the corresponding period of 2002, of which JPY5,800 per user was generated by voice services. By way of contrast, ARPU from users of DoCoMo’s (W-CDMA-based) FOMA service rose markedly from JPY7,750 to JPY10,270, with monthly spending on the operator’s remaining mobile data services rising by 9% to JPY1,930 per user. In October DoCoMo said it expected to post full year net income of JPY621 billion on sales of JPY5.03 trillion.

With 45.37 million subscribers at the end of 2003, DoCoMo still commands a 56.9% share of Japan’s mobile market, although its rivals have gradually been eating into its dominant position; twelve months previously its market share stood at 58.3%. It added 324,000 new customers in the three months to 31 December 2003, 55% fewer than in the year-earlier period. It also trails au Group (owned by KDDI Corp) by some margin in the 3G market, with 1.88 million FOMA subscribers at the end of the year, compared to the 11.76 million connected to au’s CDMA2000 1x service at the same date.