KDDI reports 30% fall in Q4 profits on network write-down

25 Apr 2006

Japan’s second largest mobile phone operator KDDI, said fourth-quarter net profit fell 30% as it wrote down the value of an old network. Net income dipped to JPY32.6 billion (USD285 million) for the three months to 31 March, from JPY46.5 billion in the corresponding period of 2005. On a more positive note, revenues were up 14% at JPY830.6 billion. Operating profit fell to JPY39 billion from JPY53.7 billion previously, the company said

Commenting on the results, KDDI chief executive Tadashi Onodera said his company was currently promoting data services on its 3G network to offset declining voice revenues from 2G users. KDDI and bigger rival NTT DoCoMo are also increasing spending on marketing and discounts to fend off competition this year from new entrants such as Softbank Corp. KDDI expects net income to fall 2.4% to JPY186 billion during its current fiscal year, down from JPY190.6 billion in the year just ended. Sales are expected to rise by 7.6% to JPY3.29 trillion.

According to KDDI, its mobile customers spent an average JPY6,840 a month on their monthly phone bills in the three months ended March, down from JPY6,960 a year earlier. Average revenue per user (APRU) for data services rose to JPY1,960 from JPY1,780, but the cellco is losing out in the race with DoCoMo to grab 3G subscribers. As of 31March, DoCoMo had 23.5 million 3G users compared to 21.8 million for KDDI, while Vodafone KK trailed behind with three million. KDDI’s share in the overall mobile market was 27.5%, behind DoCoMo’s 56%. Vodafone KK’s market share was 17%.

In October 2005 KDDI absorbed the three Tu-Ka group companies – Tu-Ka Cellular Tokyo Inc, Tuka-Cellular Tokai Inc and Tu-ka Phone Kansai Inc. However, during the twelve-month period the number of subscription contracts for its Tu-Ka second-generation service fell 23.7% to 2.74 million, KDDI said.

Japan, KDDI (au)