KDDI says profit up on mobile growth

23 Oct 2006

Japanese telecoms company KDDI Corp has reported a 24% increase in net profits for the three months to 30 September 2006 on the back of strong growth at its mobile phone division. The carrier, the second largest mobile operator in the country after NTT DoCoMo, said group net profit surged to JPY60.4 billion (USD510 million) in its fiscal second quarter, up from JPY48.6 billion for the corresponding year-ago period. Quarterly turnover was also up 6.9% at JPY806.4 billion, from JPY754.5 billion previously. KDDI ended September with 26.4 million mobile customers, up from 24.2 million at the end of Q3 2005. Its au Corporation unit claimed the lion’s share, or around 24.5 million, of the total, while subscribers of its Tu-Ka service dipped to 1.9 million.

KDDI said its fixed line arm posted revenues of JPY362.4 billion, up from JPY286.2 billion for the corresponding year earlier period, while operating lossess improved to JPY16.8 billion, from JPY29.5 billion a year ago. The unit’s net loss of JPY8.5 billion, compared favourably with a loss of JPY16.2 billion in Q3 2005 in the back of strong growth at its broadband operation. KDDI had signed up 2.8 million DION internet subscribers by the end of the third quarter, of which 1.5 million were xDSL subscribers. It also reported 192,000 FTTH subscribers, up from 138,000 last year, and 2.4 million Metal Plus voice subscribers, up from 677,000.

Commenting on the results, KDDI President Tadashi Onodera said his company was working hard both to retain existing users and sign up new ones prior to the forthcoming introduction of mobile number portability (MNP), which comes into effect from tomorrow – Tuesday 24 October. KDDI is looking to increase its share of the youth sector by offering a broader range of music download services and offering an improved suite of products that utilise the Global Positioning System satellite features of their handsets. The mobile division reported a 7% rise in sales and a 24% increase in operating profit in the three months under review despite increased competition from NTT DoCoMo and, in particular, Softbank Corp, which has embarked on an aggressive sales push since taking over the Japanese mobile unit of Vodafone Group and renaming it Softbank Mobile.

KDDI is confident of its ability to keep adding subscribers without cutting prices before the new MNP rules come into effect. It has maintained its earnings forecasts for the full fiscal year to March 2007, saying that it needs more time to assess the effects of number portability. KDDI is forecasting group net profits of JPY186 billion (USD1.6 billion) on revenues of JPY3.29 trillion.

Japan, KDDI (au), NTT DOCOMO