Japanese telecoms operator Softbank Corp said operating profit for its fiscal third quarter to 31 December 2006 more than tripled thanks to its purchase of mobile group Vodafone KK earlier in the year, but then warned it expects profits to narrow in the January-March quarter as increased advertising and promotional costs take their toll. The company posted record operating profit of JPY84.7 billion (USD701 million) in its fiscal third quarter, up from JPY23.5 billion a year earlier, compared with a median estimate of JPY76.5 billion forecast by local analysts. Net profit was JPY7.5 billion, down 66% year-on-year, due to a higher tax burden and a larger allocation of Yahoo Japan Corp profits to minority shareholders, the company said.
Softbank Corp snapped up Vodafone in April 2006 and hastily set about cutting its prices and introducing new models in a bid to grab additional market share. Although its lower prices have helped it achieve this, it faced a series of problems following the introduction of mobile number portability (MNP) in October that have undermined consumer confidence. As a result, Softbank’s share of net subscriber gains in the October-December 2006 period was 16.9%, beating DoCoMo’s 9.8%, but well behind KDDI’s 73.3%. Softbank is expanding its coverage area in 2007 and launching attractive handsets to compete with its larger rivals. It plans to raise the number of base stations in its network to 46,000 in the first half of its next financial year to achieve this.