KDDI’s H1 profit up 8.8%, maintains full-year outlook

19 Oct 2007

Japan’s second largest telecoms company by subscribers KDDI Corp has reported an 8.8% year-on-year rise in first-half operating profits for the period ending 30 September, driven by a strong performance from its mobile division, and has retained its full-year outlook. The company posted operating profit of JPY249.6 billion (USD2.17 billion) in the period April-September, and maintained its forecast for the year of JPY390 billion, which is below the mean market expectation of around JPY410 billion for the fiscal year to 31 March 2008. Net income climbed 7.1% y-o-y to JPY145.7 billion in the six months under review, on the back of an 8.1% rise in revenues to JPY1.73 trillion, from JPY1.60 trillion previously. KDDI said a strong performance at its mobile unit had helped offset losses at its fixed line business

KDDI faces intense competition in the domestic mobile market and has cut call rates and commissions on handsets this year in the face of an all-out price war with NTT DoCoMo and Softbank Mobile. The company had 29.22 million subscribers at the end of September, thanks to the net addition of 1.03 million users in the quarter. KDDI’s au Corp unit reported 1.43 million net additions, but its TU-KA group lost 400,000 customers. ARPU for au was JPY6,400 compared with JPY6,700 in H1 2006. the churn rate at the flagship au business was up marginally at 1.03%. KDDI expects to add 1.81 million net new users in the current fiscal year and plans to shut down the TU-KA service from April 2008. Shares in KDDI have climbed around 12% since the start of the year since its decision to offer music download services and cut price plans helped it grab market share from Japanese market leader DoCoMo.

On a less positive note, KDDI’s fixed line unit continues to struggle. First-half revenues dropped 2.2% year-on-year to JPY354.6 billion, from JPY 362.4 billion, while its operating loss widened from JPY16.8 billion to JPY29.5 billion. The net loss reached JPY17.1 billion, up from JPY8.5 billion previously. At the end of September KDDI had 3.17 million Metal-plus (voice) subscribers and 670,000 Hikari-one (FTTH) subscribers. It ended the period with 1.47 million ADSL subscribers, down from 1.55 million a year ago.

Japan, KDDI (au), TU-KA Group