Japan’s KDDI Corp today reported a 12% year-on-year drop in Q1 operating profit as higher advertising and marketing costs impacted on its bottom line, but said it was keeping its double-digit growth target for the full year. The operator, Japan’s second largest telco by subscribers and revenues, posted operating profit of JPY124.37 billion (USD1.17 billion) for the three months ended 30 June 2008, compared with JPY140.90 billion in the corresponding year-earlier period. Nonetheless the operator, which is in a battle for market share with NTT DoCoMo and Softbank Mobile in the domestic cellular segment, stuck by its operating profit forecast of JPY443 billion for FY2008/09, which is up 10.6% on the figure recorded in 2007/08.
KDDI is struggling to compete with Softbank Mobile in the local cellular market, while its fixed line division trails Nippon Telegraph and Telephone (NTT). Softbank, the nation’s third largest wireless carrier, added a net 158,900 new users in June to end the month with 19.111 million subscribers, while DoCoMo added 84,200 (to 53.628 million) and KDDI managed just 12,000 additional users on a net basis to end June with 30.304 million customers. On a quarterly basis however, KDDI reported a net loss of 34,300 users after it shut down its slower TU-KA service in March. By contrast, Softbank added 525,500 net new users in the second quarter of this year, while DoCoMo gained 241,000.