DoCoMo's Q1 profit up 45%, maintains full-year outlook

30 Jul 2008

Japan’s largest mobile operator by subscribers NTT DoCoMo today reported a 45% jump in quarterly profit after it reduced handset incentives, but reiterated that full-year growth would be small and below market expectations. The cellco recorded consolidated operating profits of JPY296.5 billion (USD2.75 billion) in the three months to 30 June 2008, up from JPY203.9 billion a year ago, as operating costs dropped JPY105 billion as a result of lower subsidies and slower sales of new handsets. Quarterly sales dipped 1.1% year-on-year to JPY1.17 trillion as revenues from call fees dropped sharply, it said. The company’s performance was bolstered however, by a new sales strategy of raising handset prices, but offering cheaper call tariffs in return. Reuters reports that DoCoMo was also buoyed by lower procurement costs as users delayed their purchase of a new or upgraded phone, instead using a new instalment payment plan (that usually takes a year or two to pay off), or waiting for the launch of new models from June. However, industry watchers warn that DoCoMo’s gains could prove short-lived as it battles for market share with KDDI and Softbank Mobile in a fiercely competitive domestic mobile market.