KDDI reports solid rise in 3Q profit, maintains growth forecast

23 Jan 2009

Japan’s second largest telecoms group by subscribers KDDI Corp posted operating profits of JPY143.8 billion (USD1.6 billion) for its fiscal third-quarter ended 31 December 2008, up from JPY121.4 billion in the corresponding year earlier period. The operator said the strong growth in profit was the result of lower handset subsidies which counteracted an anticipated slowdown in handset sales; KDDI has maintained its full-year growth forecast despite the global downturn.

Unlike many other telecoms companies that have cut their outlooks in recent months, KDDI has remained strong thanks to the introduction of a new business model that allowed it to cut the costly subsidies it pays to retailers. However, KDDI president Tadashi Onodera has warned that poor handset sales and rising costs have already forced it to up its subsidies and in some cases, sell older handset models for next to nothing as the impact of the economic recession increases. ‘Corporate customers who use phones just for talking have usually been first to cut their usage when the economy turns bad,’ the president told a press briefing. ‘Not only can we not get new subscriptions, but also the chance of service cancellations is not zero.’ Nonetheless, KDDI, reaffirmed its forecast for a JPY443 billion profit in the full year to 31 March 2009, up 10.6% year-on-year, but below a consensus forecast of JPY469 billion in a poll of 18 analysts by Reuters Estimates.

KDDI said its revenue in the period under review dropped 2.4% year-on-year to JPY882.4 billion due to lower average revenue per user (ARPU) and falling handset sales. The dip in revenues surprised the company which had expected to see the positive impact on revenues of new subscriber additions offsetting the drop in ARPU. KDDI has trimmed its FY2008/09 revenue target by 5% to JPY3.5 trillion and cut its target for cellphone sales by nearly 25% to 10.9 million units.

Japan, KDDI (au)