KDDI net income falls on weak mobile performance and slow handset sales

1 Feb 2019

Japan’s second largest mobile network operator (MNO) by subscribers, KDDI (au), reported a relatively weak set of financial results for its fiscal three-month period ending 31 December 2018, noting that growth in new business segments failed to offset falling mobile revenues and a double-digit dip in handset sales. Net profit for the period under review amounted to JPY160.295 billion (USD1.474 billion), down 1.6% from JPY161.114 billion, while operating revenue slipped to JPY1.309 trillion from JPY1.344 trillion. Operating income for the period (FY2018.3) fell to JPY261.289 billion from JPY271.235 billion, although KDDI noted that a 21% increase in ‘Life Design’ value added revenue (which covers media content and e-commerce) to JPY53.146 billion helped offset a 1.6% decline in mobile turnover to JPY444.484 billion from JPY446.400 billion. MVNO revenue nearly doubled to JPY12.197 billion from JPY6.852 billion. Handset sales were down 13% to JPY276.324 billion. Consolidated EBITDA declined 2.9% year-on-year to JPY317.382 billion, with the group noting that it hopes to drive its future business by promoting the ‘integration of telecommunications and life design’ in commerce, energy and education businesses, and taking steps to expand its Life Design Services.

Operationally speaking, KDDI reported that subscribers to its au-branded mobile service increased by nearly four million y-o-y from 50.638 million to 54.263 million at 31 December 2018. Average revenue per account (ARPA) dipped slightly from JPY5,910 to JPY5,870. Valued-added ARPA for its Life Design Services was up 22% from JPY630 to JPY720. The group also revealed that WiMAX venture UQ Communications had a total of 31.523 million subscribers at end-2018 (up 3.369 million), while its FTTH user base climbed to 4.491 million from 4.325 million previously.

The Japanese operator has so far offered little detail on its 5G launch plans, but did report: ‘We will work with a wide range of partners to accelerate technology testing and drive the creation of new services leveraging 5G, aiming for the start of services in some areas in 2019.’ Further, as part of an initiative with Toyota Motor Corp, KDDI plans to provide a connected environment using its ‘Global Communication Platform’ in the US, Japan and China in 2019.

Japan, KDDI (au)