KDDI posts solid set of results for FY2018/19; will cut mobile rates by up to 40%

15 May 2019

Japanese carrier KDDI (au) has published its financial results for the year ending 31 March 2019, highlighting that operating revenue increased 0.8% year-on-year to JPY5.080 trillion (USD46.39 billion) from JPY5.042 trillion, operating income improved by 5.3% to JPY1.014 trillion, EBITDA rose 2.5% y-o-y to JPY1.599 trillion from JPY1.560 trillion – with an EBITDA margin of 31.5% (up 0.5pp) – and net income rose by 7.9% to JPY617.7 billion from JPY572.5 billion in FY2017/18. The company noted that its strong performance was driven in the main by ‘the revenue increase of mobile communications revenues, value-added APRA revenues, profit increase of the Business Services segment and Global Services segment’.

Going forward, KDDI plans to raise the year-end dividends per share up JPY5 from the initial forecast, to JPY105 for the year to 31 March 2019. It also announced its new medium-term goal, toward the fiscal year ending 31 March 2022 – to generate basic earnings per share 1.5 times after six years and a dividend pay-out ratio of over 40%. To achieve this goal, the company projects a consolidated operating revenue of JPY5.200 trillion (up 2.4% y-o-y) and an operating income of JPY1.020 trillion (up 0.6%) for the fiscal year ending 31 March 2020 – the first year of the plan.

The carrier, which markets mobile services under the ‘au’ branding, closed out 31 March 2018 with a total of 55.225 mobile subscribers, compared to 52.283 million one year earlier. It also reported having 2.447 million MVNO connections on its books – and targets 2.980 million by end-March 2020 – and 32.768 million WiMAX customers for its UQ Communications unit. Further, KDDI said it had 4.508 million fibre-to-the-home (FTTH) subscribers at the end of the year, up from 4.377 million in FY2017/18.

Separately, KDDI says that in response to government calls and a recent announcement from rival NTT DOCOMO to slash some of its own rate plans, it will cut mobile fees by up to 40%, starting in June. KDDI’s move is seen as an attempt to catch up with its rival, the nation’s largest carrier by subscribers, which last month unveiled a plan to offer a communication fee reduction of up to 40% from June.

TeleGeography notes that on 10 May Japan’s bicameral legislature The National Diet enacted a legal revision of the telecoms law designed to lower mobile phone fees and spur competition in the country’s saturated telecom market. With Japan’s mobile carriers NTT DOCOMO, KDDI (au) and SoftBank Corp drawing criticism for maintaining high charges compared to other countries, the Diet passed a Bill to amend the Telecommunications Business Law, banning them from offering plans that bundle both the price of a mobile phone and connection fees in one package.

Japan, KDDI (au), UQ Communications