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NTT DoCoMo, Japan?s leading mobile telecoms group, managed to overcome slowing growth in its mature domestic market to record a strong rise in interim net profit on Friday.
For the six months ending September 30, the group earned Y385.3bn ($3.4bn) in net profit, up 14.9 per cent from the same period last year. This was mainly due to a sharp rise in the number of subscribers for its Foma, or third-generation, service.
It said on Friday that by the end of September it had 49.9m mobile subscribers. Among them 16.77m were using Foma, up 45.8 per cent from 11.5m at the end of March.
However, operating revenue in the first half was down 3.2 per cent at Y2,373.5bn. The group saw its first fall in revenues and operating profits in the past financial year, and increasing competition has since forced it to reduce rates in a bid to attract users, leading to higher marketing costs.
After 15 years in the business, NTT DoCoMo has seen mobile penetration in Japan grow beyond 70 per cent, making it harder to generate growth at home. It faces strong competition from Japan?s second-largest mobile operator, KDDI, which earlier this month reported a 1.5 per cent year-on-year decline in quarterly ARPU, or average revenue per user.
NTT DoCoMo is also anticipating additional pressure on its market share from the two new mobile phone licences expected to the allocated by the end of this year, the growing popularity of internet protocol technology and the introduction next year of number portability, which makes it easier for subscribers to change networks.
The group has been looking for investment and business opportunities abroad to cushion the impact of dwindling revenues at home.
Just a few years ago, it was forced to take massive write-downs of nearly Y1,500bn on its investments in overseas carriers including AT&T Wireless, KPN Mobile and Hutchison 3G. Following that experience, the group has focused on rebuilding its position at home.
Despite the challenges ahead, the group raised its full-year forecast on Friday. Operating income is now expected to reach Y830bn, an increase of Y20bn from the previous forecast, in light of better trends than expected in its communications traffic and the number of net additional users in the first half of the financial year.
Aggregate ARPU for the year is expected to fall 4.9 per cent to Y6,850.
NTT DoCoMo shares in Tokyo closed unchanged at Y198,000 on Friday before the results announcement.