NTT DoCoMo Inc. on Friday reported its first-ever fall in first-half earnings and revenue since it went public in 1998 due to a discount campaign to prevent its customers from defecting to rivals.
Citing the greater-than-expected number of users who opted for discount programs, the firm cut 100 billion yen from its initial full-year revenue projection but said it expects profit growth via cost cutting.
For the April-September period, Japan’s largest mobile operator’s net profit fell 6 percent to 335.19 billion yen. Revenue fell 3 percent to 2.45 trillion yen.
Calling the break in the firm’s growth streak “epoch-making,” DoCoMo Chief Executive Masao Nakamura told a news conference that it was not so bad because the discount strategy has worked.
Facing fierce competition from rival KDDI Corp., DoCoMo has started offering various deep discount programs, including a flat-rate service for its i-mode cell phone Internet service.
These discounts accelerated the downward trend for average monthly revenue per user, a closely watched gauge in telecom business. DoCoMo’s average monthly revenue per user fell to 7,370 yen from 8,080 yen a year earlier.
During the period, the number of DoCoMo subscribers increased to 47.36 million from 45.04 million a year earlier. Among them, users of its third-generation FOMA service jumped more than sixfold to 6.49 million.
In stark contrast with its bigger rival, KDDI reported on Thursday record first-half earnings, thanks to the strong performance of its au mobile phone business.
Its operating profit rose 3 percent to a record 162.43 billion yen on revenue of 1.47 trillion yen, up 6 percent. The firm’s net profit dropped 9 percent to 77.84 billion yen, mostly due to write-offs in the value of its undersea optical cables on the balance sheet.
Japan’s second-largest wireless carrier, which has been enjoying solid growth thanks to its stylish handsets and “chaku-uta” service, which allows users to download their favorite songs to use as ring tones.
During the six months, the number of subscribers to its au service jumped 19 percent to 18.19 million.
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