DoCoMo Full-Year Profits Down 3.9%

Japan's NTT DoCoMo has reported a dip of 3.9% in its full fiscal year profits to reach ¥471.9 billion (US$4.93 billion), compared to ¥491.2 billion in the previous year. The average expected by analysts had been a rise in profits to around ¥499.5 billion, according to a Dow Jones Newswires report. Operating income saw a slight rise to ¥831 billion due to a decrease in cost of equipments resulting from decreased number of handsets sold.

Sales for the fiscal year ended March 31 were ¥4.45 trillion (US$46 billion), compared to ¥4.71 trillion in the previous fiscal year, reflecting the penetration of new discount programs.

In its statement, the company noted that competition among mobile phone operators in Japan, which has already entered a mature phase given the high penetration rate, has increased in such areas as customer acquisition and further improvement of customer services among competitors, as well as market entry by new competitors such as MVNOs.

As of March 31, 2009, the number of cellular services subscriptions was 54.60 million (an increase of 1.21 million compared to the number as of March 31, 2008), 89.8% of which was represented by 3G services subscriptions of 49.04 million. The churn rate for the fiscal year ended March 31, 2009 improved significantly to 0.50% compared to 0.80% during the prior year, reflecting the effect of new discount programs and new handset sales methods.

The aggregate number of subscriptions to the new discount programs introduced in August 2007 reached approximately 32.70 million while the number of subscriptions to the "Value  Plan" reached approximately 20.80 million as of March 31, 2009, respectively. As a result, aggregate ARPU of cellular services decreased to ¥5,710 (US$59) for the fiscal year ended March 31, 2009 (down 10.2% from the prior year).

With regard to equipment sales, the number of handsets sold decreased to 20.13 million units for the fiscal year ended March 31, 2009 (a decrease of 5.61 million units from the prior year).

Looking ahead, the company warned that although the promotion of loyalty marketing is expected to curb churns and equipment sales revenues are likely to grow owing to a broader adoption of new handset purchase methods, operating revenues for the fiscal year ending March 31, 2010 are estimated to be ¥4.48 trillion (US$46.3 billion), primarily because of the projected decline in ARPU resulting from the rate revisions made in the past. On the expense side, factors such as a projected reduction in network costs resulting from lower capital expenditures and on-going cost cutting efforts are expected to contribute to cost reductions, which are partially offset by the implementation of actions aimed for expanding future profitability and enhancing customer satisfaction. Accordingly, operating income is expected to be ¥830 billion (US$8.58 billion). No guidance was offered for the net income.

Posted to the site on 28th April 2009