TOKYO -(Dow Jones)- A day after Vodafone Group PLC warned that further investments to turn around its Japanese unit would dent profits ahead, the head of Japan operations said Wednesday it won't be long before the unit returns to a growth path.
Bill Morrow, president of Vodafone K.K. in Tokyo, said he is already seeing encouraging results, such as a net increase in its subscriber base and a good start to new services.
"This is the turnaround year. Next year is the growth year," Morrow told reporters.
Vodafone K.K., whose delayed launch of third-generation services eroded its market share, has been spending money more aggressively than its rivals, NTT DoCoMo Inc. and KDDI Corp., in order to keep existing customers and attract new ones.
Morrow said many business performance indicators have continued to improve in recent months.
The company added about 240,000 subscribers to its flat-rate call service in the two weeks since its Nov. 1 launch, he said.
Chief Financial Officer John Durkin said the start of the flat-rate call service is unlikely to hurt the firm's profitability as new customers attracted to the new rate system often sign up for other features.
As for other new services, Vodafone K.K. is in talks with about 30 companies for the planned mobile virtual network operator, or MVNO, business in which the mobile telecommunication carrier would lease capacity to others.
In addition, Vodafone K.K. executives said new entrants to the mobile communication industry will not pose immediate threats to existing operators.
The Japanese government has recently decided to let three companies, including Softbank Corp. and eAccess Ltd., to enter the mobile phone market.
Vodafone K.K. Chairman Shiro Tsuda said the number of mobile phone subscribers in Japan may continue to grow from the current 90 million, but the slowing pace of subscriber base growth in Japan means newcomers may take away some market share from existing network operators in the future.
Against this backdrop, the company is taking steps to boost its competitiveness, such as improving handsets and strengthening its network, Tsuda said.
-Kazuhiro Shimamura, Dow Jones Newswires; 813-5255-2929; kazuhiro.shimamura@dowjones.com
-Edited by Tomoko Hosaka
(END) Dow Jones Newswires "
Posted to the site on 16th November 2005
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