Docomo’s Q1 profit jumps; talks up ‘Premium 4G’ growth

Japan’s largest operator NTT Docomo reported strong profit growth in Q1, with higher ARPU, a recovery in voice revenue and lower operating expenses helping to boost its bottom line.

Its net income jumped 22.6 per cent to JPY207 billion ($2.03 billion) year-on-year for the quarter ending 30 June.

Operating revenue during the quarter was up 3 per cent to JPY1.109 trillion, despite a 17.7 per cent drop in equipment sales to JPY165.8 billon. Service revenue expanded 8.1 per cent to JPY730 billion, with mobile service turnover increasing 5.2 per cent to JPY704 billion. Voice revenue jumped nearly 10 per cent to JPY216 billion.

Operating expenses were down 3.8 per cent to JPY809 billion year-on-year due primarily to lower depreciation expenses (a result of a change in the depreciation method used), a decrease in the cost of equipment sold and initiatives to boost cost efficiency, it said in a statement.

The operator, with a 37 per cent market share, expanded its mobile user base by 6 per cent to 71.6 million over the past year. Aggregate ARPU rose 8 per cent to JPY4,330 ($42.50) from a year ago. Its bundled ‘Hikari’ plans, introduced just over a year ago, now have 2.07 million users.

Premium 4G
In May Docomo launched its Premium 4G service (see chart left, click to enlarge), offering peak download speeds of 375Mb/s, which it claims is Japan’s fastest, and plans to boost the speed to 500Mb/s this fiscal year.

Capex increased 4.3 per cent to JPY97.1 billion during the quarter. The operator expanded its Premium 4G service to 1,203 cities by adding 30,900 base stations. It also increased its 4G base stations by 34 per cent over the past year to 143,500 sites.

Although it expects equipment sales to continue to fall, it estimates operating revenues for the fiscal year ending 31 March 2017 will increase 2 per cent to JPY4.62 trillion. This will be driven by an increase in mobile service revenues as a result of the rise in smartphone use, strong demand for tablets, and initiatives aimed at boosting packet consumption of its “Kake-hodai & Pake-aeru” billing plan subscribers and an increase in optical-fiber broadband service due to the projected growth of ‘Hikari’ users.

Operating income for the next fiscal year is forecast to rise 16 per cent to JPY910 billion.