Japan incumbents brace for new entrant, 5G rollouts - Mobile World Live

Japan incumbents brace for new entrant, 5G rollouts

07 AUG 2019

Japan’s three major mobile operators reported vastly different financial results for the April to June quarter, with modest subscriber growth and declines in handset sales the only common elements reported by the trio.

Both market leader NTT Docomo and KDDI, which account for 80 per cent  of the country’s mobile subs, suffered significant drops in net profit.

Docomo’s bottom-line was hit by higher marketing expenses for new tariffs introduced on 1 June. Mobile revenue plunged nearly 19 per cent year-on-year.

In a research note, Jefferies equity analyst Atul Goyal said that while the ARPU impact of the lower prices was minimal so far, he expects the new plans to lead to lower operating profit in the second half of its fiscal 2020. He noted Docomo’s price plans appear to be more aggressive than its rivals’.

Nearly 5 per cent of its subscriber base (3.75 million) moved to the new mobile pricing plans as of 23 July.

Second-ranked KDDI said its profit was hurt by a 12.1 per cent drop in handset sales and higher selling, general and administrative expenses in the quarter. Docomo and SoftBank recorded 6.1 per cent and 5 per cent declines in equipment sales respectively.

Despite continued pressure from the government to lower prices and unbundle handset and data plans, KDDI and SoftBank both managed to increase ARPU from the same period in 2018 (see chart above, click to enlarge).

Consumer mobile revenue accounted for just 36 per cent of consolidated revenue in the quarter for SoftBank, which continues to make moves to diversify beyond its traditional telecoms business. It made Yahoo Japan a consolidated subsidiary in June after increasing its stake in the unit with the aim of promoting businesses such as fintech in a more active and integrated manner, it said in a statement.

5G timetable
All three companies were surprisingly quiet on their respective 5G rollout plans as the country gears up for the pre-commercial launch of the technology for the Rugby World Cup which starts in just over a month.

Docomo only said it will deploy 5G services at eight stadiums and various other locations across the country, while KDDI and SoftBank highlighted the efficient gains and cost savings of their infrastructure sharing arrangement announced last month. The two plan joint trials in Asahikawa City in Hokkaido, Narita City in Chiba prefecture and Fukuyama City in Hiroshima prefecture in the next few months.

With the government pushing to make switching operators easier by reducing early termination fees for mobile contracts and e-commerce operator Rakuten scheduled to launch mobile service in October, the next few quarters will likely be much more challenging for the three incumbents.

The prospect of increased competition was certainly a key driver behind KDDI and SoftBank agreeing to share 5G base stations in rural areas.

All four operators say they plan to commercialise 5G networks next year, with the Tokyo 2020 Olympics expected to be used to showcase new applications. They committed to investing $14.4 billion in 5G over a five-year period.



Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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