Japan’s leading operator NTT Docomo reported a 12 per cent decline in its net income to JPY410.1 billion ($344 million) for its fiscal year ending 31 March as service revenue fell due to continued heavy discounts to attract new subscribers.
Its overall operating revenue fell 1.7 per cent to JPY4.38 trillion. Operating expenses increased 2.8 per cent to JPY3.74 trillion, due mainly to a rise in revenue-linked expenses such as the cost of equipment sold and other factors despite its ongoing cost-reduction efforts.
As a result, its operating income fell 22 per cent to JPY639.1 billion – well short of its original full-year target of JPY750 billion.
Operating revenue from its telecoms business was down 4.5 per cent to JPY3.65 trillion, which the company attributed to the expanded uptake of its “monthly support” discount programme and the negative impact caused by its new “Kake-hodai & Pake-aeru” billing plan in the initial phase following its launch, which more than offset the increase in revenues from equipment sales, Smart Life business and other businesses.
Smartphones accounted for 61 per cent of the 23.75 million handsets it sold, with 92 per cent LTE-enabled.
Its Smart Life business saw revenue increase 22.5 per cent to JPY437 billion, which it credits to the launch of its content distribution business called “dmarket”. The service now has 11.9 million subscribers.
In the Internet of Things (IoT) space, Docomo reached a deal with Tesla Motors to provide the in-vehicle information/communication platform and data connectivity for its Model S electric vehicles marketed in Japan.
The operator added 3.49 million mobile customers and now has a total of 66.6 million. It said its churn rate improved by 0.16 points to 0.71 per cent. But aggregate ARPU fell 5.2 per cent to JPY4,370 ($36.70).
With its 4G network rollout nearly completed, it reduced capex last year by 6 per cent to JPY661.8 billion. The operator said it added more than 42,000 4G base stations last year, bringing its total to almost 100,000. More than half of those support speeds of 100Mb/s or higher. Capex is forecast to decline by almost 5 per cent this fiscal year to JPY630 billion.
Its EBITDA margin dropped 4 points to 31.2 per cent in fiscal 2014 from a year ago and is expected to fall by another 1.5 points to 29.7 per cent this year.
Its guidance for fiscal 2015 is 2.8 per cent growth in operating income and a 6.4 per cent increase in operating revenue. 4G connections this year are forecast to increase by 6.26 million to 37 million. Subscribers to its Hikari optical-fibre service, launched in March, are expected to hit 1.8 million.