NTT Docomo, Japan’s second largest mobile operator, reported a sharp increase in its fiscal Q3 net profit as it recorded strong revenue growth across almost all of its business lines.

The operator’s net profit for the three months to end-December 2017 jumped 53 per cent year-on-year to JPY75.68 billion ($696 million), helped by a JPY20 billion gain from a change in the way depreciation is calculated. Fiscal Q3 revenue increased 9.7 per cent year-on-year to JPY1.3 trillion.

Telecoms service revenue rose 5.6 per cent to JPY793 billion, with mobile service turnover increasing 2.8 per cent to JPY732 billion. Voice revenue grew 7.6 per cent to JPY241 billion and equipment sales jumped 33 per cent to JPY274 billion (after a 30 per cent year-on-year decline in the previous quarter).

Revenue from its Smart Life digital services unit fell 9.4 per cent year-on-year to JPY119 billion. Contract numbers for its Hikari fibre service increased by 1.5 million year-on-year to 4.48 million.

Both voice and data ARPU recorded slight increases year-on-year, with aggregate ARPU rising 6 per cent to JPY4,720 in the quarter.

New competition
In a research note, Jefferies equity analyst Atul Goyal said steady growth in revenue and profit was a positive sign, but noted Rakuten’s entry as a fourth operator could disrupt the market.

He said Rakuten’s current plans (with capex of JPY200 billion compared with annual capex of each incumbent of between JPY500 billion and JPY600 billion) are insufficient to create a meaningful risk to the industry’s profitability: “However, if Rakuten were to become more aggressive in its spending and capex plans to build a network, that could trigger a price war among incumbents as a defence mechanism.”

Docomo added 2.1 million mobile subscribers in 2017, ending the year with 75.7 million subscribers and a 39 per cent market share.

Since December 2016, the operator said it rolled out an additional 21,000 LTE base stations to take its total to 175,000. Its Premium 4G coverage, offering peak download speeds of 788Mb/s, reached 241 cities after it upgraded nearly 46,000 base stations.