Japan’s largest mobile operator NTT DoCoMo reported a 41 percent rise in profit for its fiscal first-quarter 2008 due to a scheme designed to reduce handset subsidy costs, though analysts saw the results as evidence of DoCoMo mimicking its competitors and a change in the company’s accounting process. DoCoMo’s net income for the three months ended June 30 increased to JPY173.5 billion (US$1.6 billion) from JPY122.8 billion a year earlier, but quarterly sales fell 1.1 percent to JPY1.17 trillion. However, both profit and sales beat analyst JP Morgan’s forecasts, reports Bloomberg.

The quarter was characterised by DoCoMo’s efforts to curb the progress of rivals Softbank and KDDI, including offering free calls to family members and its earlier decision to charge customers more for handsets in exchange for a cheaper monthly phone bill. The company said that 8.9 million people had subscribed to the latter service by the end of the quarter, helping boost revenue in the quarter by JPY111.8 billion. Prior to the introduction of the scheme, subsidy payments had been equivalent to 20 percent of its sales. However, the cheaper tariffs meant that ARPU fell 10 percent from a year earlier to JPY5,890 (US$54.70) and analysts were sceptical that the subsidy scheme would continue to generate profit, viewing the quarterly rise in profit as a one-off. “The increase in profit was merely caused by the change in the accounting,” said Kenji Nishimura, a Tokyo-based analyst at Deutsche Bank, reports Bloomberg. “Given revenue per user is likely to continue dropping at the current pace for the time being and the effect of the installment plan only lasts this business year, the company can’t avoid seeing its profit fall next fiscal year.”