Japan’s NTT DoCoMo reported a 4 per cent drop in net profit in its fiscal Q3, as discounts for new mobile plans introduced in June led to a 7.5 per cent fall in mobile service revenue.
The operator posted a slight decline in its total operating revenue to JPY1.154 trillion ($9.72 billion) from JPY1.165 a year ago. Its net income fell to JPY122 billion (from JPY130 billion), and the company is estimating a sharp decline of almost JPY200 billion in its operating income for the entire fiscal year.
Mobile service revenue dropped to JPY673 billion during the quarter. For the nine months ended 31 December, mobile revenue fell by JPY159 billion to JPY2.06 trillion.
Revenue from equipment sales increased 4.7 per cent in Q3 to JPY289 billion, driven by strong smartphone sales. The company sold 9 per cent more handsets, or more than six million units, in Q3.
The country’s number one mobile operator, with a 40 per cent market share, added almost nine million 4G customers in the first nine months of 2014, ending the year with 28 million 4G connections. 4G customers now account for 43 per cent of its 65 million mobile connections.
ARPU fell 5.8 per cent to JPY4,340 ($36.60) in Q3 from a year ago and churn also dropped to 0.70 per cent from 0.76 per cent.
Operating expenses edged up 2 per cent to JPY966 billion during the quarter, due mainly to a 12 per cent jump in the cost of equipment sold and other revenue-linked expenses, despite what the company said were efforts to reduce cost by accelerating its structural reform programme.
Its EBITDA margin for the nine months ending 31 January fell to 33.2 per cent from 36.7 for the same period a year ago.
Looking ahead to its full-year results for the fiscal year ending 31 March, DoCoMo estimates its operating income will decline by JPY189 billion to JPY630 billion.
It expects operating revenues to drop by JPY61.2 billion to JPY4.4 trillion due to the strong takeup of its new billing plan and the long-term impact of its mobile discount programme, despite an increase in revenue from new businesses. Its operating expenses for the year are forecast to increase by JPY128 billion to JPY3.77 trillion, as it faces higher expenses for its new businesses and an increase in cost of equipment sold.
DoCoMo also announced today it is introducing bundled plans that that give mobile customers a variety of discounts when they sign up for its high-speed broadband service (Hikari). The Hikari Pack includes mobile, fixed-line and 1Gb/s optical-fibre broadband services. The plans are priced between JPY3,800 ($32) and JPY5,200 depending on the exact service and the type of dwelling. Customers can sign up to the new plans starting on 16 February.