Japan’s largest mobile operator has reported strong growth across almost all of its business lines in what was a rip-roaring Q3 for NTT Docomo. The telecommunications incumbent in Japan enjoyed a sharp increase in its net profit.
The operator’s net profit for the three months to end-December 2017 jumped 53% year-on-year to $698 million, which was helped by a JPY20 billion gain from a change in the way depreciation is calculated. In addition to this, it was also disclosed that fiscal Q3 revenue increased by 9.7% year-on-year JPY1.3 trillion.
NTT Docomo’s financial quarterly report will delight its shareholders and stakeholders and cement its positon as the No.1 mobile operator in Japan. What is remarkable about its fiscal Q3 is the fact it enjoyed growth across all of its business channels.
Telecom service revenue grew by 5.6%, mobile service turnover increased by 2.8%, voice revenue grew by 7.6% and its equipment sales grew by a whopping 33%, despite a 30% year-on-year decline in the previous quarter.
However, some analysts have pointed out that NTT will face disruption due to the introduction of a fourth operator to the industry in the form of Rakuten. Jefferies equity analyst Atul Goyal claimed that steady growth in revenue and profit was a very positive sign, but stressed that the operator should prepare itself for the inevitable disruption which Rakuten will have on the telecommunications industry in Japan.
He’s suggested that 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 defense 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.
