NTT DoCoMo and KDDI Corp. may say Q4 operating profit fell as they paid retailers more to lure shoppers and promote new handsets. DoCoMo’s operating profit probably dropped 83 percent to 44.4 billion yen ($420 million) in the three months ended March 31, according to the median targets of nine analysts in a Bloomberg survey. The company’s biggest rival in Japan, KDDI, may say operating profit, or sales minus the cost of goods sold and administrative expenses, fell 6.8 percent to 53.5 billion yen.
The two Tokyo-based carriers, which together control more than 80 percent of Japan’s 9.4 trillion yen annual cell-phone market, are spending more to get subscribers to switch to 3G networks. Growth prospects are also dimming as people talk less on the phone and opt for cheaper fixed- rate options to download music files and send e-mails.
“Mobile-phone carriers are going to struggle to produce gains if competition turns out to be excessive,” said Naoki Fujiwara, who oversees the equivalent of $187 million in Japanese equities, including DoCoMo shares, as a fund manager at Shinkin Asset Management Co. in Tokyo. “Handset costs for DoCoMo are rising, and that will continue because the company has set adding customers as a priority.”
Vodafone K.K., the smallest of Japan’s three cell-phone service operators, forecast in January net income would probably total 110 billion yen, compared with a loss of 100 billion yen a year earlier when it booked provisions related to the sale of its fixed-line unit. The company reports results on May 24. Continue >>