Extract: Vodafone K.K.’s 3G devices increased by 564,600 in the quarter, bringing the number of 3G subscribers to 2,318,200, whilst market share of 3G net additions remained fairly constant throughout the quarter at just over 10%. Blended ARPU for the quarter was down 3.7% year on year, an improvement from the 5.4% fall recorded in the quarter to September. The continued fall in ARPU reflects the loss of higher value customers in the previous year and competitive pressures on pricing. Blended ARPU for the quarter was down 3.7% year on year, an improvement from the 5.4% fall recorded in the quarter to September. The continued fall in ARPU reflects the loss of higher value customers in the previous year and competitive pressures on pricing. The improved trend is due in part to the positive impact from the new range of flat-rate plans, which are generating additional usage. Service revenue fell 4.5% year on year due to the decline in ARPU. Voice revenues fell 6.2%, with non-voice revenues broadly stable. The improvement versus the previous quarter can be attributed to an improved ability to retain customers, resulting from a better handset line-up and service offering. (WWJ subscribers log in for more details). 

Vodafone K.K. Key Performance Indicators for Third Quarter of Fiscal 2005

The Vodafone Group today announced its key performance indicators (KPI?s) for the 1 October to 31 December 2005 quarter. KPI?s relevant to Vodafone K.K. are as follows.

The quarter saw an improvement with 125,200 net subscriber additions, the highest level since the quarter to 31 March 2004, bringing the closing customer base to 15,116,700(1). Vodafone K.K. benefited from the introduction of new flat-rate tariff plans and a steady improvement in the range and quality of its 3G handsets. Vodafone K.K.?s 3G devices increased by 564,600 in the quarter, bringing the number of 3G subscribers to 2,318,200, whilst market share of 3G net additions remained fairly constant throughout the quarter at just over 10%. The cumulative percentage of prepaid customers was 11% for the three month period to 31 December, unchanged from at the end of the previous quarter.

Annualised blended churn for the last quarter improved to 17.6% from 19.1% in the quarter to 30 September, through continued focus on retention and upgrading customers to 3G. Blended ARPU for the quarter was down 3.7% year on year, an improvement from the 5.4% fall recorded in the quarter to September. The continued fall in ARPU reflects the loss of higher value customers in the previous year and competitive pressures on pricing. The improved trend is due in part to the positive impact from the new range of flat rate plans, which are generating additional usage.

Service revenue fell 4.5% year on year due to the decline in ARPU. Voice revenues fell 6.2%, with non-voice revenues broadly stable. The improvement versus the previous quarter can be attributed to an improved ability to retain customers, resulting from a better handset line-up and service offering.

Net acquisition costs were similar year on year, with lower volumes offset by higher unit costs. Net retention costs increased year on year, as upgrade volumes were significantly higher year on year reflecting both increased retention activity and more attractive handsets, with higher unit costs due to increased 3G upgrades. The EBITDA margin in the quarter was consistent with expectations that the full year decline in margin will be similar to that recorded in the first half of the current financial year ended 31 March 2006(2).

Bill Morrow, President of Vodafone K.K. said:

Market conditions remain challenging, but our recovery made further progress with monthly net additions of over 50,000 both in November and December, thanks to improved network coverage, an expanded 3G handset range and popular services like Love Flat-rate. We?re in a good position to continue our advance in the spring sales season with 6 new models, including the world?s thinnest 3G handset.

Notes
(1) Vodafone K.K. customer numbers in this press release are calculated on a venture (100%) basis, as previously reported to the Telecommunication Carriers Association (TCA) in Japan. The Vodafone Group KPI press release calculates Vodafone K.K. customer numbers on a proportionate basis, based on its 97.7 percentage ownership at 31 December 2005.

(2) Vodafone Group financial reporting is done according to International Financial Reporting Standards (IFRS), whilst Vodafone K.K. reports are based on Japanese GAAP. As a result, EBITDA margin announced by Vodafone Group and EBITDA margin based on Vodafone K.K. financial reports may differ.

Product and Service Highlights

Vodafone K.K. continued to offer innovative products and services for the three months to 31 December 2005.

• The 903T GPS and 803T music mobile by Toshiba were offered in October as new, high specification 3G handsets. In November, the 703N by NEC was offered as a leather design 3G handset and the introduction of the 703SHf mobile wallet 3G model by Sharp marked the launch of Vodafone live! FeliCa services. December saw the debut of a new 3G smartphone, the 702NK II (Nokia 6680) by Nokia, and an additional mobile wallet 3G model, the 804SH by Sharp, was rolled out in selected regions.
• The V604SH by Sharp was offered as an entertainment-oriented 2G packet-based handset in November, and the V502T 2G packet-based handset by Toshiba was announced in December as a slim entry model scheduled for January.
• Love Flat-rate, an offering that enables unlimited voice calls and messaging to one designated Vodafone K.K. number, and Family Call Flat-rate, a service that allows unlimited voice calls to family members for a fixed monthly charge, were introduced on 1 November as new price initiatives.
• Vodafone live! NAVI, the world?s first mobile service to enable GPS roaming abroad, was launched in October and Vodafone live! FeliCa, a service that enables mobile payments and ticketing, was introduced in November.
• Business customer offerings were strengthened with revisions to the Vodafone Mobile Office price plan and discount services on 1 November, and the announcement of Vodafone Office Mail in December as Japan?s first service that enables customers to remotely access their PC emails and schedules on their mobiles in real-time.
• 3G network rollout further progressed, with active expansion and network quality improvement in indoor and suburban residential areas to enable a better customer experience.
• For roaming abroad, 182 roaming agreements in 130 countries and regions were in place as at 31 December, an expansion of 13 agreements in 8 countries and regions over the quarter. Free international plug adapter rentals were also offered starting in December to assist customers roaming abroad.

Related posts:

1. Vodafone Key Performance Indicators
2. Vodafone Japan New 3G Phones: Details, Audio Interview
3. Notable Revelations from Japan’s Cellcos
4. SoftBank Mobile Q3 Profit Slips
5. Vodafone Japan’s Losses To Widen

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