KDDI Corp has reported a 27 percent jump in quarterly profit, attributed in part to lower handset subsidies, with operating profit at 138.5 billion yen ($1.38 billion) in the July-September quarter, against a 108.7 billion yen profit a year earlier. The company stuck to its profit forecast of 443 billion yen for the fiscal year ending March 2009.
The higher price has depressed handset sales as users tend to hold on to their phones longer but has lifted carriers’ profits because they now pay much less in subsidies to retailers. DoCoMo and Softbank have also benefitted from the move. KDDI president Tadashi Onodera said economic weakness has had little effect on the mobile industry in the past but voiced caution over the possible impact of the current financial crisis.
Shares in KDDI have fallen 19 percent over the past 6 months, outperforming a 36 percent drop in the Nikkei as investors looked to telecom stocks as a safer bet to weather the global financial turmoil and cloudy economic outlook. KDDI expects handset unit sales to fall 9 percent to 14.4 million this business year, but the target is seen as high considering that sales dropped 34 percent in the second quarter according to Reuters.