NTT DoCoMo's 1st-Half Earnings Hurt by Loss of Subscribers to Rivals

Tokyo, Oct 26, 2007 (Jiji Press) - NTT DoCoMo Inc. said Friday it suffered falls in revenues and profits in April-September, hurt by an exodus of subscribers under the number portability system.In stark contrast to KDDI Corp. the operator of the "au"-brand mobile phone service that last week announced record first-half group revenue and profits, NTT DoCoMo reported that its April-September group net profit slumped 20.4 pct from a year earlier to 246,510 million yen.It said that half-year operating profit decreased 21.0 pct to 408,496 million yen, weighed down by increases in advertising costs and capital investments for installing base stations.Revenues fell 2.4 pct to 2,325,117 million yen, hurt by a fall of 45.8 billion yen in revenues from mobile phone services, NTT DoCoMo said."NTT DoCoMo has been in a tough situation since the start of the mobile number portability system," President Masao Nakamura said at a press conference.The number portability system, which allows subscribers to switch mobile phone carriers without changing their phone numbers, was introduced in Japan in Oct. 24, 2006, in a bid to enhance competition in the mobile phone service market.During the one-year period, NTT DoCoMo lost a net 1,091,400 subscribers through the number portability system, while KDDI gained a net 1,232,200 subscribers. Another mobile phone firm Softbank Mobile Corp., a unit of Softbank Corp. , lost a net 105,100."We will do our best to reduce the churn rate while raising net increases in the number of new subscribers," Nakamura said.NTT DoCoMo's churn rate in the first half stood at 0.90 pct. Nakamura said that this was within the company's expectations.NTT DoCoMo's average revenue per user, or ARPU, for its FOMA and mova mobile phone services stood at 6,550 yen in the July-September quarter, down 2.5 pct from a year before. ARPU, a key gauge of profitability in the telecommunications industry, at the au business of rival KDDI stood at 6,400 yen for the same term.Hurt by the loss of existing subscribers, NTT DoCoMo revised downward its full-year group revenue estimate to 4,667 billion yen, from an earlier projected 4,728 billion yen. Mobile phone service revenues are expected to fall 58 billion yen short of the company's predictions, it said.But the company kept intact its full-year operating profit estimate of 780 billion yen."The introduction of a series of discount packages is expected to erode NTT DoCoMo's full-year operating profit by 20 billion yen. But this will be offset in full by a reduction in incentive payments to sales agents," Nakamura said.