Japan-based NTT Docomo forecast a return in profit growth after booking a double-digit decline in its fiscal Q2 ending 30 September, as mobile revenue dipped on continued price pressure.
Net profit in the July to September period fell 11.5 per cent year-on-year to JPY173.4 billion ($1.53 billion) due to network-related expenses covering depreciation and amortisation costs, and the loss on the disposal of property, plant and equipment and intangible assets.
Total revenue fell 2.3 per cent to JPY1.16 trillion, with mobile communications turnover dropping 2.3 per cent to JPY671.8 billion and equipment sales down 6.2 per cent to JPY125.6 billion.
In an earnings call, NTT Docomo president and CEO Motoyuki Ii explained the loss is in line with expectations, as it previously stated higher expenses will come before profits, because of investments in new initiatives.
Its full-year outlook forecasts positive profit growth, with Ii saying both its telecoms and smart life units will see improvements in profitability in fiscal H2, noting a wider range of 5G data plans is driving strong adoption among older users, which has aided subscriber growth.
Price pressure
With aggressive competition from all players, the CEO said he not too optimistic about an improvement in ARPU in fiscal H2. He said attracting big data users, which tend to be younger, is a fundamental issue for the company, adding “How to capture this is where we have to focus our attention.”
5G subscriptions grew by 3.1 million to 6.94 million at end September. Total mobile subs rose 3 per cent to 83.5 million. Aggregate ARPU was flat year-on-year at JPY4,850.
Smart life revenue fell 3.9 per cent to JPY273 billion, while other businesses grew 3.5 per cent to JPY115.7 billion.
Capex in the six-month period increased 21 per cent to JPY248.7 billion. Full-year capex is forecast to decline 3.4 per cent to JPY550 billion.
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