Docomo sees 5G turnaround powered by young consumers

NTT Docomo's enterprise and Smart Life services have carried the company to higher revenue and profit for the first time in four years. The telco forecast that its core mobile business, which contracted once again, will rebound over the coming year on the back of 5G demand.

The Japanese mobile operator Thursday reported a 2.6% rise in full-year net income to 772 billion Japanese yen (US$5.7 billion) on 3.2% higher sales of JPY6.1 trillion ($45 billion).

The Smart Life unit, which includes financial and digital services, and the enterprise business between them contributed 32% of revenue and 45% of operating profit. Mobile operating profit declined by 2.8%. The company forecast a 6% rise in full-year operating profit in 2023-24, with the Smart Life and enterprise growing their combined profit by 12%.

Figure 1: NTT Docomo reports higher revenue and profit for the first time in four years.
(Source: NTT Docomo)

But it expects the mobile business to return to the black as demand recovers after two years of intense price competition.

CEO Motoyuki li told an earnings briefing the company was expecting growth from demand in large 5G bundles. He said with most of the population owning smartphones already, the company would be targeting primary school and junior high school students. "The purchasing decision will be taken by mothers so we will focus on people involved in child-rearing," he said.

The company is planning a series of efficiency measures, including a possible further sale of mobile towers to JTower, and the closure of 600 of its 2,300 retail outlets by 2025.

O-RAN negotiations

Docomo has also set a target of JPY10 billion ($74 million) in anticipated revenue from Open RAN subsidiary OREX. Ii said the company was in negotiations with five operator partners and hoped to close the deals soon. He did not say who they were but earlier this year it said Orex was working with KT Corp, Vodafone Group, Smart Communications, Singtel and Dish Wireless.

The company was offering support for its O-RAN solutions as a recurring service, not just a one-off sale, Ii said. He acknowledged that operators were not willing to adopt Open RAN "all at once" but hoped to migrate gradually to the new architecture.

Separately, Docomo parent NTT Corp has unveiled a plan to invest JPY8 trillion ($59 billion) in growth businesses over the next five years. The core of its new growth will be its self-developed IOWN (innovative optical and wireless network) concept.

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The company said it is aiming to lift EBITDA (earnings before interest, taxes, depreciation and amortization) from JPY3.3 trillion ($24.3 billion) today to JPY4.0 trillion ($29.5 billion) in 2027.

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— Robert Clark, contributing editor, special to Light Reading