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NTT DoCoMo earnings fall on tougher competition and virus impact

Japan's NTT DoCoMo has posted an 11% fall in earnings, a result of sharper competition and the impact of COVID-19.

The Japanese telco announced a net profit Tuesday of 591.5 billion yen (US$5.55 billion) on 3.9% lower revenue of 4.65 trillion yen ($43.6 billion).

It attributed the result to "intensifying" competition as a result of regulatory changes and "the spread of low-cost smartphone services through MVNO and MNO sub-brands, and new entrants from different industries."

CEO Kazuhiro Yoshizawa said the virus outbreak meant DoCoMo could not issue guidance for the coming 2020-21 financial year.

"What is not foreseeable is how long the pandemic will continue," he said on an earnings call. "Whether it is six months or one year or more. That is something that is unforeseeable."

He cited the new limits on visitors to DoCoMo stores, which had cut numbers by 70%.

"If this is going to continue this will have a significant impact on the number of handsets sold. In terms of revenue there will be a certain impact."

He said the 5G rollout had slowed slightly as a result of delays in supply because of the COVID-19 shutdowns. The company was uncertain about maintaining its capex over the coming year.

The operator signed up 40,000 5G customers since its launch a month ago, but it says it might have to revisit its target of 2.5 million subscribers by year-end.

Without giving specific numbers, DoCoMo said COVID-19 had slowed subscription sales, while international roaming was "significantly down."

However, voice and data consumption had increased, while usage of some lifestyle apps had also risen because users were staying at home.

In its core telecom business, the operator reported a 7.2% decline in revenue and an 18.4% drop in operating profit. Mobile ARPU was down 3% to 4,230 yen ($39.66).

It increased mobile subs by 2% to 80 million and fiber broadband customers 13% to 6.5 million.

But it posted topline growth in its Smart Life business, which includes digital content, healthcare and financial services.

Yoshizawa said that after spending heavily on increasing market share in the past year, he expected Smart Life to boost the bottom line in 2020-21.

He also pointed out the company had met its target of cutting 130 billion yen ($1.2 billion) in costs.

— Robert Clark, contributing editor, special to Light Reading

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