NTT DoCoMo profits dip 17%

30 Oct 2006

(Associated Press via NewsEdge) Japan's largest mobile operator, NTT DoCoMo, said profit dipped 17% in the most recent quarter as sluggish phone sales and higher costs offset modest growth in its mobile services.

Net income fell to 146.3 billion yen ($1.23 billion) in the July-September period, the company's fiscal second quarter, compared to 177.4 billion yen ($1.51 billion) a year earlier, the Tokyo-based company said.

Sales were eroded by sluggish handset revenue, falling 1.8% to 1.16 trillion yen ($9.77 billion). Operating profit fell 9.8% to 244.2 billion yen ($2.06 billion), hit by increased personnel and material costs and a jump in capital investment in 3G phone services.

But the carrier promised aggressive cost cuts to leave its profit outlook for the fiscal year ending March 2007 unchanged at 488 billion yen ($4.11 billion).

Industry leader DoCoMo has been banking on sophisticated new handsets and services to drum up revenue as it fends off falling phone rates in Japan's cutthroat cell phone market.

Millions of Japanese now use mobile phones to surf the Web, listen to music, pay for products at stores and exchange e-mail. Earlier this year, a service began that allows users to watch digital TV on some handsets.

But handset prices tend to decline quickly despite the massive costs of developing new mobile technologies, making it difficult for companies to make profits.

The arrival of number portability, which allows users to switch carriers without changing phone numbers, is expected to further intensify competition. DoCoMo's smaller rivals KDDI and Softbank see portability as a chance to boost their market share at DoCoMo's expense.

© 2006 The Associated Press

© 2006 Dialog, a Thomson business. All rights reserved

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