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NTT DoCoMo to merge broadband, mobile services [New Vision (Uganda)]
[November 01, 2014]

NTT DoCoMo to merge broadband, mobile services [New Vision (Uganda)]


(New Vision (Uganda) Via Acquire Media NewsEdge) Japan's largest mobile network operator, NTT DoCoMo Inc., said Friday it would begin selling high-speed broadband and mobile service in a single, discounted package next February as it responds to fierce competition and a sharp earnings decline.



The company lowered its forecast for operating profit in the fiscal year ending in March by Yen120 billion, to Yen630 billion ($5.6 billion), citing tough competition and the measures it has taken to respond. In June, the company introduced a new, discount pricing plan that has been more popular than the company expected, attracting 10 million subscribers through mid-October, many of them existing subscribers who switched from more expensive packages.

The company's results were also affected by cuts to the prices of handsets, including Apple Inc.'s iPhones, which Docomo added to its lineup only last year--five years after SoftBank Corp. began selling them.


As a result, operating profit fell by 15.5% in the six months through September to Yen399.6 billion. Net income fell by 13.6% to Yen259.5 billion, while revenue slipped by 1.2%, to Yen2.17 trillion.

We view this situation very gravely and feel very bad about it, President Kaoru Kato said at a news conference, adding that the rate of uptake of the new pricing plan was totally unexpected.

The upside of that popularity was a net addition of 1.19 million subscribers in the first half, up from 240,000 a year earlier. Before the introduction of the new pricing plan, Docomo, which was spun off from the former state monopoly Nippon Telegraph & Telephone Corp. in 1991, had been losing ground for years to its two rivals, SoftBank and KDDI Corp.

For the bundled broadband and cellular service, Docomo plans to use the fiber-optic network of NTT, which remains Docomo's majority shareholder. NTT is making its fiber-optic network available to resellers on a wholesale basis.

In anticipation of the new service, Docomo's rivals have complained to Japanese regulators that Docomo could gain an unfair advantage because of its ties to NTT.

We wonder if they would give special treatment to their group companies and we think that is unacceptable, said a spokesman for KDDI, which already offers some bundled services. A SoftBank spokesman said it planned to introduce a packaged, discounted fiber optic and mobile service for competitive/business reasons.

Mr. Kato said the new service was essential for Docomo to remake itself as a company with a challenger mind-set, rather than a market leader--even though, with more than 40% of subscribers, it retains the biggest share.

The next three years will be a moment of truth for Docomo, Mr. Kato said.

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