Japanese wireless carriers split on dividend plans
Docomo, KDDI keep raising payouts as SoftBank focuses on growth
TOKYO -- Japan's three big wireless carriers are of two minds on what to do with their steadily growing profits, with NTT Docomo and KDDI eyeing more generous shareholder returns while SoftBank Group builds up its war chest for acquisitions and other investments.
KDDI continued a 15-year streak of dividend hikes Thursday, raising its annual payout for fiscal 2016 by 15 yen per share (13 cents) to 85 yen. The company is planning a 5 yen increase for the fiscal year ending March 2018, for which it sees revenue growing 4% to 4.95 trillion yen and net profit rising 3% to 565 billion yen. The planned dividend payout ratio of 39.2% tops its 35% target.
Subscriber numbers and data revenue per user are up, as are profits in other areas such as video streaming and payment services. In light of this strong showing, "we want to continue rewarding shareholders through dividend hikes," President Takashi Tanaka said.
KDDI also announced plans to spend as much as 100 billion yen to buy back a maximum of more than 1% of outstanding shares as well as retire a slightly smaller amount of treasury stock.
NTT Docomo expects to lift its dividend for a fourth consecutive year to 100 yen per share for fiscal 2017. This 20 yen increase is significantly larger than previous hikes of 5 yen to 10 yen, and does not reflect any special dividend the company may pay for its 25th anniversary.
"We can be confident that we have sufficient financial backing and profit growth over the long term," Chief Financial Officer Hirotaka Sato said. Docomo said it plans further hikes in fiscal 2018 and beyond and will flexibly repurchase stock.
SoftBank, meanwhile, intends to keep its dividend at 44 yen per share for this fiscal year. The company needs abundant capital for growth investments, including a contribution to a 10 trillion yen joint investment fund.
While SoftBank hiked its dividend in fiscal 2015 and fiscal 2016, this was only to keep total shareholder returns constant after buybacks reduced the number of outstanding shares, according to the company.
NTT Docomo and KDDI are paying out 296.9 billion yen and 208.9 billion yen, respectively, to shareholders for fiscal 2016. SoftBank's returns total just 47.9 billion yen. Yet investors seem to have higher hopes for SoftBank's plans for its money than for the two rival carriers. SoftBank shares have gained 14% this year, while KDDI has advanced just 3% and Docomo 2%.
Though all three carriers expect results to remain solid this fiscal year, price competition in low-end smartphones has weighed on profit growth.