April 24, 2014 2:00 am JST

NTT Docomo's fiscal 2013 profit seen down 2%

TOKYO -- NTT Docomo Inc. is expected to report a group operating profit of around 820 billion yen ($7.91 billion) for the year ended March 31, a 2% decrease instead of the slight gain to 840 billion yen it had anticipated.

     This will mark the second straight year of operating profit declines for the leading Japanese mobile carrier.

     Locked in fierce competition with other carriers, Docomo failed to see the lift expected from introducing the Apple iPhone. The company had poor results in the interim period with a strategy focused on selling smartphones made by Sony and Samsung. And when Docomo did begin offering iPhones last fall, it initially faced difficulties securing enough of the handsets.

     Docomo's subscriber base grew by a net 1.57 million contracts over the year, fewer than the 1.85 million targeted.

     Expenses from cash-back promotions and other costs ballooned amid intense competition. The company bore a heavy burden from rate discounts for smartphone users and suffered sustained drops in average monthly per-contract revenue.

     Earnings will apparently grow at a sluggish pace this fiscal year as well. It is widely expected that operating profit will remain flat, owing in part to the introduction of a fee structure with fixed rates for voice calls.

     The company will review spending in research and development and other areas, aiming to shave around 200 billion yen in annual costs.

     Even as Docomo watches profit plateau, its rivals are steadily improving their own earnings. SoftBank is expected to post a fiscal 2013 operating profit exceeding 1 trillion yen for the first time, and KDDI is also seen booking a record profit.

(Nikkei)