Global Insight Perspective | |
Significance | The number of FOMA subscribers grew by 104% y/y to 23.46 million at end-March 2006, equating to 45.9% of the operator's total mobile subscriber base. |
Implications | The operator is committed to growing its 3G and value-added services to drive ARPU and revenue growth. |
Outlook | DoCoMo is set to face even more competition following the introduction of mobile number portability (MNP) and the arrival of new players. |
Japan's largest mobile operator today posted operating revenues of ¥4.766 trillion (US$41.7 billion) for the year ending 31 March 2006, down 1.6% year-on-year (y/y). The operator's mobile (FOMA plus mova) service revenue increased to ¥4,158.1 billion, up 0.3% y/y. Although sales of handsets related to the migration of subscribers from 2.5G (mova) to 3G (FOMA) services were continually strong, revenues from equipment sales decreased to ¥470 billion, down 14.2% y/y.
Operating income rose by 6.2% y/y to ¥832.6 billion. EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 1.2% y/y to ¥1.607 billion, representing a margin of 33.7%. Net income amounted to ¥610.5 billion, down 18.3% y/y.
Operating revenues, operating income and net income for the fiscal year ending 31 March 2007 are estimated at ¥4.838 trillion (up 1.5% y/y), ¥810.0 billion (down 2.7% y/y) and ¥488.0 billion (down 20.1% y/y) respectively.
End-March 2005 | End-March 2006 | End-March 2007 (Forecast) | |
Mobile (FOMA+mova) Subscribers (mil.) | 48.825 | 51.144 | 52.900 |
Net Additions (mil.) | 2.497 | 2.319 | 1.756 |
Market Share (%) | 56.1 | 55.7 | - |
- FOMA Subscribers mil.) | 11.501 | 23.463 | 35.000 |
- Net Additions (mil.) | 8.456 | 11.963 | 11.537 |
- mova Subscribers (mil.) | 37.324 | 27.680 | 17.900 |
- Net Additions (mil.) | -5.959 | -9.644 | -9.780 |
Aggregate ARPU (FOMA+mova) (¥) | 7,200 | 6,910 | 6,690 |
- Voice | 5,330 | 5,030 | 4,760 |
- Data | 1,870 | 1,880 | 1,930 |
Aggregate ARPU (FOMA) (¥) | 9,650 | 8,700 | 7,790 |
- Voice | 6,380 | 5,680 | 5,090 |
- Data | 3,270 | 3,020 | 2,700 |
Aggregate ARPU (mova) (¥) | 6,800 | 5,970 | 5,240 |
- Voice | 5,160 | 4,680 | 4,320 |
- Data | 1,640 | 1,290 | 920 |
Source: NTT DoCoMo |
Outlook and Implications
Revenue: The operator's mobile (FOMA plus mova) services revenues increased to ¥4,158.1 billion, up 0.3% y/y. Among these, voice (FOMA plus mova) revenues decreased by 1.5% y/y to ¥3.039 trillion. Voice revenue from FOMA increased by 127.3% y/y to ¥1.17 trillion. The figure represented 38.5% of the total voice revenues, compared with 16.7% in the previous year. Data (FOMA plus mova) revenue rose by 5.5% y/y to ¥1.12 billion. Data revenue from FOMA services amounted to ¥613.3 billion, up 135.3% y/y. This accounted for 54.8% of the total data revenues, compared with 24.6% in the previous year.
Subscribers: DoCoMo had a total of 51.14 million mobile subscribers at end-March 2006, up 4.7% y/y. The operator had a market share of 55.7% at the same date. It has achieved significant success in the migration of customers from 2.5G (mova) to 3G (FOMA) services. The number of FOMA subscribers grew by 104% y/y to 23.46 million at end-March 2006, equating to 45.9% of the operator's total mobile subscriber base. In comparison, FOMA subscribers only accounted for 23.6% of the total mobile subscriber base at end-March 2005. The growth of FOMA subscribers is expected to continue, with an estimated net addition of 11.5 million subscribers during the year ending March 2007. The churn rate for mobile (FOMA plus mova) services for the year ending March 2006 was 0.77%, up 0.24 point from the previous year. In addition, the number of i-mode subscribers reached 46.36 million at end-March 2006, up 5.3% y/y.
ARPU: For the year ending March 2006, the voice, data and aggregate full-year monthly ARPU of FOMA services were ¥5,680, ¥3,020 and ¥8,700, respectively. Voice, data and aggregate full-year monthly ARPU of mova services stood at ¥4,680, ¥1,290 and ¥5,970, respectively.
Capital Expenditure: The operator's capital expenditure (capex) during the year increased by 3% y/y to ¥887.1 billion, as a result of the accelerated roll-out of FOMA base stations. Capex for the year ending March 2007 is estimated to be ¥905 billion, of which ¥639 billion will be invested in further FOMA network expansion.
Outlook for Current Year: The country's largest mobile operator is expected to face even more intense competition in the current year, following the introduction of mobile number portability (MNP) and three market newcomers. Softbank, an internet company, will enter the mobile market via its recent acquisition of Vodafone KK (see Japan: 4 April 2006: Softbank Borrows US$10.9 bil. to Fund Vodafone Tender Offer). IPMobile and eAccess, which were granted mobile licences in November 2005, plan to launch commercial services on 1 October 2006 and 15 March 2007 respectively (see Japan: 10 November 2005: Three New Competitors for Japanese Mobile Market). In order to maintain its market-leading position, DoCoMo will continue to focus on the development of 3G and value-added services.