NTT DoCoMo: Higher Earnings; Big plans for 5G but lots of competition

NTT DoCoMo, now a fully owned unit of parent NTT Group, reported 6.3% higher full-year earnings of 629 billion yen (US$5.74 million). Revenue was 1.6% higher at 4.73 trillion yen ($43.14 billion) while operating costs were flat.

Quarterly mobile revenue, which had fallen in the first half of the year, grew slightly in the last two quarters, although over the full year it was flat at 2.7 trillion yen ($24.6 billion).  The new Ahamo discount plans, launched in March, attracted more than 1 million new customers to the end of March, most of them aged under 30, DoCoMo CEO Motoyuki Ii told analysts on Thursday.

In its presentation to investors, the company described their 5G goals:

  • Build 5G coverage that exceeds competitions’ in both speed and breadth while elevating our service offerings. Concentrate managerial resources on 5G to deliver on efficiency improvement at the same time.
  • Concentrate network investments on 5G and improve efficiency of 4G spend, to achieve reduction in total expenditures.
  • Accelerate replacement of base stations from 3G to 5G to suppress total network costs

DoCoMo had 3.09 million 5G customers as of March 31st, with a target of 10 million in the current fiscal year.  In fiscal year 2020, there were 7,100 base stations deployed (in 574 major cities in Japan).  In fiscal year 2021, the company expects to deploy 20,000 base stations and commence 5G core/SA service.  The 5G SA network will be deployed only “where there is actual demand” for enterprise services such as network slicing.

Also, 55% of Japan’s population will be covered by “Lightning Speed 5G” (that uses sub-6GHz bands and millimeter wave spectrum).

DoCoMo’s most promising 5G solution was a joint venture with machinery company Komatsu to provide smart construction services, Ii said. The LANDLOG open platform connects land, equipment and materials for innovative and smart construction.  These would be sold globally through NTT Group sales channels as well as locally.

Image Credit: Getty Images

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Challenge toward a “New DoCoMo” include the following initiatives:

  • Drive innovation and bring major changes to society.
  • Pursue “customer-first” and deliver new value that exceeds customers’ expectations.
  • Enhance customer experience (CX) and realize business structure reform by promoting and executing digitalization of business operations and data utilization.
  • Promote business and ESG management in an integrated manner, thereby contributing to the creation of a sustainable society.

FY 2021 Principal Actions include:

Telecom Business:

  • Expand customer base by offering rate plans and services catered to diverse customer needs.
  • Achieving both Early expansion of 5G coverage and improvement of network cost efficiency.
  • Accelerate digital shift of sales channel and digital transformation (DX) of call centers and DoCoMo Shops (converged online/offline CX).

Enterprise Business:

  • Expand areas/industries where 5G solutions are applied and achieve nationwide deployment.
  • Support DX of small- and medium-sized companies through early proliferation of “Business d Account.”

Smart Life Business:

  • Expand finance/payment business and establish data-driven B2B2X ecosystem.
  • Create new lifestyles centered on video offerings and expand new business domains.

With respect to earnings guidance, DoCoMo forecast a 1.4% increase in operating profit for the 2021-22 financial year, with Smart Life services expected to improve earnings by 9.3%. Telecom group operating profit is projected to fall 1.6%.

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Sidebar: Japan Mobile Network Competition for DoCoMo

Mobile sites in Japan (courtesy of Light Reading)

Mobile sites 5G sites 5G sites target
KDDI 110,000 10,000 50,000 by March 2022
NTT DoCoMo 80,000 7,100 20,000 by March 2022
Rakuten 44,000 (summer target) 1,000 N/A
SoftBank 230,000 N/A 50,000 by March 2022
Source: Companies

KDDI says it had 10,000 5G base stations deployed at the end of March and is targeting 50,000 by March next year.  KDDI estimates the latter number will provide population coverage of 90% of Japan’s population. Last year alone, it spent about JPY174 billion ($1.6 billion) on 4G and 5G rollout, as well as JPY200 billion ($1.8 billion) on “common equipment.”

SoftBank, the third operator, has precisely the same target of 50,000 base stations and 90% population coverage by March 2022.

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References:

https://www.nttdocomo.co.jp/english/corporate/ir/library/presentation/index.html

https://www.nttdocomo.co.jp/english/corporate/ir/binary/pdf/library/presentation/210512/presentation_fy2020_4q_e.pdf

https://www.nttdocomo.co.jp/english/info/media_center/event/mwc19/pdf/about_smart_construction_iot.pdf

https://www.lightreading.com/5g/rakuten-and-curious-case-of-missing-5g-plan/d/d-id/769477?

 

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