Earnings: KDDI Profit Up 4.7 Percent, Data ARPU Still Not Making Up For Fall In Voice

Despite the intense price wars being waged by Japanese mobile operators and the impact on increasing churn, number-two provider KDDI reported a 4.7 percent rise in profits to 63.25 billion yen ($550 million), with gains in the mobile division offsetting losses in fixed, for Q2 (June-September 2007).

— KDDI now has 29.2 million mobile customers, a rise of almost 11 percent over the same period a year ago; sales rose 10 percent to 695.26 billion yen ($6.05 billion).

— Data ARPU increased over the previous quarter, to 2,130 yen ($18.44) from 2,080 yen ($18.01), but it wasn’t enough to make up for the fall in voice revenues; total ARPUs stood at 6,400 yen ($55.42) compared to 6,430 yen ($55.68). Almost 24.5 million customers are using KDDI’s EZweb mobile Internet service.

— No details on which services are getting exceptional usage, but some of the recent content arrangements include a tie-up with Google (NSDQ: GOOG) as well as full-music downloads.

— One other interesting detail I noticed in the earnings presentation had to do with handset replacement: many operators and vendors outside Japan like to say that over there everyone is crazy about having the latest handsets and services to go with them; and that this results in robust take-up of new data services. But KDDI seems to say that is not exactly always true: it’s been subsidising handsets in an effort to get more of its legacy users adopting its 3G platform “au.” But it points out that some of the challenges in getting people to come on board have been a “perception of unfairness concerning frequent need for upgrading handsets,” and “perception that the current system brings unnecessary switching of handsets.” KDDIis now trying a new strategy involving discounted tariffs and clearer marketing of subsidised phones.

Earnings presentation | KDDI financials page

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