KDDI rings in lower profits


KDDI's earnings were relatively upbeat, compared with expectations, but came out after the close of trade

TOKYO, Japan (Reuters) -- KDDI Corp, Japan's second-largest telecoms company, on Thursday postedprofits for the business year just eneded that were down 3.3 percent.

It cited write-downs of idle assets but said restructuring and new mobile services would help boost profits this year.

It reported a group net profit of 12.97 billion yen ($101.6 million) for the year ended on March 31, down 3.3 percent. Group sales rose 24.9 percent to 2.83 trillion yen.

The results, unveiled after the Tokyo market closed, were better than the company's projections in March, when it said it expected a group net profit of six billion yen on 2.85 trillion yen in sales.

The relatively upbeat results were because of reductions in operating costs, KDDI said. It also said it would buy back up to 14.4 billion yen, or 24,000, of its own shares representing 0.5 percent of outstanding shares.

For the year to March 2003 it expects group net profit to more than triple to 49 billion yen. Sales meanwhile are expected to rise slightly to 2.86 trillion yen.

Behind the bullish forecast is its jump-start of a third-generation (3G) mobile phone service that attracted 330,000 users in the first month of its launch in April, three times more than giant NTT DoCoMo Inc signed up in seven months.

Other new services such as movie clippings and GPS (global positioning system) navigation devices are also enjoying strong demand with a combined total of more than a million subscribers signing up since December.

Now focusing its resources on "au", one of its three wireless arms but the only one that offers 3G and video and GPS services, it is abandoning services or writing off facilities that have little synergy with the core business.

The streamlining efforts have brought a 50 percent rise in its share prices this year, outperforming the market benchmark Nikkei average by 39 percentage points. Shares of KDDI ended up 2.78 percent at 370,000 yen on Thursday while the Nikkei average rose 0.82 percent.

By next March, KDDI expects seven million 3G users as all handsets it makes are now 3G compatible. Top dog NTT DoCoMo, on the other hand, sees 1.38 million people using its 3G fast net connection and teleconferencing services by March 2003, up from 105,500 last month.

Some analysts, however, have questioned how far KDDI can go in increasing subscribers when NTT DoCoMo continues to tower over competitors with a 60 percent market share of Japan's maturing mobile market.

With number three J-Phone, operated by Britain's Vodafone Group Plc, and Japan Telecom Co Ltd growing more competitive, KDDI faces tough going, analysts say.