DoCoMo Seen Posting Record 1st-Half Profit on i-Mode
--From AOl.-- Cooters
Tokyo, Nov. 14 (Bloomberg) -- NTT DoCoMo Inc., which is expanding overseas to make its cellular phone technology a global standard, will probably post record first-half earnings as it gained more subscribers attracted by its mobile Internet service.
The Tokyo-based operator of the i-mode service will post group net income for the six months to Sept. 30 of 200 billion yen ($1.85 billion), or 20,885 yen a share, from 178 billion yen, or 18,592 yen a share, a year ago, according to Toyo Keizai estimates. Sales probably rose 13.5 percent to 2 trillion yen.
DoCoMo, which plans to deploy W-CDMA, a high-speed cellular phone technology, in Japan next year, added 3.3 million new users, or 71 percent of Japan's 4.6 million new cellular phone users in the six months. That bodes well for the company's overseas expansion, as it says the success of i-mode will help it make alliances with foreign carriers without taking large stakes.
``I-mode is helping DoCoMo to cultivate the global market for data transmission,'' said Shinji Moriyuki, senior analyst at Daiwa Institute of Research Ltd. ``DoCoMo has another advantage: it's ahead of its rivals in introducing high-speed cellular phone service.''
The company is likely to report group pretax profit of 400 billion yen for the first half, up from 33 billion yen for the same period last year, the Nihon Keizai newspaper reported today, without citing sources. Full-year group pretax profit will probably total 700 billion yen, the Nikkei said.
DoCoMo shares have fallen 27 percent so far this year despite robust growth in cellular phone subscriptions. Investors are concerned DoCoMo may not make sufficient returns from its overseas investments. The company is scheduled to report first-half earnings at 3 p.m. Tokyo time.
3G
I-mode enables users to access the Internet to download music, conduct online shopping, look for a job and create Web pages. Cellular data transmissions are key to DoCoMo's future as projected growth in voice transmission revenue is limited.
An offspring of the formerly state-owned Nippon Telegraph & Telephone Corp., DoCoMo made i-mode a success since its start in February 1999 by signing on content providers whose offerings appealed to Japan's free-spending youth.
I-mode is seen as a prelude to DoCoMo's introduction in May of high-speed cellular phone service, which is expected to boost data transmission on cell phones. The W-CDMA service, which allows users to send data at least 40 times faster than DoCoMo's current technology, will let users view moving pictures and download music. DoCoMo will be the first carrier in the world to start so- called 3G, or third-generation, cell phone services.
DoCoMo uses a packet-switched network for i-mode. Users are charged for the amount of data sent, not the length of time they are on line.
The company earned 38.5 billion yen on packet transmissions in the year ended in March, compared with 2.8 trillion yen from voice calls. The latter account for three-quarters of DoCoMo's total revenue, with pagers, PHS or personal handy-phone systems, and handset sales making up the rest.
In May, the company said it expects packet transmission revenue to quadruple to 152 billion yen for the year through March 2001. Analysts say that's too conservative, as subscribers to i- mode have grown faster -- and spent more -- than expected.
Toshiaki Onoda, senior analyst at WestLB Securities Pacific Ltd., expects the figure to have grown to about 300 billion yen. That increase will help the company to raise its full-year earnings forecast, he said.
Expansion
DoCoMo wants its foreign partners to offer services similar to i-mode so they will benefit from the growth in data services and help DoCoMo make a return on its foreign investments.
The company spent 645.5 billion yen in the past year to take minority stakes in foreign operators including Hutchison Telephone Co., Hong Kong's largest mobile phone company, KPN Mobile NV of the Netherlands and Hutchison 3G UK Holdings Ltd., which will operate high-speed cellular phone service in the U.K.
Hutchison Telephone followed DoCoMo's lead to start Orange World, a mobile Internet service. KPN Mobile is expected to start a similar service.
DoCoMo is searching for a U.S. partner to push its technology in the world's largest market. Still, the company failed in its bid to take a stake in VoiceStream Wireless Corp., which is being bought by Deutsche Telekom AG of Germany.
i-mode
While revenue from voice traffic is falling, DoCoMo has succeeded in encouraging users to spend more for i-mode services.
I-mode users spent 2,100 yen a month -- including the 300 yen basic fee -- on average for the four months through August, in addition to the fees users paid for phone calls. That's up from an average of 1,200 yen a month in the first two years through March 2000.
``No one expected anybody would spend more than 2,000 yen a month on i-mode,'' said Hideaki Kurimoto, portfolio manager at Meiji Dresdner Asset Management Co.
Kurimoto says DoCoMo's effort to expand the contents and to introduce color-screen handsets helped the company earn more from i-mode.
Seven of DoCoMo's 14 types of i-mode handsets have color screens, first introduced in January. All new DoCoMo phones sold since June are i-mode equipped.
The service also beats the competition in the number of accessible Web sites. I-mode has 1,140 sites, more than its competitors put together. In addition, each operator has so-called ``volunteer sites'' created by users, with about 30,000 such sites for i-mode.
Even so, users still spend more than four times as much money on voice calls. DoCoMo said in May an average user spent 8,620 yen a month on phone calls in the year ended in March. The figure is expected to fall to 7,940 yen this year because of the effect of rate cuts and discounts.
Nov/13/2000 19:24 ET |
