Profit cut by half amid economic woes, rivalry-KDD
TOKYO, Nov 12 (Reuters) - Japan's biggest international phone operator Kokusai Denshin Denwa Co (KDD) said on Thursday its profit was cut by half in the six months to September due to sluggish demand at home and tough competition from newcomers.
KDD, formerly a government monopoly, expects the severe business environment to continue in the second half, with international phone traffic likely remain inactive amid economic woes at home.
KDD is also expected to announce rate cuts on its international service later this year to compete against domestic long-distance phone operator DDI Corp , which entered the market in October with rates sharply lower than those of KDD.
KDD President Tadashi Nishimoto said its parent current profit for the six months ended September 30 plunged 44.9 percent from the corresponding period a year earlier to 5.12 billion yen.
KDD said it sees parent current profit falling to nine billion yen in fiscal 1998/99, down 46 percent.
Current profit is pretax and includes extraordinary items such as investment in stocks.
Besides economic woes, KDD suffers from a transition in the international phone market as consumers are increasingly turning to the Internet and away from international phones.
KDD, which is to merge with Teleway Japan Corp in December, also slashed its group net profit forecast for fiscal 1998/99 to one billion yen from earlier estimate of 5.5 billion yen, reflecting the glum parent business.
The planned merger with domestic long-distance phone operator Teleway Japan, an affiliate of Toyota Motor Corp , will help to reduce the new company's administrative costs by one billion yen in the current business year, KDD said.
''We expect earnings to gradually recover from next year, after hitting bottom this year, helped by our new businesses,'' Nishimoto told a news conference.
In July, KDD launched a low-margin and highly competitive domestic phone service for the first time in its 50-year history. |
