+ 49% y-o-y net profit increase for KDDI

Japan’s telecom operators are a very bright spots in a dismal economic crisis. I think that’s not a coincidence.

Why? The deeper purpose of Japan’s location based services, QR-codes, mobile music, e-moji, wallet phones and keitai credit etc. has always been to make mobile phones inseparable from people’s daily lives, so that people would use their mobile phones a lot, even if there is an economic crisis. This strategy seems to work.

Japan’s second largest operator KDDI was the first to announce financial results this round:
– quarterly net income increased +49% year-on-year, and
– operating income increased +18.5% compared to same quarter last financial year.

KDDI is particularly interesting because KDDI is a model for the 3G roll-out by China Telecom in China, which was awarded a license to build a 3G network using the same CDMA2000 technology as KDDI.

KDDI was initially far more successful than both DoCoMo and Vodafone (now Softbank) to roll out 3G in Japan – as documented in detail in our 3G report. Analyzing carefully what KDDI did right, and the difficulties DoCoMo and Vodafone encountered, as well as proper exploitation in differences between technologies will be a must.

KDDI introduced many advanced services such as GPS (global positioning and related location base services LBS), full song mobile music, etc several years earlier than DoCoMo and Vodafone -> Softbank, helping the image of the brand and raising revenues (ARPU). This advance allowed KDDI to overcome the handicap of lower market share compared to DoCoMo. Read more below, and in our reports.

KDDI’s 3rd quarter net profits rose by 49% yoy.

Comparing 3rd quarter FY2009 (Oct. – Dec. 2008) with 3rd quarter FY2008 (Oct. – Dec. 2007) operating income increased +18.5% and net income increased +49%. These are spectacular results considering the terrible economic crisis going on now.

Notice also KDDI‘s very aggressive income growth targets forward to year FY2011 (shown for operating income, thin orange line).

Steadily increasing net annual incomes on the order of US$ 2 billion/year is not bad in times such we have now. Find a detailed analysis in our KDDI report.

Quarterly operating income of KDDI
Quarterly operating income of KDDI

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