NTT DoCoMo raises 3G user target

NTT DoCoMo Inc. raised its forecast for the number of users for its third-generation (3G) cellular service on Thursday while announcing increases to its overall operating revenue and net income in the first half of this year.

Operating revenue for the period from April to September rose 6.4 per cent to 2.5 trillion yen (US$22.5 billion as of Sept. 30, the last day of the period reported) and net income jumped from just above break-even in the same period one year earlier to 356.4 billion yen, said Keiji Tachikawa, president and chief executive officer of NTT DoCoMo at a Tokyo news conference.

The company also announced that its I-mode wireless Internet service now has 40 million subscribers.

Revenues from the 3G service jumped more than five times their level a year ago to 36.3 billion yen, while the I-mode service posted a healthy revenue gain of 23.9 per cent to 517 billion yen, the company said in a statement. The company’s second-generation network generated 0.3 per cent lower revenues although it still makes up the bulk of the total at 1.6 trillion yen.

NTT DoCoMo said it expects to have two million users on its 3G service, called Foma, at the end of the current fiscal year in March 2004. The company, which earlier this month said it had attracted 1 million subscribers to the service, had originally forecast 1.46 million for the full year.

“This is the year we said we would focus on expansion of Foma,” said Tachikawa. “The number of subscribers is continuing to rise so we will upwardly revise our full-year estimate to two million.”

The forecast revision marks a turn-around for Foma, which at the beginning of this year appeared to be falling behind plan. A new range of handsets launched around the start of this year provided a solution to some of the problems users had been complaining about, particularly short battery life. Following their launch, sales began to increase faster than the company had seen up to that point.

A second piece of positive 3G news delivered by Tachikawa was a rise in the amount of money coming from users on the 3G network during the six-month period.

The average revenue per subscriber (ARPU) from its 3G users rose to 10,120 yen per month per user during the period. For the previous financial year ARPU was 7,740 yen per month.

“Foma ARPU increased in the first half and the ARPU trend is moving in line with our original target,” said Tachikawa.

Of the total monthly amount 6,650 yen is spent on voice services and 3,470 yen is spent on data, according to company figures.

Compared to the second-generation network, Foma ARPU is not only higher but the portion spent on data services is also larger. Voice revenue on Foma is about nine per cent higher whereas data revenue is 77 per cent higher.

Tachikawa said the company can expect to see a decline in average revenue from Foma users as the user base becomes less biased toward early adopters, who tend to spend more. However, the company will be looking at introducing new services to push packet use and slow any decline, he said.

The half-year results announcement was in contrast to the one a year ago when NTT DoCoMo said it would record write-offs of 573 billion yen related to investments it had made in AT&T Wireless Services Inc., KPN Mobile NV and Hutchinson 3G UK Holdings Ltd.

At the time, Tachikawa said he and other senior executives would take pay cuts of up to 20 per cent during the second half of the year to take responsibility for the losses.