KDDI officials put this down to ARPU falling nearly 10% and its "simple course" package proving attractive, and the reorganization of the 800-MHz band and the costs involved. More worrying is the fact that KDDI projects mobile profit will shrink by nearly 54 billion yen (over 11%) in FY2011.
The question is whether KDDI's fixed-line business can ever become a long-term viable business.
"As Japan's No. 2 fixed-line carrier, KDDI is doing well, but NTT is so much stronger and has much more resources and capabilities. So I can't see fixed-line services ever driving the company's future," commented Yoko Ono, senior market analyst at IDC Japan.
KDDI is talking up its "alliance" with JCOM, which has more than three million subs, as though it will play a key role in its future and was recently forced to deny it was negotiating the integration of JCOM with its own JCN operation.
"Some people in KDDI have told me that JCOM and JCN can produce a big synergy for KDDI, but I think it will be very difficult to integrate CATV services with their FTTH and IPTV services," noted Ono.
JCOM president Tomiyuki Moriizumi told the press last month that he expected the biggest synergy to be between his cable operation and KDDI's mobile business.