What's Happening?
NTT Docomo reported a nearly 13% drop in net income for the third quarter, amounting to 339 billion Japanese yen (US$2.2 billion), as it faces intensified competition in the consumer mobile market. The company's operating profit fell by 14%, despite a slight
increase in revenue. CEO Yoshiaki Maeda announced a strategic shift to increase marketing efforts, spending an additional JPY55 billion ($358.6 million) on sales promotion. The company plans to continue investing in network improvements, with a 38% increase in capital expenditure to JPY356 billion (US$2.3 billion). Despite challenges, the enterprise segment showed growth, with a 12% increase in operating profit.
Why It's Important?
The competitive pressures faced by NTT Docomo highlight the challenges in the mobile telecommunications industry, where companies must balance investment in infrastructure with aggressive marketing strategies to retain market share. The increased capital expenditure indicates a commitment to enhancing customer experience, which is crucial for long-term growth. The company's efforts to expand its smart life service suite and enterprise segment reflect a diversification strategy that could mitigate risks associated with declining profits in its core consumer communications segment.
What's Next?
NTT Docomo plans to announce a cost-cutting plan in the spring of next year, which may involve further strategic adjustments to improve profitability. The company's continued investment in network performance and customer experience is expected to drive future growth. Additionally, the parent company NTT's initiative to establish an autonomous driving business could open new revenue streams and leverage existing infrastructure for innovative services.
