Current crisis acts as convenient distraction for wider NTT failings

Like many other businesses, NTT Docomo has pointed to COVID-19 for poor financial results, but this is a business which was struggling long before the coronavirus hit Japan.

In what should be considered a standard screen play from the PR handbook, NTT Docomo has offered much more detail on the 5G roadmap than any would have expected. Why, some might ask, perhaps as a distraction from the negative news which has been unveiled during the year-end financial results.

“As for the guidance for FY2020, given the difficulty of making reasonable estimates on our financial results due to the impact of COVID-19 outbreak, we decided not to make any disclosures at this juncture,” said CEO Kazuhiro Yoshizawa.

“After carefully assessing the impact on our financial performance, we will make a prompt announcement once it becomes possible to make reasonable estimates.”

NTT Docomo will not offer any guidance while the current crisis plagues society, while it has been a poor year from the Japanese telco. COVID-19 will of course explain some of the declines, but it would appear to be only one contributing element.

NTT Docomo full-year financial results to March 31 (USD ($), millions – approximate)
  Actual Year-on-year
Operating revenues 43,579 -3.9%
Operating expenses 35,570 -0.8%
Operating profit 8,007 -15.7%
Profit before tax 8,132 -13.4%
Profit 5,572 -10.5%

It might be easy to attribute the decline to COVID-19, but as you can see from the table below, revenues have been down year-on-year across all quarterly reports.

Breakdown of full-year financial results by quarter (USD ($), millions – approximate)
  Operating Revenues Year-on-year
Q1 2019 10,864 -1.5%
Q2 2019 10,971 -3.5%
Q3 2019 11,114 -6.3%
Q4 2019 10,638 -4.4%
FY 2019 43,579 -3.9%

For some businesses it is perfectly fair to largely ignore revenue declines in the most recent financial results, COVID-19 is a very unique crisis, though you have to place it into context. At NTT Docomo, the financial decline has been in place long before the impact of the coronavirus pandemic. It could be viewed as a convenient distraction for the wider failings across the business.

Of course, there is a direct link to COVID-19 also. International roaming is significantly down, migration from 4G to 5G has decelerated, while sales for data packages and ‘Smart Life’ solutions are lower due to shop closures. The coronavirus pandemic is causing problems, but the financial decline at NTT Docomo seems to be much more.

One issue for NTT Docomo seems to be eroding ARPU, as mobile subscriptions have been increasing, as well as some very heavy discounts and promotions across the year. Competition has intensified in Japan, which has been hitting revenues, though it might only get more detrimental for NTT Docomo as Rakuten enters the market with incredibly disruptive pricing plans. Looking at statement Rakuten has already made, tariffs look to be roughly half the price what is being offered by rivals.

Alongside the financial results, the telco has also offered greater insight into the 5G deployment plans over the next 12 months, as well as targets through to 2023. These projects will certainly keep the team busy.

After launching its 5G commercial services, NTT Docomo has said it has deployed 500 base stations to date, attracting 14,000 subscribers. Over the next 12 months, the team will continue this rollout (aiming to have 10,000 5G base stations by June 2021) while also concentrating on integrating OpenRAN solutions and mmWave spectrum.

By this point next year, NTT Docomo should have launched 5G commercial services in 500 locations including all government-designated cities, while it aims to have 2.5 million 5G subscribers. There are currently seven ‘5G services’ available, which will be increased across music, gaming, video and sports, while there are also 22 partnerships in place for the co-creation of new 5G solutions.

The 5G plan offers much more detail than many other operators have offered to date, though a sceptic might suggest this is a distraction technique to draw eyes away from financial failings.

  • Private Networks in a 5G World

  • 5G Networking Digital Symposium

  • LIVE: Getting the Best out of 5G

  • 5G Ecosystem Digital Symposium

  • 2020 Vision Executive Summit

  • TechXLR8

  • BIG 5G Event

  • 5G World

  • 5G Latin America

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