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NTT profits dragged down by cellphone unit slump

Pedestrians pass a manhole cover bearing the Nippon Telegraph and Telephone Corp logo in Tokyo yesterday. PHOTO: AP

Japan's largest telecom group, Nippon Telegraph and Telephone Corp (NTT), said yesterday that its net profit fell by 21.8 percent in the nine months to December as its cellphone unit DoCoMo suffered a slump in earnings.

NTT reported a net profit of ¥320.86 billion (US$3 billion) for the first three quarters of the fiscal year.

Operating profit dropped by 9.6 percent to ¥874.38 billion as revenue dipped 1.1 percent to ¥7.84 trillion.

The mobile arm remained a drag on profits. NTT DoCoMo reported last week that its operating profit fell 7.7 percent in the nine months to December as it continued to struggle amid an industry price war.

DoCoMo has been the big loser of Japan's introduction a year ago of "number portability," which lets customers switch carriers without changing numbers and has sparked increased price competition.

"Although profits declined in the April-December period, the pace of the fall slowed in the October-December quarter as NTT DoCoMo worked hard to improve the competitiveness of handsets, prices and network," NTT president Satoshi Miura told a press conference.

"We want DoCoMo to continue its turnaround efforts although the business environment is becoming more challenging," he said.

DoCoMo introduced new discount plans in the third quarter in an effort to stop customers switching to rival cellphone operators.

The discounts had an impact on mobile services revenue, causing overall profits to decline and the mobile operator and its parent company.

NTT maintained its forecasts for full-year earnings, which are expected to benefit from capital gains linked to pension assets.

The company sees an 11.1 percent rise in net profit to ¥530 billion for the year to next month, and a 19.2 percent increase in operating profit to ¥1.32 trillion, despite an expected 1.5 percent decline in revenue to ¥10.6 trillion.
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