Japan | Wireless profits head to gain, skip Abenomics doldrums

Japan’s largest mobile phone carriers are poised to report the highest quarterly profit in at least a decade, a rare bright spot as aggregate earnings at the nation’s largest companies slump under a stronger yen and weak consumer confidence.
Operating income at the three largest carriers will probably rise 6 percent in aggregate to 858 billion yen (USD8 billion) for the three months ended June 30, according to analyst estimates compiled by Bloomberg. That’s the most since at least 2006, when SoftBank Group Corp. entered the mobile phone business by buying Vodafone Group Plc’s Japan unit.
NTT Docomo Inc., KDDI Corp. and SoftBank are benefiting after the government prompted wireless carriers to eliminate handset subsidies, a marketing cost that had crimped profit as providers used cheap or free phones to lure new customers. The companies have also reversed a decline in per-user revenue as customers upgrade to smartphones and are spending less on improving networks before beginning to upgrade to 5G, expected to be introduced after 2020.
“Profit at the Big Three carriers will continue to increase until 5G network investments occur around 2021 or 2022,” said Jun Tanabe, an analyst at JPMorgan Securities Japan Co. Revenue from streaming video and other contents will keep increasing as more customers use smartphones, he said.
Docomo shares rose 1.4 percent as of the close in Tokyo yesterday. KDDI added 2.3 percent, and SoftBank advanced 0.4 percent. The Topix fell 0.5 percent.
Investors have pushed up the operators’ shares this fiscal year as well, while Japan Inc.’s biggest manufacturers have dropped as the Japanese currency’s 5.8 percent surge versus the dollar has eroded the value of overseas income. Toyota Motor Corp., for example, has declined 3 percent, compared with a 14 percent gain for Docomo, which reports second-quarter earnings July 29. SoftBank is scheduled to announce its results a day earlier, while KDDI gives its earnings on Aug. 2. Grace Huang, Bloomberg