NTT Docomo Inc. led declines among Japanese wireless carriers, plunging the most in almost seven years, after a report that Prime Minister Shinzo Abe said mobile phone rates should be reduced.
Docomo, Japan’s largest mobile-phone carrier by subscribers, dropped 9.8 percent, the most intraday since March 2011, as of the close in Tokyo. KDDI Corp., the No. 2 provider, fell 8.6 percent, while SoftBank Group Corp. sank 5.5 percent.
Mobile phone bills have become too high and are burden on family budgets, Abe said at an economic conference on Friday, Kyodo news service reported. KDDI said Friday it would lower fixed rates for voice traffic, a move that undermines DoCoMo’s earnings outlook, Kei Takahashi, an analyst at Mizuho Securities Co., wrote in a note dated Sept. 11.
“Profits could be depressed by as much as 250 billion yen if NTT DoCoMo were to match KDDI’s discount,” Takahashi wrote. “If it elects not to do so, we see an increased risk of subscriber outflow; a simplified calculation suggests the loss of 1 million subscribers would lower profits by at least 50 billion yen.”
Takahashi downgraded the shares to underperform from neutral.
Japan’s mobile carriers have struggled to raise revenue in a saturated market where the number of mobile subscriptions exceeds the population. DoCoMo forecasts 4.51 trillion yen in revenue this year, 18 percent below the 5.17 trillion yen peak in 2002.