Docomo, KDDI Rise as Panel Stops Short of Pushing Rate Cuts

  • Panel recommends price plans for light and long-term users
  • Prime Minister Shinzo Abe has said phone bills are too high

NTT Docomo Inc. and KDDI Corp., two of Japan’s largest wireless carriers, rose in Tokyo trading after a government panel set up to examine customers’ mobile phone bills fell short of asking the companies to cut rates.

Docomo climbed 6.5 percent to close at 2,475 yen, its biggest gain since 2011, while KDDI advanced 5.1 percent, the most since Sept. 30. The Topix index gained 2.5 percent.

Market value chart for Japan's three largest wireless service providers
Market value chart for Japan's three largest wireless service providers

Shares of the carriers plunged in September after Prime Minister Shinzo Abe said mobile phone bills are too high, suggesting the companies will face pressure to cut rates. On Wednesday, the committee on mobile phone costs called for carriers to introduce pricing plans that benefit light and long-term users.

“There was uncertainty about what rates should be cut,” said Michelle Ma, an analyst at Bloomberg Intelligence. “The panel’s recommendations today definitely eased the market concern, because rate cuts focused on low-usage subscribers will not significantly impact carrier revenues.”

The companies should also reconsider the way they subsidize handsets, such as offering free phones, because that’s unfair, the panel said. The task force has previously said mobile phone discounts disproportionately benefit users who frequently change providers.

A user switching to Docomo from one of its rivals would pay 10,368 yen ($85) for a 16-gigabyte iPhone 6 S over two years, according to the company’s website. That compares with 25,920 yen for existing subscribers and the 86,800 yen price tag on Apple’s online store.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE