KDDI Says Ministry Call to Cut Rates ‘Not Fundamentally Right’

  • Value-added services, not lower bills, are key, Tanaka says
  • KDDI to offer loyalty rewards instead of cheaper plans

Japan’s second-largest mobile phone carrier KDDI Corp. said it would focus on offering value-added services to customers amid rising pressure from the government to introduce broader discounts.

The company, which has about 46 million subscribers, will give users of at least four years as much as 900 loyalty points a month, starting in November, the company said Tuesday in a statement. These can be used to purchase goods at a KDDI online shopping site, with each point being worth about one yen.

Japan’s communication ministry has said it will increase its effort to prompt KDDI, NTT Docomo Inc. and SoftBank Group Corp. to widen discounts for wireless services to benefit longer-term users. The companies have said they’ll comply with the ministry’s previous recommendation to eliminate handset subsidies and other payments to lure new subscribers because those only benefited new users and those who upgrade phones often.

“We will try to be more attractive to customers by offering unique add-on services,” Takashi Tanaka, KDDI president, told reporters on Tuesday.

Asked about ministry pressure for more low-price plans, Tanaka said: “The communication ministry’s approach is not fundamentally correct.”

Profits in the telecommunications industry are among the fastest-growing for large companies in Japan. The outlook for strong earnings at the carriers prompted the communications ministry to increase pressure on the carriers to lower rates.

The Ministry of Internal Affairs and Communications declined to comment on KDDI’s announcement and remarks by the company president Tuesday.

The communications ministry does not directly control mobile services pricing, though the carriers have a record of complying with the government’s requests on rates.

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