Japan to Seek Cheaper Plans From Operators, Official Says

Updated on
  • Move comes as Japanese wireless carriers see rise in profits
  • Communications minister may make request to wireless carriers

Japan’s government plans to step up the pressure for the country’s largest mobile-phone carriers to offer cheaper plans as surging profits show they have room to reduce costs for customers, an official at the communications ministry said. Shares of Japanese wireless operators fell.

Minister of Internal Affairs and Communications Sanae Takaichi may make a new round of requests to carriers, according to the official, who asked not to be named because the plans haven’t been announced. If successful, any cuts would build on previous recommendations by a panel the government formed to study lower fees, the official said.

A ministry spokesman declined to comment.

The move would come as previous efforts resulted in Japan’s three largest mobile-phone operators -- NTT Docomo Inc., KDDI Corp. and SoftBank Group Corp. -- offering reduced-price plans that only applied to a limited number of users. Meanwhile, carriers in the $125-billion-plus market embraced the panel’s recommendation to reduce handset subsidies, which bolstered their profits by lowering costs.

“This report affirms that the ministry is continuously pressuring carriers to cut prices,” said Satoru Kikuchi, an analyst at SMBC Nikko Securities Inc. in Tokyo. “The carriers are not thinking this pressure will end soon.”

Shares of KDDI, Docomo and Nippon Telegraph & Telephone Corp. tumbled, losing a combined 940 billion yen ($8.6 billion) in market value, in Tokyo trading on Tuesday following the Bloomberg report. SoftBank pared gains before ending up the day up 1.8 percent.

‘Long-Term’ Subscribers

The government’s focus now will be to widen the variety of lower-cost plans to benefit more users, the official said. For example, the request would include shortening the number of years required for users to qualify for pricing plans geared toward “long-term” customers, according to the official.

Docomo has said it will introduce low-rate pricing plans for long-term users in June, which apply to users who’ve been subscribing for more than four years, and maximum discounts of 2,500 yen a month to users who’ve been customers for more than 15 years. KDDI and SoftBank are also considering offering new plans to reduce user costs.

Carriers Ready

“We will consider price adjustments if the ministry requests more,” Docomo spokeswoman Hiroko Shimoyama said by phone Monday. “We will continue to amend handset prices, and also will adjust phone-bill plans one by one.”

Representatives at KDDI and SoftBank said their carriers would consider new requests for price cuts from the ministry if they are made.

While the ministry doesn’t directly regulate pricing, mobile-phone operators have a track record of complying with the government’s requests on pricing.

Meanwhile, profits in the industry are booming. Docomo, which has about 70 million subscribers, forecasts net income will surge 17 percent in the year started April 1 to the highest in more than a decade. KDDI has said it expects net to increase 9.2 percent to a record. SoftBank did not provide earnings forecasts for the current fiscal year, after reporting a 7.5 percent increase in profit at its domestic telecommunications business for the 12 months ended March.

(Updates with drop in market capitalization in sixth paragraph.)
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