1. 3Q.2011 Japan Mobile Operator
Forecast
Japan to have 136 million mobile subscriber connections in 2015 with NTT DOCOMO
taking 44.8% market share
October 2011
2. Stable subscriber growth continues in Japan
6.5% industry average subscriber growth in 2Q.2011
INDUSTRY AVERAGE SUBSCRIBER
GROWTH IN THE JAPANESE WIRELESS
Chart 1: Subscriber Growth (4Q08 – 2Q11), %
MARKET WAS 6.5% IN THE LATEST 100%
QUARTER
The operator-wide average subscriber
growth (YoY) was 6.5% in 2Q.2011, up from
4.0% in 2Q.2010. 50%
Subscriber growth at SOFTBANK remains
the highest among the top 3 operators in
Japan. SOFTBANK’s subscriber growth
(YoY) was 15.9% in 2Q.2011. 0%
The largest operator, NTT DOCOMO, saw
its subscriber growth (YoY) rise from 3.0%
in 2Q.2010 to 3.4% in 2Q.2011.
Also, WILLCOM’s subscriber growth -50%
jumped from -14.4% in 2Q.2010 to 2.9% in 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
2Q.2011.
EMOBILE is a relatively new operator NTT DOCOMO KDDI SOFTBANK MOBILE WILLCOME EMOBILE Industry Total
which entered the Japanese mobile
operator space in 2005. Its subscriber
growth rate in 2Q.2011 was 31.7%.
Source: IEMR
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2
3. ARPU growth in Japan remains negative
-5.9% industry average ARPU growth in 2Q.2011
THE AVERAGE ARPU IN JAPAN
CONTINUES TO DECLINE Chart 2: ARPU Growth (4Q08 – 2Q11), %
The industry average monthly ARPU was
US$ 58.46 in 2Q.2011, down -5.9% YoY. 10%
At the operator level, NTT DOCOMO 5%
continues to have negative ARPU growth at -
4.4% in 2Q.2011 (down from -4.6% in 0%
2Q.2010).
-5%
SOFTBANK MOBILE’s monthly ARPU rose
by 1.9% (YoY) to reach US$ 52.33 in -10%
2Q.2011.
-15%
We note that EMOBILE’s ARPU (US$35.55
in 2Q.2011) is much lower than the other -20%
operators’ ARPUs. This is partly because,
when EMOBILE entered the market, its -25%
strategy was to depart from traditional 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
operators’ models where voice was the main
business; EMOBILE based its market entry
NTT DOCOMO KDDI SOFTBANK MOBILE EMOBILE Industry Total
exclusively on mobile broadband data
provision.
Source: IEMR
© 2011 IE Market Research Corp.
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3
4. Minutes of Use per Subscriber is decreasing
Industry average MOU/Sub is 136 minutes per month
The operator-wide average Minute of Chart 3: MOU/Sub Growth (4Q08 – 2Q11), %
Use (MOU) per subscriber was 136
12%
minutes per month in 2Q.2011, down -
2.6% YoY. 10%
MOU/Sub at KDDI was -0.7% in 8%
2Q.2011, down from 10.1% in 2Q.2010. 6%
MOU/Sub at KDDI continues to be 4%
higher than MOU/Sub at NTT 2%
DOCOMO. 0%
MOU per subscriber at KDDI and NTT -2%
DOCOMO was 151 minutes and 128 -4%
minutes respectively in 2Q.2011.
-6%
-8%
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
NTT DOCOMO KDDI Industry Total
Source: IEMR
© 2011 IE Market Research Corp.
All rights reserved.
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5. Strong EBITDA growth at SOFTBANK in 2Q.2011
+5.2% INDUSTRY-AVERAGE EBITDA Chart 4: EBITDA Growth (4Q08 – 2Q11), %
GROWTH IN 2Q.2011
60%
• The industry average EBITDA growth
rate (YoY) in 2Q.2011 was 5.2%, up
from 0.3% in 2Q.2010. 40%
• EBITDA growth rate (YoY) at
SOFTBANK MOBILE was 14.5% in 20%
2Q.2011 (down from 30.7% in
2Q.2010). 0%
• EBITDA growth rate (YoY) at NTT
DOCOMO was 6.4% in 2Q.2011 (up -20%
from -6.4% in 2Q.2010).
-40%
4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11
NTT DOCOMO KDDI SOFTBANK MOBILE Industry Total
Source: IEMR
© 2011 IE Market Research Corp.
All rights reserved.
5
6. So what is IEMR’s Forecast?
Total subscriber connections to reach 136 million in 2015
We forecast that the number of total Chart 5: Subscribers by operator (CY09 – CY15)
wireless subscriber connections in
70,000
Japan will increase from 120.7 million in
the end of 2010 to 136 million in the end
60,000
of 2015.
Given the latest quarter numbers, our 50,000
subscribers (000s)
model predicts that NTT DOCOMO will
have approximately 61 million mobile 40,000
subscriber connections in 2015.
30,000
In our view, NTT DOCOMO will
continue to hold a dominant position as 20,000
the largest mobile operator in Japan with
a 45% market share in 2015. 10,000
On the other hand, we forecast that
0
KDDI will have 35.4 million wireless CY09 CY10F CY11F CY12F CY13F CY14F CY15F
subscribers in 2015 (26% market
NTT DOCOMO KDDI SOFTBANK MOBILE
share).
WILLCOM EMOBILE
Source: IEMR
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All rights reserved.
6
7. So what is IEMR’s Forecast?
ARPU levels in Japan to decline
WE EXPECT THE OPERATOR-WIDE Chart 6: Average Revenue per User (ARPU)
AVERAGE ARPU LEVEL TO per month (CY09 – CY13F), JPY
DECLINE TO ABOUT JPY 4,600 IN
2013 6,000
We expect that ARPUs in Japan will
5,000
be declining over the next two years.
Our forecasting model predicts that
Japanese Yen (¥)
4,000
the industry average ARPU will be
JPY 4,618 per month in 2013.
3,000
We expect that NTT DOCOMO’s
ARPU level will continue to be higher 2,000
than those of SOFTBANK MOBILE
and EMOBILE over the next two
1,000
years.
0
CY09 CY10F CY11F CY12F CY13F
NTT DOCOMO KDDI SOFTBANK MOBILE EMOBILE Average
Source: IEMR
© 2011 IE Market Research Corp.
All rights reserved.
7
8. So what is IEMR’s Forecast?
Stable profitability at NTT DOCOMO, KDDI, and SOFTBANK MOBILE
We forecast that EBITDA margins at Chart 7: EBITDA margins (CY09 – CY13F), %
the largest three operators will be
stable over the next few years.
60%
We forecast that NTT DOCOMO’s
EBITDA margin will be about 48% 50%
over the forecast period.
KDDI’s EBITDA margin will remain 40%
lower than those of its competitors at
about 42% from 2012 to 2013. 30%
20%
10%
0%
CY09 CY10F CY11F CY12F CY13F
NTT DOCOMO KDDI SOFTBANK MOBILE EMOBILE Average
Source: IEMR
© 2011 IE Market Research Corp.
All rights reserved.
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