NTT DoCoMo Annual Report to Shareholders, 'The Mobile Phone as the Key to Daily Life'
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NTT DoCoMo Annual Report to Shareholders, 'The Mobile Phone as the Key to Daily Life' - JCN Newswire
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NTT DoCoMo Annual Report to Shareholders, 'The Mobile Phone as the Key to Daily Life'

 NTT DoCoMo Annual Report
Tokyo, Sept 7, 2006 - (JCN Newswire) - NTT DoCoMo, the world's leading mobile communications company, is pleased to present its Annual Report to Shareholders for the year ended March 31, 2006. As Japan's mobile phone market has grown to more than 90 million subscriptions and a level of penetration of one phone per person, DoCoMo has achieved a 55.7% market share. While focusing on efforts to provide services that satisfy all of our more than 50 million customers, DoCoMo is developing new businesses such as credit services based on the strength of its overwhelming customer base.

NTT DoCoMo 2006 Annual Report : 'The Mobile Phone as the Key to Daily Life'

'The Mobile Phone as the Key to Daily Life' is the keyword in DoCoMo's efforts to achieve sustained growth in the drastically changing mobile phone market. It embodies the company's commitment to the further evolution of mobile phone services in terms of technological advancement and security. DoCoMo intends to hasten this evolution by providing diverse, innovative services that enhance the convenience of customers' daily lives, including not only voice calls and Internet connection services via i-mode, but also credit payments, e-money, e-ticketing, music players and television, and even ID cards and house keys.

President and Chief Executive Officer Masao Nakamura, in his 2006 Address to Shareholders, talks about 'Changes in Operating Environment and Growth Strategy' for his company:

"With the introduction of MNP and market entry by new carriers, the operating environment is expected to change from fiscal 2006 onwards. We believe that our efforts so far have been supported by our customers, and we will continue to focus on strengthening our core business further, creating new revenue sources, and facilitating cost reduction, based on our customer-oriented management policy."


Strengthening Our Core Business: No silver bullet for MNP. Effort must be concentrated on boosting our total power to gain the support of customers.

"Although there is concern over the impact of the introduction of MNP, there is no quick remedy for adapting to it. MNP will not be a temporary measure but a new system that will continue to be in place into the future. Thus, the only effective action will be to gain the support of customers by boosting our comprehensive strength in areas including rate structure, handset lineup, network quality and after-sales support.

In the preceding two years, DoCoMo implemented various revisions to the charging scheme such as upgrading our "Family Discounts" plan, introducing the flat rate i-mode packet service and the simple billing plan, and expanding discounted rates for long-term subscribers. Through these measures, DoCoMo has achieved a rate level that is attractive enough to customers compared with those of other companies and one that provides us with competitiveness adequate for adapting to MNP.

We have also brought about a major evolution in mobile handsets over the past two years. We launched "Osaifu-Keitai" handsets, which are equipped with the"FeliCa-" contactless IC chip two years ago. Since its launch, more than 13 million of our customers are using "Osaifu-Keitai" handsets, as of May 2006, and this has been a base bringing us new business possibilities. We have also introduced handsets to meet the needs of such special customer segments as seniors, children and corporate customers, and have succeeded in opening up new customer segments.

We also believe that our first priority is to improve the quality of our FOMA networks and have devoted the fullest effort to this task. In the past few years, we have worked on the expansion of base stations. In the current fiscal year we will increase our capital expenditures for this area to JPY 905.0 billion, and by the time MNP is introduced, we expect that our FOMA network coverage will surpass our highly rated mova network."


Creating New Revenue Sources: Forging capital and business alliances with other companies in five areas that can be expected to bring synergistic effects

"Amid the current slowdown in the mobile phone market, it is crucial to create new revenue sources for achieving sustained growth. For this purpose, DoCoMo has formed capital and business alliances with various companies in five peripheral areas which can be expected to create synergies with our core mobile phone business: payments and commercial transactions, broadcasting, content and Internet, global services, and mobile phone peripheral technology.

Although we have just begun to take on challenges in these fields, an area where concrete results have quickly emerged is credit services in the field of payments and commercial transactions. The penetration rate of credit-card payment is extremely low in Japan compared with other industrialized countries. However, if the convenience of "Osaifu-Keitai" can be enhanced with a credit function, the market could very well grow to a scale of many trillions of yen centering on the micropayment market. I firmly believe that the expansion of new businesses in the potentially explosive credit market will not only spur the evolution of the mobile phone into the lifestyle infrastructure that our company envisions but also provide a key to supporting sustained growth.

More time will be required before these new areas of business can be developed to an extent where they contribute significantly to our revenues. I believe, however, that the new added-value created by these new fields will, in the medium-to-long-term, enhance the appeal of our company's mobile phone services and ultimately contribute substantially to stronger competitiveness in our core business itself. Moreover, by using our overwhelming customer base, these new fields should lead to the development of other new businesses. By creating this positive growth cycle DoCoMo is aiming for further growth."


Efforts to Reduce Costs: Promoting the A to Z measures to reduce costs such as agent commissions and network costs

"In order to maintain our competitive superiority in the changing business environment, we need to carry out a sweeping overhaul of our cost structure and operating processes and realize all-out cost reductions.

DoCoMo is currently implementing cost reduction measures from every conceivable angle concerning agent commissions and network costs, which carry significant weight in DoCoMo's cost structure.

As for agent commission reduction, we will work with handset and semiconductor manufacturers to lower the unit cost of handset procurement by developing low-cost general-purpose LSIs (large scale integrated circuits) and by promoting compatibility of platforms. We will also work to hold down the number of mobile handsets sold by extending the replacement cycle of handsets through various means including enhancement of after-sales support, which should lead to a reduction in the total amount of agent commissions.

Measures to reduce network costs have included reductions in equipment costs, the introduction of economical base station equipment coupled with design and installation improvements, the integration of network equipment, and conversion of the core network into an IP-based network. We also anticipate that capital investment will decline after peaking this fiscal year as we substantially upgrade our networks in the FOMA service area. Going forward, network costs, which include depreciation and other items, are also expected to gradually decline."


Medium-to-long-term Performance Outlook

"In fiscal 2006, we expect that operating income will fall below the result of the preceding fiscal year, primarily due to the ongoing full-scale migration to FOMA and an increase in expenditures for upgrading network quality prior to the introduction of MNP. In the medium term, however, we anticipate the trend toward higher operating expenses will level off. With a view to achieving a recovery in our operating income, moreover, DoCoMo will devote full effort to developing new areas such as the credit business and raising the level of customer use through the provision of attractive new services."


To Our Shareholders

"DoCoMo management believes that returning profits to shareholders is one of the most important issues in corporate management. In the preceding three years, more than JPY 400 billion was returned each year to shareholders in the form of dividends and the repurchasing of shares.

We doubled the dividend per share to JPY 4,000 in the preceding term and we will maintain dividends at this level in fiscal 2006. We also intend to repurchase up to 1.4 million shares at an aggregate amount not to exceed JPY 250 billion.

At the same time, we firmly believe that investment for growth will also be necessary to meet the expectations of our shareholders. It is my responsibility as CEO to maximize DoCoMo's corporate value while maintaining a balance between returning profit to shareholders and investing for growth.

We at DoCoMo will open up new mobile phone markets and meet the expectations of our customers and shareholders by tirelessly challenging for the future. As always, we ask for your continued support."

(Excerpt from the CEO's Address to Shareholders in the NTT DoCoMo Annual Report 2006)


To download the NTT DoCoMo Annual Report 2006, please visit the
NTT DoCoMo IR website, http://www.nttdocomo.co.jp/english/ir/

About NTT DOCOMO

NTT DOCOMO is a world-leading mobile operator and growing provider of comprehensive services centered on mobility. The company serves over 60 million customers in Japan via advanced wireless networks, including a nationwide 3G network and one of the world's first commercial LTE networks. Leveraging its unique capabilities as a mobile operator, DOCOMO is a leading developer of cutting-edge technologies for NFC mobile payments, mobile GPS, mobile TV, intuitive mobile assistance, environmental monitoring, smart grids and much more. Overseas, the company provides technical and operational expertise to eight mobile operators and other partner companies. NTT DOCOMO is listed on the Tokyo (9437), London (NDCM) and New York (DCM) stock exchanges. Please visit www.nttdocomo.com for more information.

Contact:

NTT DoCoMo, Inc.
Investor Relations
e-mail : ir@nttdocomo.co.jp 
 http://www.nttdocomo.co.jp/english/ir/ 
 


Sept 7, 2006
Source: NTT DOCOMO

NTT DOCOMO (TSE: 9437) (FTSE: NDCM) (U.S: DCM)

From the Japan Corporate News Network
http://www.japancorp.net
Topic: Press release summary
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