Softbank outstrips rivals in adding customers

Rating: cheapskates and soft matter

By Annie Turner

Japan’s fastest-growing mobile-phone carrier, said second-quarter profit jumped 64 percent after the company added as many customers as larger rivals NTT DoCoMo Inc. and KDDI Corp. combined.

The company began allowing customers to pay for handsets in instalments in September last year, rather than sell phones for an outright payment. This enabled the company to spread subsidy costs over a period of up to two years, while booking handset sales immediately, bolstering earnings in the past four quarters. It introduced ten new handsets in October.

In January Softbank cut monthly fees to 980 yen (EUR 5.9/USD 8.6) and allowed unlimited calls among subscribers on its network, wherein lies the rub. Softbank’s user spending has fallen behind that of its rivals and over the course of the year by 16%.

The problem is that this cut-price approach will appeal to a certain sector – youth primarily – which has a low disposable income. However, Softbank cannot continue to add users at that rate indefinitely and at some point the soft matter will hit the rotating item. Other sources of income are needed beyond fancy footwork with subsidised handsets. Still, I bet soft matter is flying in the boardrooms of KDDI and DoCoMo over these figures.

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