PSA Telecom: Is KDDi (9433 JP) Hitting Saturation?
Main Points• KDDi (9433 JP) shares fell in the wake of the firm’s 3Q FY17 numbers, which were okay at the headline level, but showed the extent to which KDDi was up against industry saturation, once you delved deeper.
• KDDi’s clever value-add moves from five years ago are continuing to grow value-added ARPA, but the growth rate has slowed and is now matched by the decline in data ARPA, as a result of MVNO competition. While there are existing value-added products with potential for growth, such opportunities are diminishing.
• KDDi is therefore looking to new products for growth. The problem is that its existing businesses are so profitable that, if new businesses are to make an impact, they have to scale, and scale quickly. This in turn means that most attention is on new business opportunities within the 5G / M2M / IoT space.
• Of the related technologies, we see Low Power Wide Area Network (LWPA) as offering the best potential to boost earnings in the near term for KDDi. To this end, management is creating a viable ecosystem. However, while the theory is there, the business model is as yet unproven. As a consequence, whereas the market immediately bought into the au Smart Pass model, it will probably need to see this one deliver top line impact.
• Meanwhile, there is the entry of Rakuten (4755 JP) into the 4G / 5G space.
KDDI is a telecommunications company. Along with its affiliates, Co. operates in four principal business segments: personal, value, business, and global. Co. is engaged in the sale of mobile handset; and the provision of mobile telecommunication services under "au" brand name, Internet contents, settlement service, and electronic money service for individual customers. Co. offers information and communication technology ("ICT") solution services and data center services for domestic corporate customers, overseas companies and individual customers. Co. is also involved in the call center business, the research and technological development, and the telecommunication facilities maintenance.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
The founding partners have worked closely together for twenty years and the team has more than doubled in size since 2012.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.