2025 was another tougher year for the Japanese incumbents; with KDDI and SoftBank rising modestly and NTT flat, but all (including Rakuten) underperforming a strong Nikkei. This despite prices rising in Mobile. We think the sector is modestly undervalued and will grind higher with EPS. SoftBank remains our top pick.
We met with all 3 of the incumbent Japanese Telcos & Rakuten in Tokyo last week, as well as visiting Osaka to talk to NTT in more depth about IOWN. Overall, we remain bullish on Japanese telcos operationally and buyers of all three incumbents. NTT remains our top pick followed by KDDI.
Aggregate service revenue trended better on higher contribution from non-mobile, coupled with mobile improvement. Industry mobile was primarily driven by Softbank’s outperformance. Q3 EBITDA dropped on higher mobile marketing costs at NTT which the company seeks to offset through cost efficiencies. DOCOMO is the clear mobile underperformer, but we believe expectations for Fixed recovery is still low, plus there is IOWN optionality. NTT remains our preferred pick.
We ran our Asia Telco tour last week. This time we met 12 companies in 3 countries (Korea, Japan, Thailand). Telco share prices in all 3 of these countries have been pretty strong recently as telcos continue to benefit from generally positive themes: growth, return on capital and shareholder remuneration are all typically improving.
Although the Japanese economy, politics and stock market seem to be where they were this time last year, there is a seismic shift going on in the way the Japanese stock market behaves that could make investing in Japan in 2022 quite different to previous years. We look at how and why this shift has taken place and what it means for investing in Japan in the coming year.
NTT has reported a decent set of figures for Q2 21. As with KDDI and SoftBank Corp, revenue trends slowed, impacted by the launch of lower value plans. However, the impact appears to be less significant at DOCOMO, with mobile ARPU down only ¥10, and MSR down a relatively modest 1.9%, partly driven by good 5G net adds.
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
One of the key takeaways from our recent calls with the Japanese telcos is that both KDDI and SB Corp are looking actively at M&A; KDDI in the Fintech/EC space, and SB to increase ownership of growth assets, implying PayPay or Z Holdings most likely.
Rakuten has announced its new price plan, unlimit-VI. Monthly charge will depend on usage – in months when a user uses over 20GB they will still be charged ¥2,980, 3-20GB for ¥1,980/month, 1-3GB for ¥980/month and be free for subscribers using up to 1GB.
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