Softbank's Q1 profit falls on decline in sales

TOKYO: Japan's No 3 mobile carrier Softbank Corp. reported a 22.9 percent plunge in fiscal first-quarter profit on Tuesday as people hung on to their handsets longer before upgrading them.

Softbank has grabbed media attention here as the exclusive local carrier so far of the iPhone from Apple Inc., and has also embarked on an aggressive campaign to lure people away from rivals with discounts. But it has yet to translate such marketing moves to solid profit gains.

A decline in revenue per user also added to the fall in Softbank's April-June profit to 19.37 billion yen (US$179.4 million), the Tokyo-based company said. Quarterly sales declined 2.4 percent to 647.26 billion yen (US$6 billion), according to Softbank.

Softbank has been increasing users, gaining 525,500 users to its mobile service during the latest quarter, marking the 14th straight month of beating rivals NTT DoCoMo and KDDI Corp. in winning new people over to its service.
The defections to Softbank have accelerated since Japan adopted ``number portability'' late last year. That allows people to switch carriers without changing phone numbers.

Some 19 million people in Japan now use Softbank for their mobile phone service. Carriers have been forced to lower their fees to win users, and that has hurt Softbank's earnings. Some discounts being offered require people to use the same handset for a period of time, and that has been discouraging people from upgrading machines, Softbank said.

Softbank Chief Executive Masayoshi Son tried to assure investors that his business was doing fine although revenue appeared to be falling. People are switching increasingly to mobile devices such as cell phones to download music, take part in social networking and enjoy other Internet services, he said, and that will with time boost revenue from data transmission and make up for what is being lost in fees gained for chatting and other old-style cell-phone use.

Also Tuesday, Softbank lowered the monthly fee for the iPhone, with payments starting as low as 2,990 yen (US$27.7) a month, less than half the cost at its introduction here last month. The fee offered then was 7,280 yen (US$67.4) for unlimited use.

The change is aimed at wooing more people to iPhone, not just the niche heavy Net users that Softbank initially thought would be attracted to the product, Son said.

Son also spent some time praising the iPhone, especially its features such as e-mail security and easy software upgrades that are different from what's available on Japan's Net-linking handsets.

``This is really great,'' he said about his own iPhone. ``I can't stop myself from having fun with it. I can't stop myself from loving it. Twenty-four hours in a day just aren't enough.''

Apple has said that it sold a million of the new 3G-ready iPhone handsets around the world in three days when they went on sale in July. The iPhone 3G is available in more than 20 countries, including the U.S., Australia, Germany, Spain and the UK.

Third-generation, or 3G, handsets, including the iPhone, relay information and connect wirelessly to the Internet at faster speeds than previous models.

Softbank, which also offers Internet services, bought British cellular giant Vodafone Group PLC's struggling Japanese operations in 2006.

Japanese have been ahead of users in other nations in using cell phones to do restaurant searches, exchange e-mail, making electronic payments, read digital novels and download music. Softbank shares dipped 2.4 percent to 1,936 yen (US$17.9). Softbank released earnings after trading ended.