NTT DoCoMo, Japan's largest mobile operator, posted a 17% profit drop in the most recent quarter as sluggish phone sales and higher costs offset modest growth in its mobile services, an Associated Press report said.
The report said net income fell to 146.3 billion yen ($1.23 billion) in the July-September period, the company's fiscal second quarter, from 177.4 billion yen ($1.51 billion) a year earlier, according to the Tokyo-based company.
Sales were eroded by sluggish handset revenue, falling 1.8% to 1.16 trillion yen ($9.77 billion). Operating profit fell 9.8% to 244.2 billion yen ($2.06 billion), hit by increased personnel and material costs and a jump in capital investment in 3G phone services, the report said.
But the carrier promised aggressive cost reductions to leave its profit outlook for the fiscal year ending March 2007 unchanged at 488 billion yen ($4.11 billion), the report further said.
According to the report, DoCoMo has been banking on sophisticated new handsets and services to drum up revenue as it fends off falling phone rates in Japan's cutthroat cell phone market.
The arrival of number portability, which allows users to switch carriers without changing phone numbers, is expected to further intensify competition.