Company Reports

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates usually among the lowest in the world at less than 1% per month.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates usually among the lowest in the world at less than 1% per month.

KDDI's first-quarter 2026 result was solid, with revenue growth of 5.1%, operating income growth of 20% and net profit growth of 22%. This looks on track to beat unchanged fiscal 2026 guidance of 5.6% revenue growth, 5.0% operating income growth, and 2.7% net profit growth.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates usually among the lowest in the world at less than 1% per month.

KDDI's fiscal 2025 result was solid, with revenue growth of 4.1%, operating income growth of 6.0%, and net profit growth of 13.6%. Fiscal 2026 guidance is for 5.6% revenue growth, operating income growth of 5.0%, net profit growth of 2.7% with DPS of JPY 84, and a JPY 300 billion buyback.

KDDI provided only preliminary third-quarter results, as it is still investigating potential inappropriate transactions at one of its subsidiaries. However, based on the release, its core business performed steadily, with operating income up 8.5% on improved mobile results.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates usually among the lowest in the world at less than 1% per month.

KDDI’s second-quarter fiscal 2025 revenue increased by 3.4%, with operating profit up 2.9% year over year. Management retained full-year guidance of underlying revenue growth of 7%, operating profit growth of 5.3%, and net profit growth of 9.1%, expecting a stronger second half.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates usually among the lowest in the world at less than 1% per month.

KDDi’s fiscal first-quarter revenue rose 3.4%, with operating profit down 1.6% year on year (up 1% excluding one-offs). Management retained full-year guidance of underlying revenue growth of 7%, operating profit growth of 5.3%, and net profit growth of 9.1%, expecting a stronger second half.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates usually among the lowest in the world at less than 1% per month.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates usually among the lowest in the world at less than 1% per month.

KDDI’s third-quarter fiscal 2024 revenue increased by 1.5% with operating profit up 1.4%, broadly in line with the growth over the first two quarters. Management retained full-year guidance of underlying revenue of growth of 0.3%, operating profit growth of 2.7% and net profit to grow of 1.2%.

KDDI’s second-quarter fiscal 2024 revenue increased by 1.4%, with operating profit up 0.8%, slower than the 4.2% and 3.9% growth in the first quarter. Management retained full-year guidance of underlying revenue growth of 0.3%, operating profit growth of 2.7%, and net profit to rise 1.2%.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates among the lowest in the world at less than 1% per month.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates among the lowest in the world at less than 1% per month.

Narrow-moat KDDI’s first-quarter fiscal 2024 result (ending June 2024) was ahead of our estimates on revenue, but broadly in line at the operating profit level. We retain our fair value estimate for KDDI at JPY 4,500 and see KDDI shares as fairly valued. First-quarter revenue increased 4.2% year on year driven mainly by the business services segment, which grew 19.6% year on year. In the business services segment, digital business process outsourcing revenue was up 90% year on year to JPY 59 billion, Internet of Things revenue up 27% to JPY 38 billion, and data center revenue up 18% to JPY 33 billion. These are growth areas for telecom companies that we see across most telcos in the Asian region. Consolidated operating profit was up 3.9% driven by the financial and energy business, Lawson, and BPO. Net profit was broadly flat and the company made no change to its full-year guidance of revenue to grow 0.3%, operating profit to grow 2.7% from the underlying fiscal 2023 level, and net profit to grow 1.2% from the underlying fiscal 2023 level.

Narrow-moat KDDI’s fiscal 2023 result (ending March 2024) was in line with our expectations on an underlying basis despite narrowly missing its full-year guidance and pushing out its previous midterm earnings per share growth target by one year. We retain our fair value estimate for KDDI of JPY 4,500 and see KDDI shares as fairly valued following a share price correction since late January 2024.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. In addition, the firm is now addressing most of our concerns regarding its long-term wireless strategy. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates among the lowest in the world at less than 1% per month.

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. In addition, the firm is now addressing most of our concerns regarding its long-term wireless strategy. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates among the lowest in the world at less than 1% per month.