DoCoMo to Cut No-Frills Wireless Offering
NTT DoCoMo, the largest wireless carrier in Japan, announced it’s largely scrubbing its low-cost, no frills “personal handyphone system” (PHS) business and would cut its profit forecasts as a result. DoCoMo said it would stop accepting new customers April 30 and likely begin withdrawing from the business, though the carrier hasn’t made a firm decision to get out entirely. DoCoMo said it would have to post a $652 million charge that would reduce profits for the year to $7.4 billion from an anticipated $8 billion.
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The PHS system is one of 3 DoCoMo offers, along with its regular mobile business and its fast-growing 3G network. DoCoMo has lost some $3.64 billion on PHS phones since it took the business over from 9 NTT Personal Communications Network companies spread across Japan 7 years ago.
PHS was launched in 1994 as a cheaper alternative to standard phone systems, which in Japan run on the PDC standard, similar to the worldwide GSM standard. At one point it was the most popular wireless service in Japan. DoCoMo is the #2 provider of PHS after Willcom.
“Due to falling service charges and the steadily enhanced functionality of cellular phones… DoCoMo anticipates a steady decline in PHS customers, and in view of DoCoMo’s focus of its management resources on its 3G FOMA mobile phone business, the decision was made to stop accepting PHS service applications,” the company said in a statement. “DoCoMo will also evaluate the possibility of terminating the service altogether while monitoring future trends in PHS usage by existing customers.”
The carrier said it would offer current PHS customers incentives to transfer to its 3G service. DoCoMo shares lost almost 25% of their value the past year but recovered slightly Mon. after the announcement.