Vodafone reports dismal sales in Japan

Vodafone netted just 900 new customers in Japan, its biggest single market, during December, figures showed yesterday. In December, Vodafone's biggest Japanese rival, NTT DoCoMo, had 247,500 new subscribers, and there were 241,600 more for KDDI, the second-biggest operator.

Vodafone netted just 900 new customers in Japan, its biggest single market, during December, figures showed yesterday. In December, Vodafone's biggest Japanese rival, NTT DoCoMo, had 247,500 new subscribers, and there were 241,600 more for KDDI, the second-biggest operator.

The figures, published by Japan's Telecommunications Carriers Association, were immediately leapt upon by bearish analysts as further proof that Vodafone's well-known problems in Japan are a long way from being solved.

Mark James, who reiterated his sell recommendation on Vodafone shares yesterday, said: "Dismal net adds in December reinforce our view that there is no quick fix to Vodafone's woes in Japan. We have held the view for some time that it could prove hard to turn around Vodafone's weak position there. The company has placed much emphasis on the handset line-up announced in quarter four of 2004, yet the range looked poor in comparison to its competitors.

"Miserly net adds of just 900 in December illustrate that Vodafone's position in Japan continues to be in retreat. This is a big deal, given the business represents about 25 per cent of group revenues."

Vodafone's chief, Arun Sarin, appointed Shiro Tsuda, a former NTT DoCoMo executive, as head of its Japanese business in August. Its problems in the market have been well-flagged and the company's shares ended the day just 0.7 per cent down. But Vodafone did sign up 69,500 customers to its new third generation services. Yet Vodafone's 3G performance was still dwarfed by that of NTT DoCoMo, which signed up 930,000 3G customers in December giving it a total of 8.5m 3G users, and KDDI added 379,100 users, bringing its 3G customer base to 16.8 million. Vodafone has just 366,400 3G customers in Japan.

There are two main reasons why Vodafone fared so badly. Its 3G handsets were late arriving in retail stores and a new registration system for pay-as-you-go mobile customers imposed by the Japanese authorities is also thought to have slowed customer flows.

December does not have the seasonal significance in Japan as in the US and Europe. March is the big seasonal month for Japanese retailers although Vodafone made no forecasts.