Softbank Corp. said Tuesday its group net profit for the April-June quarter fell 22.9 percent from a year earlier to ¥19.37 billion due to a drop in sales of its mobile handsets despite the steady growth in subscribers.
The No. 3 mobile phone carrier's operating profit for the first quarter of business 2008 climbed 8.1 percent to ¥85.09 billion on sales of ¥647.26 billion, down 2.4 percent from the previous year.
"The decline (in sales of mobile handsets) is what we had expected, and it is actually ideal," Chief Executive Officer Masayoshi Son told a news conference in Tokyo.
He said that while the industry's recent trend to sell more expensive handsets on installment plans discouraged subscribers from changing phones in the short term, it also decreased customer loss.
"This means our business structure has been improving," he said.
Softbank Mobile Corp., which launched mobile phone services after taking over the Japanese operations of Britain's Vodafone Group PLC in 2006, increased its mobile phone service contracts by 2.67 million during the April-June quarter to more than 19 million.
Softbank now holds a share of 18.4 percent in the mobile phone market, following the 51 percent owned by NTT DoCoMo Inc. and 29 percent held by KDDI Corp.
Its mainstay mobile phone division reported 1.7 percent growth in operating profit to ¥44.27 billion, but sales dropped 4.9 percent to ¥372.59 billion.
Softbank said there were fewer people upgrading their mobile phones, leading to a decline in sales of its handsets.
Average revenue per user fell ¥820 to ¥4,180 due mainly to generous discount benefits and services.
Softbank signed up an additional 158,900 subscribers in June from the previous month, beating its bigger rivals for the 14th month running.