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Monday, 18 June, 2001, 10:23 GMT 11:23 UK
Mobile price war hits Japan
Office users of mobile phones in Japan
Japan has been quick to embrace new mobile phone gadgetry
Japan Telecom, the country's third biggest carrier, has entered into a mobile phone price war with the market leader NTT DoCoMo.

J-Phone, the mobile arm of Japan Telecom, is to cut its mobile service charges at regional subsidiaries from July.


Given this heated competition.... their earnings outlooks are becoming increasingly cloudy

Tomonori Shintani
Tokyo Securities
Monthly charges will be slashed, and the breadth of free call services expanded, with a statement detailing the price changes expected on Tuesday.

The rate cuts could cost the group up to 10 billion yen ($81.4m, 57.8m) this year, according to a financial newspaper in Japan.

British wireless giant Vodafone is in the process of boosting its share in J-Phone to 46%.

3G rivalry

The cuts are thought to be in response to NTT DoCoMo's decision to cut service charges by as much as 9% from 1 June.

The two competing mobile phone firms have already been sparring in the race to launch Japan's first third generation mobile phones, which will allow users to watch videos and access the internet through their handsets.

Both firms were originally set to launch the high-speed services in October.

But Japan Telecom has been forced to delay until 2002, while NTT DoCoMo has run into numerous glitches with its trial of the service.

Stock gloom

News of the price war sent telecoms shares tumbling on the Tokyo Stock Exchange, as investors feared for the profitability of telecom issues.

"Given this heated competition, high cellphone saturation, and the fact that they are soon launching next-generation services, their earnings outlooks are becoming increasingly cloudy," said Tomonori Shintani, investment information manager at Tokyo Securities.

NTT DoCoMo, Japan's largest firm by market capitalisation, fell 3.4% to 1.99 million yen.

Japan Telecom dipped 0.41% to 2.43 million yen and number two carrier KDDI Corp slid 1.54% to 576,000 yen.

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See also:

06 Mar 01 | Business
Japan Telecom delays 3G launch
02 May 01 | Business
Vodafone pays 4.8bn for BT stakes
24 Apr 01 | Business
DoCoMo: Racing to 3G launch
15 Jun 01 | Business
DoCoMo withdraws 3G phones
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