Mobile phone giant Vodafone has reported the first ever drop in customers at its Japanese business, Vodafone KK.
Vodafone KK is behind its main rivals in 3G subscriber numbers
Net subscribers fell by 3,100 in July, the first such loss reported by one of Japan's three main operators.
The news came as bigger rivals NTT DoCoMo and KDDI Corp reported an increase in new customers.
NTT DoCoMo gained 225,700 new subscribers, while KDDI Corp gained 219,700, according to industry figures.
'Reputation at stake'
More than 2% of Vodafone KK's 15 million customers left in July, an increase compared with previous months, news agency Reuters reported.
The net loss figure is calculated by subtracting the number of cancellations from the number of new customers.
"The only thing Vodafone can do is improve service quality," said Kazuyo Katsume, an analyst at investment bank JP Morgan.
"They want customers to wait until they roll out attractive (high speed) 3G handsets in December but their reputation is at stake now. They have to take measures to retain customers."
Vodafone KK's 3G subsriber base currently lags well behind those of its main rivals.
The company had 199,500 3G subscribers at the end of June, compared with KDDI's 14.7 million and DoCoMo's 4.6 million.
Vodafone KK, which UK-based Vodafone acquired three years ago, has been struggling amid delays in the introduction of new phones and a failure to provide attractive handsets.
Last month, the company reported a 6% drop in first-quarter revenues.