KDDI: cellphone sales to slide 20-30 pct in 2008

TOKYO, Sept 17 Wed Sep 17, 2008 4:07am EDT

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TOKYO, Sept 17 (Reuters) - Japan's second-biggest wireless carrier, KDDI Corp (9433.T), said its mobile phone sales may have fallen as much as 30 percent this summer, as operators switch to a new sales model and the domestic market matures.

KDDI president Tadashi Onodera also said that sales will likely fall some 20 percent in the coming winter shopping season. Japan's top three operators, which include NTT DoCoMo (9437.T) and Softbank Corp (9984.T), have embarked on new sales plans which have boosted the price of mobile phones and cut calling fees.

The higher prices have hurt unit sales as users tend to keep their phones longer but carriers' profits have benefited as they no longer need to pay heavy subsidies to retailers to fuel sales. "We are being careful with our orders, so inventories are not piling up that much," Onodera told reporters.

"We do have more inventory than last year, but we believe we can sell enough of that." KDDI sold 2.86 million handsets in the latest quarter, down 19 percent from the same period last year as many of its Tu-Ka brand users upgraded their phones last year before the brand ceased service in March 2008.

The company had previously operated services under two separate brands -- Tu-Ka and au -- on different bandwidths. The Tu-Ka brand stopped accepting new subscribers in 2006.

"KDDI's estimates may be conservative but they are in line with expectations," said Mitsubishi UFJ Securities analyst Shinji Moriyuki.

"Sales are falling in reaction to promotions to upgrade Tu-Ka users last year, and higher handset prices from instalment payment plans are also slowing down sales," he said.

Mobile phone sales for industry leader NTT DoCoMo, which shifted to the new model last November, fell 21 percent in the April-June quarter, hurt also by the difficulties of selling in a mature market where about 85 percent of population already own a cellphone.

One telecoms analyst, who declined to be named, said the expected fall in sales would likely shrink KDDI's market share. KDDI currently has 28 percent of Japan's $70 billion mobile market, against DoCoMo's 49 percent and third-ranked Softbank Corp's (9984.T) 18 percent.

KDDI shares closed up 2.8 percent at 588,000 yen, outperforming a 1.2 percent rise in the Nikkei average .N225. (Reporting by Sachi Izumi; Editing by Edwina Gibbs)

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