UPDATE 2-NTT DoCoMo Q2 profit rises 37 pct, keeps forecast

*Q2 operating profit up 37 pct on lower subsidies, costs

*Keeps operating profit forecast below market view

*Cuts net profit forecast on lower value of shareholdings

*Aims for operating profit over Y900 bln in 4 yrs, up 8 pct

*Shares lose 8.2 pct ahead of results vs Nikkei's 5 pct fall (Adds details, comments, byline)

By Sachi Izumi

TOKYO, Oct 31 (Reuters) - NTT DoCoMo Inc, (9437.T) Japan's top wireless carrier, reported a 37 percent rise in quarterly profit on Friday on lower mobile phone subsidies and procurement costs, and kept its full-year outlook below market expectations.

But it still took a hit from the plunging domestic stock market and trimmed its net profit target by 2 percent due to the lower value of its shareholdings.

DoCoMo's (DCM.N) profit rose after it introduced a new business model last November because it lowered costly handset subsidies paid to retailers and helped slash procurement costs of devices.

It also locked in customers for longer with instalment plans as higher phone prices have made switching carriers more expensive, though it caused mobile phone sales to tumble and forced DoCoMo to lower its annual sales forecast.

The industry leader also laid out plans to improve services and networks, and said it aims to increase profit by more than 8 percent in the next four years.

"First-half earnings were generally satisfactory because they are showing progress in the business model change that lowered the churn rate and shrank subsidies," DoCoMo chief executive Ryuji Yamada told a briefing.

"In the second half we need to implement measures to build a base for our future earnings growth," he said, adding that one step would be to encourage 2G services users to upgrade their phones. About 14 percent of its subscribers are still using the older-generation services.

DoCoMo said its operating profit rose to 280.5 billion yen ($2.85 billion) in the three months to Sept. 30, from 204.6 billion yen a year earlier. Quarterly sales slipped 4 percent to 1.1 trillion yen.

For the full year to next March 31 it kept its operating profit forecast at 830 billion yen, against an 866 billion yen projection in a poll of 15 analysts by Reuters Estimates.

It lowered its annual sales estimate by 3.6 percent to 4.6 trillion yen and trimmed its net profit forecast by 1.6 percent to 495 billion yen. It stuck to its capital investment plan of 719 billion yen for the current business year.