KDDI Reports 21% Profit Growth in Q1, Ends Most Rakuten Roaming Services
Japan's telecoms giant posts strong quarterly results while announcing September termination of primary roaming agreement with Rakuten Mobile.
Strong Start to Fiscal Year
KDDI Corporation reported robust first-quarter results for fiscal year 2027, with operating revenue up 5.1% year-on-year and adjusted net income climbing 21.6% (earnings call, 2026-08-07). The Japanese telecommunications giant, with a market capitalization of approximately $72 billion, achieved a 23.2% progress rate against its full-year revenue forecast.
CFO Saishoji emphasized that "quarter 1 saw growth in both revenue and profit, marking a strong start to the fiscal year," with operating revenue increasing across all segments (earnings call, 2026-08-07). Adjusted operating income rose 21%, reaching a 26% progress rate against annual targets.
Mobile Business Drives Performance
Key performance indicators showed significant improvement in KDDI's core mobile business. Mobile ARPU (average revenue per user) reached ¥4,400 in Q1, representing a substantial year-on-year increase of ¥106, or 3.8% growth (earnings call, 2026-08-07). The customer churn rate improved to 1.17%, down 0.06 percentage points from the prior year.
Active smartphone users totaled 33.3 million, an increase of 390,000 year-on-year (earnings call, 2026-08-07). KDDI attributed these gains to "lifetime value focused initiatives" and expanding adoption of top-tier plans across all brands.
Rakuten Roaming Agreement to End
In a significant operational development, KDDI confirmed it will terminate its primary roaming agreement with Rakuten Mobile at the end of September 2026. The company stated it has "already played a certain role for Rakuten" after providing seven years of roaming services to supplement population coverage (earnings call, 2026-08-07).
KDDI executives explained the decision centers on protecting network quality for its own au Mobile customers. "We want to maintain the quality for our own customers," company representatives stated, adding that "telecom quality must be protected firmly" (earnings call, 2026-08-07).
The company will continue limited roaming services in certain rural areas for a specified period while Rakuten builds its own infrastructure. KDDI disclosed that roaming revenue impact in Q1 was approximately ¥800 million year-on-year, and the company has conservatively excluded post-September roaming revenue from its full-year guidance (earnings call, 2026-08-07).
Growth Areas Show Momentum
KDDI's diversified business segments demonstrated solid performance. The personal growth segment posted 9.3% year-on-year operating income growth, while business growth surged 21.6% (earnings call, 2026-08-07). AI integration and cybersecurity revenue grew 19.2% year-on-year, with cloud infrastructure revenue expanding more than 30%.
The connectivity data center business captured AI inference demand, achieving 20.6% year-on-year operating revenue growth with an EBITDA margin exceeding 40% (earnings call, 2026-08-07).
KDDI maintained its full-year adjusted operating income forecast of ¥1,210 billion and reported core free cash flow remained stable. The company has completed 11 divestments year-to-date, generating approximately ¥150 billion in cash as part of ongoing portfolio optimization efforts (earnings call, 2026-08-07).
This article was generated by MarginX from the earnings call on 2026-08-07. It is not investment advice.