The Capex (capital expenditure) of NTT Docomo has decreased every year since 2014, while going further this year owing to the pre-mature wideband code division multiple access (W-CDMA) move by the telecom operator.
The telecom that has a very complex organizational structure for its mobile business unit is among the world’s top 10 service providers ranked by revenue.
NTT Docomo had previously offered insights into the impact of new technology introduction and natural disasters on capital spending.
Its 3G rollouts investment, between 2000 and 2005, has summed up to ¥1.8T ($17.3B) to roll out a pre-standard W-CDMA network, said a report by IHS.
The Japan-based telecom company started to upgrade its 3G network meet the 3GPP standard including high-speed downlink packet access (HSDPA), as soon as 3GPP completed its W-CDMA standard.
As far as 4G is concerned, the group expanded the coverage of its Premium 4G service to 1,203 cities across Japan and 30,900 base stations as of 30 June 2016.
The Capex increased by 4.3 percent to JPY97.1 billion, during the quarter, ending on 30 June, 2016. Capex during the quarter ended June 30, 2015 fell 37.3 percent to 93.1 billion yen or $750 million. However, in the first quarter of 2016, Capex fell 10 percent to JPY595 billion.
The company conveyed estimations that its Capex will be dropping slightly to JPY585 billion over the next two fiscal years, in a release earlier this year.
Operating expenses (Opex) were low by 3.8 percent in the second quarter of 2016 to JPY809 billion owing to lower depreciation expenses, reduction in sold equipment cost and initiatives to boost cost efficiency, conveyed the company.
The software-based upgrade deployed in a span from 2007 to 2010, highlighted a Capex decline resulting from the lack of hardware spending. NTT Docomo had HSDPA running 14Mbps downlink in major metropolitan areas by the end of 2006, in-spite of this.
NTT Docomo deployed nationwide LTE network starting from 2010 in less than three years, resulting in a growth in Capex from 2010 to 2012, with the Capex staying under the ¥800B bar in 2012 compared to almost ¥1T in 2006.
The company lost more than 6,000 3G base transceiver stations (BTSs) in the middle of a significant LTE rollout in the Fukushima disaster, and the resultant tsunami, but it did not vary its Capex, even when a total of 6,720 BTSs nationwide, including 4,900 in Tohoku branch service areas, were out of service right after the disaster.
NTT Docomo announced a new architectural design that is based on a C-RAN architecture including a next-generation BTS design, low power remote radio heads and LTE-Advanced (LTE-A) features such as carrier aggregation and coordinated multi-point transmission/reception (CoMP) in 2013, asking vendors to develop the products, with rollouts starting in 2014.
Due to minimal new hardware, Capex has fallen since then with another decline in 2016, with the SDN/NFV deployments being the factors affecting Capex reduction.
NTT Docomo, with a current market share of 37 percent, has phased out traditional technologies like 2G, while introducing the next gen ones, to maintain its Capex decline.
The company has conveyed that even if the latest technology claims to be sophisticated and software intensive, it still has to be lower in cost and more productive for being used, ruling out chances of Capex hikes during future 5G deployments.
The telecom network operator intends to invest in a 5G nationwide network in 2020, with only a hike in a few percent in Capex when compared to the current level, with maximum estimations pointing to a figure of ¥650B at best.
The fall in Capex has justified the telecom vendor consolidation with Alcatel-Lucent, Ericsson, Fujitsu, Hitachi, Huawei, Lucent Technologies, Marconi, Motorola, NEC, Nokia, Nortel, Panasonic Mobile Communications, Samsung and ZTE having provided telecom gears in 2005, while many of them are not in market now.
Vina Krishnan
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