KDDI Investing in Business Services While Its Mobile Business Recovers From Price Competition

KDDI is Japan's second-largest telephone company, and Japan is one of our favorite wireless markets. Japan has three incumbent wireless operators, all of which have traditionally competed more on service and handset features than on price. Industry regulation in the country has been fairly benign, and the industry has traditionally successfully weathered threats to this competitive balance. In 2008, a fourth carrier, eMobile, entered the market, but it was acquired by SoftBank after only gaining about 3% share. This relatively benign competitive environment has allowed the industry to operate as an oligopoly, as evidenced by churn rates among the lowest in the world at less than 1% per month.