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Introduction & Market Context
KDDI Corporation (TYO:9433) presented its first quarter fiscal year 2026 financial results on August 1, 2025, highlighting modest revenue growth amid ongoing investments in next-generation technologies. The Japanese telecommunications giant continues to focus on enhancing its "power to connect" while developing new value propositions through digital data and AI initiatives.
Quarterly Performance Highlights
KDDI reported consolidated operating revenue of 1,436.3 billion yen for Q1 FY2026, representing a 3.4% year-over-year increase. However, operating income declined slightly by 1.6% to 272.5 billion yen, while profit attributable to owners of the parent decreased by 3.3% to 171.1 billion yen.
As shown in the following financial results summary:
The company explained that the operating income decline was primarily due to the impact of the previous year’s promotional expenses, including one-time costs of 7.3 billion yen. This negative impact of 21.4 billion yen was partially offset by positive contributions from mobile services, financial and energy businesses, and the Lawson equity method investment.
The following breakdown illustrates the factors affecting operating income:
Despite the slight profit decline, KDDI maintained its full-year forecast, projecting operating revenue of 6,330.0 billion yen and operating income of 1,178.0 billion yen for the fiscal year ending March 2026.
Mobile Business Performance
KDDI’s mobile business showed encouraging signs of growth, with mobile revenues (across Personal Services and Business Services segments) increasing by 7.6 billion yen year-over-year to 550.6 billion yen. Mobile ARPU (Average Revenue Per User) rose by 60 yen to 4,340 yen, while smartphone subscriptions grew by 0.45 million to 32.91 million.
The following chart illustrates this growth trajectory:
The company’s new mobile plans have been well-received in the market. The "au" brand, which focuses on the value of "connected experience," has achieved approximately 80% selection rate for new subscriptions and model changes. Meanwhile, the "UQ mobile" brand’s large-capacity plans have reached about 40% selection rate, driven by increased data usage.
As shown in the following slide detailing the new plans’ performance:
KDDI has also strengthened its network infrastructure, claiming to have the largest number of Sub6 base stations in Japan with 41,000 installations. The company reports achieving the top rating in all six categories for 5G SA performance, including download speed, upload speed, gaming experience, video experience, UDP latency, and reliability.
The following slide highlights KDDI’s 5G network competitiveness:
Financial Services & Business Segment Growth
KDDI’s financial services business showed strong performance, with au Financial Holdings reporting a 33.0% year-over-year increase in operating income to 11.7 billion yen. Transaction volume for settlement and loan services reached 5.79 trillion yen, up 13.6% year-over-year. The company’s au PAY card membership grew to 10.32 million, a 7.0% increase, with gold card members increasing by 28.9% to 1.61 million.
The Business Services segment also demonstrated solid growth, with operating revenue increasing by 4.5% to 349.7 billion yen and operating income rising by 5.4% to 57.5 billion yen. The company noted that while mobile revenues in this segment increased steadily, there were delays in the integration of Altius Link, and Digital BPO underperformed expectations.
As illustrated in the following business segment performance data:
Strategic Initiatives for Future Growth
KDDI is actively pursuing several strategic initiatives to drive future growth. The company is developing core infrastructure to accelerate digital transformation for Japanese companies and customers, focusing on AI data centers, high-quality secure networks, and data utilization.
In collaboration with Lawson, KDDI opened its first "Next-generation convenience store" in June 2025, which serves as a testing ground for advanced technologies. The pilot store, which began operations in July 2025, has been well-received with an average of 1,000 daily users and an average dwell time of about 2 minutes.
The company is showcasing this innovative retail concept as seen below:
KDDI is also expanding its AI capabilities through partnerships with companies like Google Cloud, AMD, and DRIVENETS. The company plans to open new AI data centers, including the Osaka Sakai AI Data Center and TELEHOUSE TOKYO Tama 5-2nd (scheduled to open in fall 2027), to create secure and reliable AI environments for Japanese companies and customers.
Forward-Looking Statements
Looking ahead, KDDI expects growth to accelerate in the second half of the fiscal year, particularly in mobile services and digital transformation initiatives. The company aims to strengthen its focus on high-demand areas such as cybersecurity and IoT, which have shown promising results with implementation across 600 companies/organizations and over 8 million IoT connections through SORACOM.
KDDI remains committed to its vision of "enhancing the power to connect" while creating new value through digital data and AI. The company’s multi-pronged approach—spanning telecommunications, financial services, retail innovation, and AI infrastructure—positions it to navigate the evolving digital landscape while addressing the challenges of modest profit growth in the current fiscal environment.
Full presentation:
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