News
Shares in NTT and KDDI have soared since PM Yoshihide Suga announced he would not seek a second term, with investors hopeful that his replacement will be far less passionate about driving down mobile prices
For Japan’s PM Yoshihide Suga, reducing the cost of the nation’s mobile plans has been a major focus since his days as Chief Cabinet Secretary, dating back to 2012. He assumed office as PM in September 2020, comfortably winning the Liberal Democratic Party leadership election following long-serving PM Shinzo Abe’s resignation.
This victory finally gave him a platform to push reform in the country’s telecoms sector, with the Ministry of Internal Affairs and Communications announcing plans to force operators to reduce their mobile price plans just one month later.
Japan has some of the highest mobile price plans in the world, noted as being up to 40% more expensive than equivalent packages in other Western countries.
The operators were relatively quick to respond to government pressure, with KDDI and SoftBank both notably announcing lower-cost plans for customers more in line with Western averages. However, these new plans quickly came under criticism from observers, who noted that they were mostly reserved for the company’s brands that already had low-cost options, leaving 80–90% of the operators’ customers unaffected by the reductions.
Since then, however, there has been more considerable movement from the sector at large, with KDDI, SoftBank, NTT Docomo, and newcomer Rakuten all launching cheaper mobile price plans in 2021.
However, on Friday PM Suga announced that he would not be seeking a second term in office, trigging another Liberal Democratic Party leadership election at the end of this month. His replacement will be forced to call a general election upon assuming office.
Despite initial popularity, Suga’s short time in office has been mired by the country’s relatively poor response to the coronavirus pandemic, which has seen his approval rating slip below 30%. The decision to allow the Olympics to proceed – usually a significant popularity boost for the host country’s leadership – did little to help his situation, given the controversy surrounding travel and live events during a pandemic.
But for Japan’s telcos, the surprise news is being seen as a major boost. Suga’s replacement is unlikely to consider reducing the nation’s mobile prices as high a priority as the Suga administration, potentially giving the major telcos considerable respite when it comes to introducing cheaper price plans.
In fact, investors have reportedly added nearly $12 billion to the combined valuation of NTT And KDDI since Suga’s announcement, with shares rising in value by 5.2% and 3.8%, respectively.
Of course, such optimism for the telecoms market and, indeed, the Japanese business market, may not last. With no clear frontrunner to take over from Suga, who has widely been viewed as pro-business, the upcoming period of political uncertainty could temper investor confidence.
“Investor confidence in Japan is now likely to lift, but the political turmoil of Suga standing down after only just a year in position, following the near eight-year Abe era, may weigh on future gains,” explained senior investment and markets analyst at Hargreaves Lansdown, Susannah Streeter.
Want to keep up to date with the latest developments in the world of telecoms? Subscriber to receive Total Telecom’s daily newsletter here
Also in the news:
Deutsche Telekom sells Dutch unit, ups stake in T-Mobile
O2 bribery probe resurfaces
Veon raises almost $1bn in Russian tower sale
