EPC is an advanced system that supports high speed Super 3G communications, and quickly and smoothly delivers such services as image applications between mobile phones or between mobile phones and data servers.

NTT DoCoMo's decision to have NEC provide the core network, mobile terminals and wireless base stations, for its Super 3G system can largely be credited to the highly regarded performance of equipment and know-how that NEC has provided for existing 3G (FOMA(R)) systems.

Looking forward, NEC will continue to support the expansion of NTT DoCoMo business with its comprehensive solutions that contribute to the growth of next generation mobile infrastructure throughout the world.

EPC is being considered by the W-CDMA standardization organization, 3GPP, and NEC is taking an active role in the standardization process, including the vice-chairmanship and a variety of key member positions.

NEC's EPC is capable of processing voice and data transmission for LTE and existing 3G mobile phone networks, as well as conducting handover between non 3GPP compliant networks, including WLAN and CDMA-2000, in accordance with requirements from mobile operators.

(*1) EPC (Evolved Packet Core):

A core network that integrates a range of access networks, including Super 3G, 3G and wireless LAN.

EPC is composed of the following three systems.

1) "Mobility Management Entity" system to register Super 3G device positions, process incoming device calls and coordinate handover between wireless base stations.

2) "Serving Gateway" for processing data related to voice and packets for 3G and Super 3G systems.

3)"PDN Gateway" for interfacing with EPC, IMS and/or external packet networks.

(*2) HSDPA (High-Speed Downlink Packet Access):

A technology that dramatically increases downlink communication speeds; standardized by 3GPP as an advanced version of W-CDMA to meet demands for high packet communication speeds. Theoretically, this technology can achieve high downlink communication speeds of up to 14Mbps.

(*3) HSUPA (High-Speed Uplink Packet Access):

A technology that dramatically increases uplink communication speeds; standardized by 3GPP as an advanced version of W-CDMA to meet demands for high packet communication speeds. Theoretically, this technology can achieve high uplink communication speeds of up to 5.7Mbps.

*FOMA is a registered trademark of NTT DoCoMo

About NEC Corporation

NEC Corporation is one of the world's leading providers of Internet, broadband network and enterprise business solutions dedicated to meeting the specialized needs of a diversified global base of customers. NEC delivers tailored solutions in the key fields of computer, networking and electron devices, by integrating its technical strengths in IT and Networks, and by providing advanced semiconductor solutions through NEC Electronics Corporation. The NEC Group employs more than 150,000 people worldwide. For additional information, please visit the NEC website at: http://www.nec.com

NEC is a registered trademark of NEC Corporation. All Rights Reserved. Other product or service marks mentioned herein are the trademarks of their respective owners. 2008 NEC Corporation.

CONTACT: Bethan Jones, Communications Group, Corporate Planning & Strategy Division, NEC Europe Ltd Tel:+44 (0)20 8752 3447 Tel: +44 (0)7736 891 020 e-mail: bethan.jones@eu.nec.com

M2 Communications Ltd disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to info@m2.com.

DoCoMo registered operating profit of 296.49 billion yen ($2.7 billion) for the quarter, up from a profit of 203.88 billion yen a year earlier.

Net profit grew 41 percent to 173.51 billion yen, although revenue dipped 1.1 percent to 1.17 trillion yen.

The company in November introduced a new service plan dubbed the "Value Course," which cut the basic monthly charge to as low as 1,050 yen from the lowest rate of 1,890 yen under the previous plan, as well as handset sales on an installment basis.

In introducing the new plan, DoCoMo was able to reduce its sales promotion incentives to handset sales agents.

DoCoMo used to spend some 35,000 yen per handset in sales promotion incentives, but sales incentives paid to sales agents recently dropped to below 20,000 yen per handset.

"We now reckon the introduction last year of a new discount service, as well as a new sales model, as our key growth drivers, with some 97 percent of our new subscribers now choosing the 'Value Course', which contributed to the first-quarter results," NTT DoCoMo president Ryuji Yamada told a news conference.

As of July 26, the number of subscribers to its "Value Course" topped 10 million, while the churn rate, or cancellation rate, dropped to 0.51 percent in the three months to June from the average churn rate of 0.8 percent in the year to March 2008.

But the introduction of the installment payment, at the same time, blocked the frequent replacement of handsets among subscribers, which had led to a drop of nearly 21 percent in handset sales to 4.95 million units in the first quarter from a year earlier.

"Although it is true that sales of handsets have been falling since the introduction of the new sales model, we need to assess more carefully the pace of the declines," Yamada said.

"If sales continue to tumble, we may need to consider some counter-action," he said, without elaborating.

Meanwhile, DoCoMo said it has so far been little affected by the launch in July of Apple's iPhone cellular phones by its rival telecom carrier Softbank Corp.

"Judging from the recent sales trend of major carriers, we did not see a massive outflow of subscribers to our competitors, which seems to suggest that demand for iPhones is largely for secondary use," Yamada said.

For the full-year to March 2009, the company is maintaining its forecasts, made in April, for net profit of 503 billion yen, operating profit of 830 billion and revenue of 4.768 trillion.

Ahead of the release of the results, NTT DoCoMo closed Wednesday up 3.2 percent at 171,700.

yasuhiko.seki@thomsonreuters.com

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But net profit dropped 23 percent to 19.37 billion yen due to a sharp increase in corporate tax payments.

Revenue dipped 2.4 percent to 647.25 billion yen as the introduction of installment plans on handset sales reduced the frequency of repurchase.

"We have entered a phase where we recoup our past investments in the start-up cellular phone, fixed-phone and other businesses, which allowed us to make a stable profit," Softbank president Masayoshi Son said.

"As proof of this, we now emerge as a winner in terms of the net increase in the number of subscribers, contrary to what everybody thought a few years ago, that we would be a loser," he said.

Softbank is the parent company of Japan's third-largest cellphone carrier, Softbank Mobile, and of the country's largest online media business, Yahoo Japan Corp. Yahoo Japan, of which Softbank owns 41 percent, reported last month that its operating profit rose 10.5 percent in the April-June quarter.

A recent survey by the Telecommunications Carriers Association showed that Softbank beat bigger rivals KDDI Corp and NTT DoCoMo Inc. in attracting new cellphone subscribers for the 15th straight month in June.

The company said operating profit at its mobile phone business rose to 44.27 billion yen from 43.53 billion yen even as sales from this segment fell to 372.58 billion yen, from 391.67 billion a year earlier.

"While the introduction of the instalment plans on handset sales reduced the frequency of repurchase, it also slashed sales promotion incentives paid to sales agents, resulting in an improvement in profitability," Son said.

The churn rate, or cancellation rate, dropped to 0.98 percent in the three months to June from the average churn rate of over 1.4 percent a year earlier.

But the ARPU (average revenue per unit) fell to 4,180 yen per month in the June quarter from 5,000 yen a year earlier.

In a bid to prop up its subscriber base and ARPU, Softbank recently started selling iPhones, developed by Apple Inc.

The company gave no earnings guidance for the current year ending in March 2009.

"We would like to start issuing an earnings guidance as soon as we are able to stabilise profit trends. We still focus on driving up growth, which could fluctuate in the quarterly profit performance," Son said.

Softbank's rival cellular phone operator NTT DoCoMo Inc. reported recently its first operating profit growth in three years for the fiscal first quarter ended June, supported by reduced sales costs and other cost-cutting efforts, while another rival KDDI said its operating profit fell 11.7 percent in the April-June quarter from a year earlier, hit by a slowdown in its cellular phone business

Before the release of the company's results, Softbank shares closed down 2.4 yen at 1,936 yen.

yasuhiko.seki@thomsonreuters.com

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