Earnings release for the third quarter of FY2003,
ended December 31, 2003

28 January 2004


TOKYO: VODAFONE HOLDINGS K.K. ("Vodafone Holdings") (TSE: 9434) today announces its results for the first nine months of fiscal 2003 together with a downward revision of its forecasts for the fiscal year ended 31 March 2004. Consolidated operating revenues increased 385.8 billion yen from 30 September to 1,288.7 billion yen at the end of December, due primarily to increased revenues at Vodafone K.K. The company downwardly revised revenue, ordinary and net income forecasts due to an intensifying competitive environment and Vodafone K.K.'s investment in rolling out new services and initiatives to enhance the attractiveness of its offerings.

Operating highlights Vodafone K.K.'s operating highlights for the three-month period ended 31 December 2003 are as follows:

Net customer additions totaled 182,900, representing a 15.3% share of market net additions for the three-month period. Total customers at the end of the period amounted to 14,774,000. On a per month basis the additions marked an improvement over the period:

  Net additions Monthly share (%) Cumulative share (%)
October 33,200 9.4 18.5
November 35,500 10.7 18.5
December 114,200 22.5 18.5

In order to improve its competitiveness, Vodafone K.K. launched major retention initiatives in October. The company has already observed a positive impact on churn as a result of n ewly introduced plans such as Vodafone Happy Time, Vodafone Happy Bonus, Vodafone Happy Packet (since December), increased retention payments, and attractive handset offerings including 3G.

In December 2003, Vodafone K.K. launched Japan's first handset with a built-in TV tuner, the V601N. In the same month, the Company also released the V601SH, a handset with a 2-megapixel autofocus CCD mobile camera, and the V801SA, the first Vodafone live! handset powered by 3G.

For its Vodafone Global Standard 3G service, by the end of December 2003 Vodafone K.K. achieved network population coverage of 99.5% in Japan and Vodafone Global Standard customers totaled 111,700. The company had a total of 118 roaming agreements in 81 countries for roaming abroad on GSM networks as of 31 December 2003 . Moreover, since Vodafone K.K.' 3G network is compatible with global standards, the Company has been able to offer in-roaming services to customers of its international roaming partner networks. In December Vodafone K.K. also launched its 3G version of Vodafone live! so that customers can enjoy Sha-mail, Movie Sha-mail and web browsing services abroad, as well as send and receive e-mail attachments of up to 200KB. The V801SA, the first handset compatible with this service, was made available in December 2003.

Movie Sha-mail handsets, which also have Sha-mail capability, numbered 2,696,400 by the end of December, which represented approximately 18.3% of Vodafone K.K.'s customers.

The percentage of prepaid customers at the end of December was stable at 8%.

Data and content revenues accounted for 22.4% of total service revenues in December and 21.8% over the past 12 months. In addition to the continued success of the Vodafone live! mobile internet, Sha-mail, and Movie Sha-mail products, the 3G version now provides customers with faster speeds and richer content offerings such as Chaku-uta™(CD-quality ring songs). At the end of December 2003, Vodafone live! subscribers accounted for 86.4% of Vodafone K.K.'s customer base.

Fiscal 2003 consolidated financial forecasts

Vodafone Holdings is adjusting downward its fiscal 2003 forecasts.

Consolidated revenue is now expected to reach 1,660 billion yen, a downward adjustment of 20 billion yen compared to the previous forecast. Whilst December net additions were better than in previous months, and the increase in upgrade incentives, together with the retention plans Vodafone Happy Time, Vodafone Happy Bonus, Vodafone Happy Packet, have recently helped reduce churn, additions overall have been lower than forecast. The prepaid offering continues to be popular although customers in this segment tend to spend less than postpaid customers.

Consolidated ordinary income is expected to total 187 billion yen as lower revenues led to lower income levels, and as an increase in upgrade incentives resulted in greater handset upgrades than forecast and thus higher costs . As a result of the above, the Company now foresees a consolidated net loss of 114 billion yen.

Despite these adjustments, Vodafone Holdings K.K. believes that the recent commercial initiatives to bolster retention are on track to assist Vodafone K.K. in achieving its goal of keeping a healthy balance between attractive offerings for customers and overall profitability, and to regain competitiveness in the near future.

Consolidated forecasts for fiscal 2003

(billion yen)
  Revised FY03
Prior FY03 Forecast
(as of 18 November 2003)
% change to
prior forecast
Operating revenue 1,660 1,680 -1.2%
Ordinary income 187 212 -11.8%
Net income (loss) (114) (104) NA

About Vodafone Holdings K.K.

Vodafone Holdings, formerly JAPAN TELECOM HOLDINGS Co., Ltd., provides mobile services through its 45.1% interest in its subsidiary Vodafone K.K. Vodafone Holdings K.K. is listed on the Tokyo Stock Exchange and the Osaka Securities Exchange, with Vodafone Group Plc holding an indirect interest of 66.7% in the company. Separately from Vodafone Holdings, Vodafone Group Plc also holds an indirect 39.7% interest in Vodafone K.K., giving it a total economic interest of approximately 69.7% in Vodafone K.K. Vodafone Holdings' other significant assets are 100% stakes in Japan System Solution Co., Ltd. and Telecom Express Co., Ltd. For more information, please visit www.vodafone-holdings.co.jp

About Vodafone K.K.

Vodafone K.K., formerly J-PHONE Co., Ltd., is a leading mobile operator in Japan with over 14 million customers and is a subsidiary of Vodafone Group Plc, the world' largest mobile community. The Tokyo-based company offers a wide range of sophisticated mobile voice and data services including Vodafone live!, which provides e-mail and Internet access to 86% of its customers, and Sha-mail, the pioneering picture messaging service first introduced in November 2000 that now has over 11 million users. In December 2002, Vodafone K.K. launched Vodafone Global Standard, the world's first commercial 3G W-CDMA service based on 3GPP international standards. Vodafone Global Standard offers its customers fast data speeds in Japan and roaming on 119 networks in 84 countries a s of 22 January 2004. For more information, please visit www.vodafone.jp

Forward-Looking Statements

This press release contains certain forward-looking statements concerning the operations and strategy of Vodafone Holdings and its expectations concerning its financial and operating results, in particular its fiscal 2003 performance forecasts (including consolidated operating revenue, ordinary income and net income), as well as expectations for trends in the Japanese fixed-line and wireless telecommunications markets. This press release also contains certain forward-looking statements concerning the operations and strategy of odafone K.K. and its expectations concerning its financial and operating results and capital expenditure. By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.

There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to: changes in economic conditions that would adversely affect demand for Vodafone Holdings' and Vodafone K.K.'s services; greater than anticipated competitive activity; slower customer growth or reduced customer retention; the impact on capital spending from investment in network capacity and the deployment of new technologies, including 3G technology; the possibility that technologies will not perform according to expectations or that vendors' performances will not meet Vodafone Holdings' or Vodafone K.K.'s requirements; changes in projected growth rates in the telecommunications industry; the accuracy of and any changes in Vodafone Holdings' and Vodafone K.K.'s projected revenue models; future revenue contributions of data services offered by Vodafone Holdings or Vodafone K.K.; Vodafone Holdings' and Vodafone K.K.'s ability to successfully introduce new services, in particular 3G services, and the delivery and performance of key products; changes in the regulatory framework in which Vodafone Holdings and Vodafone K.K. operate; and the impact of legal or other proceedings involving Vodafone Holdings or Vodafone K.K. or other companies in the telecommunications industry.

All written or verbal forward-looking statements attributable to Vodafone Holdings and Vodafone K.K. or persons acting on their behalf made in this press release or subsequent hereto are expressly qualified in their entirety by the factors referred to above.