Japan Communications Inc.

Business Details

Utilizing the mobile communication networks of mobile network operators (such as NTT DoCoMo), the company provides MVNO services such as "Nihon Tsushin SIM" for individuals and corporations, MVNE partner support, and corporate Mobile Solutions (MSP Business). In addition, the company operates a digital ID and authentication platform business leveraging its patented FPoS (FinTech Platform over SIM) technology. Its US subsidiary has accumulated technology and know-how in the local 4G/5G business, and the company aims to launch a new service as Neo Career in November 2026.

Recent Overview

Net sales increased 25.9%, with increased profit, but net income declined year on year due to recording of extraordinary losses

For FY2026 (ending March 2026), net sales were ¥11,633 million (up 25.9% year on year) and operating income was ¥1,134 million (up 17.8% year on year), achieving both higher revenue and higher profit. The main driver of growth was the expansion of flat-rate and semi-flat-rate voice services centered on "Nihon Tsushin SIM." On the other hand, the company recorded an impairment loss of ¥215 million on business assets of its subsidiary my FinTech Corporation and a valuation loss on investment securities of ¥43 million as extraordinary losses, resulting in profit attributable to owners of parent of only ¥763 million (down 10.1% year on year). The company completed bond financing of ¥6.0 billion for initial investment for Neo Career, and intangible fixed assets (construction in progress for software) increased significantly from ¥440 million at the end of the prior period to ¥1,790 million. The company formulated "Vision 2030," setting targets of ¥65.0 billion in net sales and ¥15.0 billion in operating income for fiscal year 2030.

Key Products

Growth Drivers

• Continued growth in contracted lines (947 thousand lines as of end of March 2026) driven by high evaluation of "Nihon Tsushin SIM"'s communication quality and reasonable pricing structure (ranked No. 1 in J.D. Power's MVNO category for two consecutive years)
• A structure whereby subscriber growth directly contributes to profit while maintaining a certain gross margin, owing to the optimization of voice wholesale rates with DoCoMo (2020 ruling by the Minister of Internal Affairs and Communications)
• Completion of fundraising of ¥6.0 billion for initial investment and progress in core network construction ahead of the Neo Career new service launch scheduled for November 24, 2026
• Accumulation of implementation track records in the FPoS business following transition to commercial service (cumulative regional payment volume exceeding ¥5.0 billion, expansion into financial institutions in cooperation with Chiginet regional bank network services, etc.) and expansion of the number of electronic certificates provided
• Strengthening of security through the FPoS-compatible upgrade of the "Nihon Tsushin App" (scheduled for June 2026) and establishment of a foundation for smooth customer migration to the Neo Career new service
• Accumulation of technology and know-how in the local 4G/5G business through the US subsidiary JCI US Inc., and its application to SIM authentication technology for Neo Career
• A dual-pillar growth strategy for the communication services business and digital trust business based on "Vision 2030" (targeting ¥65.0 billion in net sales and ¥15.0 billion in operating income for fiscal year 2030)

Risks

• Investing cash flow resulted in an outflow of ¥2,155 million due to expanded upfront investment in system construction for Neo Career (construction in progress for intangible fixed assets/software increased by approximately ¥1,350 million from the end of the prior period), continuing a structure funded through financing activities (bond issuance of ¥3,936 million)
• Decline in the equity ratio (from 50.4% to 37.6%) and rise in financial leverage accompanying a significant increase in bond balance (bonds under fixed liabilities increased from ¥1,714 million at the end of the prior period to ¥4,862 million)
• Risk of delayed recovery of upfront investment and increased bond interest expense (¥29 million in the current period) should the Neo Career new service launch, scheduled for November 24, 2026, be delayed
• Structural risk in which the rate of increase in mobile network procurement costs (cost of sales) accompanying the growth of "Nihon Tsushin SIM" (up 33.8%) exceeds the growth in gross profit (up 14.9%)
• Risk that monetization and scale-up of the FPoS business will take time, given that the subsidiary my FinTech Corporation has continued to record operating losses in past years and has a track record of recording an impairment loss of ¥215 million
• Risk of profit pressure from intense price competition among the four MNOs and numerous MVNOs
• Risk that the response to the amended Act on Prevention of Unauthorized Use of Mobile Phones (change in identity verification method) will affect the convenience of new applications, thereby suppressing growth in the number of contracted lines