ENVALITH
沖縄セルラー電話株式会社 logo

OKINAWA CELLULAR TELEPHONE COMPANY

9436・Standard Market・Information & Communication

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沖縄セルラー電話株式会社 logo
OKINAWA CELLULAR TELEPHONE COMPANY9436

Business

Okinawa Cellular Telephone Company (Single Segment: Telecommunications Business) was established in 1991 as a telecommunications operator dedicated to Okinawa Prefecture, with KDDI Corporation as its parent company. Centered on Mobile Services (au, UQ, povo) through its multi-brand approach, the company also operates FTTH Services (au Hikari Chura, etc.), electricity retail through au Denki (Life Design Services), and Business Solutions. Its consolidated subsidiaries include OTNet Co., Ltd., Okinawa Cellular Agri & Marche (now Okinawa Cellular Assume), and Okinawa Cellular Mirai Create, among others, with its primary customer base consisting of Okinawa Prefecture residents, businesses within the prefecture, and tourists. For FY2026 (ending March 2026), operating revenue was ¥86,348 million and operating profit was ¥18,693 million, marking a new record high in profit.

Business Model

The company has a multi-layered revenue structure centered on Mobile Aggregate Revenue (communications revenue + value-added revenue), combined with monthly line revenue from FTTH Services, electricity sales revenue from au Denki, and handset sales revenue (ancillary business). Capital expenditures are funded through internal resources, with interest-bearing debt of only ¥16 million, representing effectively debt-free management. The company stably generates ¥16,329 million in operating cash flow, maintaining a dividend payout ratio of over 40% while continuing growth investments.

Company Strengths

Total mobile subscriptions at the end of FY2026 (ending March 2026) stood at 698,900 (up 1.3% year on year). Through its multi-brand strategy spanning au, UQ, and povo, combined with continuous improvement in network quality, the company maintains a high customer share in the limited market of Okinawa Prefecture. As a Type II Designated Telecommunications Facility Operator, it has a scale that carries the obligation to file interconnection tariffs.

At the end of FY2026 (ending March 2026), interest-bearing debt, including lease obligations, was only ¥16 million, representing virtually debt-free status. The capital adequacy ratio was 82.2% (versus 81.6% in the prior period), with net assets of ¥101,914 million. The company covers all funding needs, including capital expenditures of ¥6,525 million, with its own funds, and possesses the financial strength to stably generate free cash flow of ¥10,951 million.

In addition to total mobile revenue of ¥46,049 million (up 4.2% year on year), cumulative FTTH lines reached 132,600 lines (up 2.7% year on year), and au Denki contracts reached 81,600 (up 5.7% year on year), with multiple services growing simultaneously. In October 2025, the company formally entered the electricity retail business, further advancing the diversification of its revenue sources.

ENVALITH's Perspective

Ancillary business operating income/loss for FY2026 (ending March 2026) turned negative at ¥-115 million (versus +¥773 million in the prior period). The primary cause is increased cost of sales and expenses associated with the rapid expansion of Life Design Services (au Denki) and other offerings (net additions up 104.5% year-on-year). While the increase in Telecommunications Business income (+¥1,820 million) covers this overall, an expanding loss in the ancillary business would compress the upside potential for consolidated profit. The forecast for the next fiscal year explicitly notes an increase in au Denki business cost of sales, warranting continued monitoring as a risk to the transformation of the revenue structure.

Net mobile subscriber additions for FY2026 (ending March 2026) came to 8,800 contracts, down 29.6% from 12,500 contracts in the prior period. This likely reflects progressing saturation in the geographically limited market of Okinawa Prefecture. On the other hand, total mobile revenue maintained growth, rising 4.2% year-on-year to ¥46,049 million, indicating a shift toward a structure that offsets slowing subscriber growth with improved ARPU and expanded value-added revenue. Whether this transition is sustainable will be key to mid-term revenue growth.

The consolidated earnings forecast for FY2027 (ending March 2027) calls for operating revenue of ¥90,000 million (+4.2%), operating income of ¥19,100 million (+2.2%), and net income attributable to owners of the parent of ¥13,250 million (+0.3%). Although the forecast calls for both higher revenue and higher operating profit, net income growth is effectively flat. Increases in mobile sales-related costs, au Denki cost of sales, and Business Solutions costs are expected to constrain profit growth. The annual dividend is set at ¥70 (a significant decrease from ¥99 in the prior period), reflecting a post-stock-split basis; while the dividend payout ratio of 48.7% is maintained, the change in the absolute amount may draw investor attention.

Growth Strategy

Under Cellular 6X management, the company aims for operating revenue of ¥100.0 billion and growth-area revenue of ¥30.0 billion in FY2030 (ending March 2030)

The company is promoting network quality improvement and customer-focused services centered on its three brands: au, UQ, and povo. Total mobile revenue for FY2026 (ending March 2026) expanded steadily to ¥46,049 million (up 4.2% year on year). The strategy is shifting toward offsetting the slowdown in net subscriber additions through ARPU improvement, driven by growth in both communication revenue and value-added revenue.

The company continues to invest in facility expansion for au Hikari Chura, au Hikari Chura Business, Hikari Yuimaru, and other services. The cumulative number of subscriber lines at the end of FY2026 (ending March 2026) reached 132,600 lines (up 2.7% year on year). Net additions slowed to 3,500 lines from 4,800 lines in the previous period, and responding to changes in the competitive environment remains a challenge.

The number of au Denki contracts reached 81,600 (up 5.7% year on year), with net additions expanding rapidly to 4,500 contracts, up 104.5% year on year. This is explicitly cited as a factor for revenue growth in the next fiscal year's forecast as well. However, cost increases have caused the ancillary businesses as a whole to fall into an operating loss, making cost management an urgent priority toward achieving profitability.

The corporate business segment is explicitly cited as a factor for revenue growth in the forecast for the next fiscal year, FY2027 (ending March 2027). Amid rising demand for corporate communication and ICT needs driven by digitalization, the company is promoting expansion by leveraging its corporate customer base within Okinawa Prefecture. Disclosure of specific contract numbers and sales scale remains limited at this time.

In FY2026 (ending March 2026), total dividends amounted to ¥6,214 million (payout ratio of 47.2%), and share buybacks of ¥4,999 million were carried out. As a subsequent event, in May 2026 the company resolved to cancel 1,875,500 treasury shares and to establish a new buyback program with an upper limit of 1,700,000 shares and ¥5.0 billion. The company continues to promote improved capital efficiency and enhanced shareholder returns.

Last updated: July 19, 2026