Japan's Big 3 Telecom Carriers Q1 FY2026: KDDI leads profit growth

• All three carriers posted higher revenue and profit. Revenue grew by an average of 8.5%, led by NTT at 10.9%. SoftBank followed at 9.4%, while KDDI rose 5.1%.
• Profit growth varied. Average operating profit was ¥347.2 billion, with NTT the largest at ¥425.1 billion. KDDI's 21.1% year-on-year increase stood out.
• Services beyond telecommunications supported growth. NTT's Global Solutions business increased revenue by 16.4%, while KDDI expanded its corporate digital services.
• Demand for AI and digitalization provided a tailwind. Corporate services are helping offset the mature telecommunications market.
• Rising costs weighed on earnings. NTT cited higher energy and personnel expenses, showing how revenue growth does not necessarily translate directly into profit.

KDDI was the strongest performer. Its operating profit was ¥314.2 billion, second only to NTT's ¥425.1 billion. KDDI's 21.1% year-on-year increase far outpaced NTT's 4.9% and SoftBank's 4.0%.

KDDI also led on operating margin, at 21.1%. SoftBank posted 16.7% and NTT 11.8%. Growth in corporate digital services and other areas helped KDDI deliver profit growth faster than revenue growth.

SoftBank had the toughest quarter for profit growth. Revenue rose 9.4% year on year, second only to NTT's 10.9%. But operating profit increased just 4.0%, the slowest rate among the three. Net income growth was also 3.3%, well below KDDI's 22.1%.

That weakness refers to the pace of profit growth. SoftBank's margin was 16.7%, above NTT's 11.8%. NTT led in revenue but ranked last among the three on operating margin.

• NTT grew revenue in its Global Solutions business by 16.4%, while price increases also lifted sales. Revenue rose 10.9% year on year, the fastest among the three, but higher costs limited operating profit growth to 4.9%. NTT left its full-year forecast unchanged.
• KDDI launched a three-segment structure. Revenue in its Business Growth segment increased 11.7%. Demand from businesses for AI, cybersecurity and data centers helped lift operating profit by 21.1% year on year.
• SoftBank has made AI use and next-generation social infrastructure part of its long-term strategy. Revenue rose 9.4% year on year, while operating profit grew 4.0%. The focus is on whether investment and costs can be converted into growth.

Full-year operating profit forecasts are ¥1.71 trillion for NTT, ¥1.21 trillion for KDDI and ¥1.10 trillion for SoftBank. First-quarter profit growth and the scale of full-year targets should be assessed separately.

• Higher personnel and energy costs. Expenses could squeeze profit even as revenue grows.
• Competition over telecommunications pricing. Price increases and customer acquisition efforts can affect user responses and earnings.
• Returns on AI and data center investment. Demand may expand without generating enough profit to justify the investment burden.
• Intensifying competition in corporate digital services. Carriers face growing competition not only from each other but also from IT companies.
• Changes in external conditions, including interest rates and prices. These can affect investment costs and corporate IT spending, influencing whether full-year plans are met.

NTT ranked first in both revenue and operating profit, underscoring the continuing advantage of its scale. KDDI led on operating margin at 21.1%, a gap of 9.3 percentage points over NTT's 11.8%.

NTT had the fastest revenue growth, at 10.9%, while KDDI led operating profit growth at 21.1%. The ability to expand scale and the ability to generate profit are showing up at different companies.

Telecommunications companies no longer just sell network connections. NTT's global business, KDDI's corporate AI and data center services, and SoftBank's next-generation infrastructure plans point to expanding opportunities in IT and corporate services.

When comparing employers, look beyond the scale of their telecommunications businesses to corporate services and AI-related work. Growth does not always translate into higher profit, so roles involving cost management and investment decisions are also worth considering.