T-Gaia Corporation, a leading Japanese mobile phone distributor, has released its financial results for the first quarter of the fiscal year ending March 31, 2024. The company experienced a decline in sales and profit due to a decrease in mobile phone contracts.
The mobile phone handset market, which is T-Gaia’s main business field, has been impacted by factors such as soaring smartphone prices and lengthening replacement cycles. Additionally, some telecommunications carriers are planning to consolidate or abolish carrier shops in the medium to long term. These developments have contributed to a challenging business environment for T-Gaia.
Despite these challenges, the company has been making progress in the shift to 5G telecommunication services and has recognized the evolving role of smartphones beyond communication devices. Smartphones now play a crucial role in integrating various services such as finance, payment, and entertainment, thereby driving significant changes in the competitive landscape.
To adapt to this changing market, T-Gaia has been actively investing in growth opportunities, particularly in the Enterprise Solutions Business Segment and Smart Life & QUO Card Business Segment. The company is striving to achieve a well-balanced business portfolio that is not solely dependent on the Consumer Mobile Business Segment.
In April 2023, T-Gaia set up a project organization with the aim of transforming its shops, mainly carrier shops, to adopt a customer-centric business model. This initiative seeks to promote collaboration across all businesses and enhance services provided to customers. T-Gaia is shifting its focus from a product-out approach to a market-in approach, aligning its offerings with customer requests to drive revenue growth.
During the first quarter, T-Gaia reported net sales of 96,431 million yen, representing an 11.1% decrease compared to the previous year. Operating profit stood at 1,039 million yen, down 54.2% from the same period last year. Ordinary profit and profit attributable to owners of the parent also declined by 42.8% and 53.2% respectively.
The primary reason for the decline in sales and profit was attributed to a decrease in commission income resulting from a decline in mobile phone contracts within the Consumer Mobile Business Segment.
T-Gaia acknowledges the challenging business environment in Japan, with downward risks stemming from various factors such as fluctuations in commodity prices, supply constraints, and financial market fluctuations. The company emphasizes the importance of closely monitoring and managing these risks going forward.
In conclusion, T-Gaia Corporation’s Q1 financial results reflect the impact of declining mobile phone contracts on sales and profit. The company is actively pursuing growth opportunities in other business segments while transforming its shops to adopt a customer-centric approach. Despite the challenges, T-Gaia remains committed to achieving its medium-term management goals and addressing the evolving competitive landscape in the telecommunications industry.
