Company Profile

KDDI

Japan

Telecommunication Services – Wireless Telecommunication Services

http://www.kddi.com/english/

KDDI Corporation is atelecommunications company. KDDI is the only telecom company in Japan that provides service over both mobile and fixed line broadband circuits.

Impacts and Opportunities for Telecommunications Companies

Reduced Carbon Footprint

By 2020, information and communication technology (ICT) enabled solutions offer the potential to reduce annual global emissions by an estimated 9.1 gigatons carbon dioxide (CO2)equivalent, or 16.5% of the total projected COequivalent for 2020.1 

KDDI’s Green Cloud research and development team works to develop “green ICT technologies” such as a machine to machine (M2M) platform. This technology allows both wireless and wired systems to communicate with other devices, thereby enabling smart grids and other environmentally beneficial technologies.

Market Growth

Global mobile data traffic reached 1.5 exabytes per month at the end of 2013, up from 820 petabytes per month at the end of 2012. By 2014, voice will account for less than 5% of all mobile traffic and video streaming will increase to approximately 66%.2

KDDI expects mobile data traffic in its network to increase by as much as 12 times from 2012 to 2016. Given that data traffic per smartphone is around 30 times that of a feature phone, it will be difficult for mobile networks to handle the projected increase in traffic. As a result, KDDI intends to leverage its multi-network business model to offload mobile data onto its fixed line networks.

Energy Efficiency

Energy use is anticipated to rise due to the growth of mobile users overall,as well as an increase in the number of devices per user. Despite this growth, energy efficiency improvements in the devices themselves and across the industry’s infrastructure are expected to reduce the overall carbon footprint per user by 20% in 2020 from a 2007 baseline.3

KDDI reports that in fiscal year 2013 approximately 60% of the power consumed by the company was used by its mobile phone base stations and associated air conditioning to keep the stations cool. In response, KDDI is researching and developing Type-VII radio equipment, which requires no air conditioning and achieves a per-unit power reduction of approximately 40% compared with previous models.

Areas for Improvement

Expand Use of Efficient Technology

KDDI has begun to employ “tribrid” electric power control technology at its base stations, which combines solar power generation and accumulator batteries to store energy generated from sunlight to power the station at night. According to KDDI, base stations that use tribrid power control technology have cut annual CO2 emissions by as much as 30% compared with conventional base stations. While the company has a goal to increase the number of these base stations to 100 in fiscal year 2014, this will account for just a small percentage of total base stations. Portfolio 21 has asked the company to expand the use of this efficient technology.

  1. Global e-Sustainability Initiative. “GeSI SMARTer 2020: The Role of ICT in Driving a Sustainable Future,” December 2012. Accessed February 14, 2014. http://gesi.org/SMARTer2020 []
  2. Cisco. “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2013–2018,” February 5, 2014. Accessed February 14, 2014. []
  3. Ericsson. “Ericsson Sustainability and Corporate Responsibility Report 2012,” April 2013. Accessed February 14, 2014. http://www.ericsson.com/res/thecompany/docs/corporate-responsibility/2012/2012_corporate_responsibility_and_sustainability_report.pdf []

To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 6/30/14 and may not reflect current opinions or subsequent events.

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