Vodafone shares have fallen sharply after Europe's biggest mobile phone operator said its Japanese unit J-Phone has raised subsidies on about half the handsets in the Japanese market in response to competition.
J-Phone, operated by Japan Telecom 9434.T and its parent Vodafone, said that on the most expensive handsets the subsidy was about 5,000 yen per phone. "More than half that amount comes from the manufacturer lowering their prices," said Vodafone spokesman Mr Bobby Leach.
However, J-Phone in Tokyo stressed the overall higher subsidies fitted within its normal budget plans for the year.
Mr Leach said margins at J-Phone would not be hurt by the subsidies and the firm still expected a margin improvement due to customer usage, efficiencies and "a range of other factors".
Shares in Vodafone fell 6-1/2 pence on the news to a new 4-1/2 year low of 88 pence. "The subsidies are a marketing tool. It is a response to competition," said Mr Leach.
The rate of subscriber numbers is slowing in Japan as the market matures. New Japanese subscriber numbers fell 35 percent to 422,200 in May from the previous month at the country's top operators, according to data released this month.