JAPAN TELECOM SERVICES — Sector investment strategy: Signs of easing in mobile competition, shifting to growth phase on higher ARPU; Buy on NTT/Softbank

In this report, we summarize the business environment for the telecom sector, including for Rakuten Mobile, and our investment ratings, covering sector share price trends, earnings trends, mobile communications service revenue, mobile KPIs (subscribers/ARPU), network quality and capex, and trends in non-telecom businesses. Share price performance in the telecom sector had been lackluster YTD but has been on a recovery trend since July, reflecting a decline in excessive promotional competition and signs of an easing in the mobile competitive environment following price hikes by KDDI and Softbank. Aggregate mobile communications service revenue at the four major MNOs increased +2.5% yoy in Apr-Jun 2026 as the revenue growth rate accelerated, with mobile ARPU generally on an upward trend driven by the ongoing user shift to large-volume plans and KDDI's price hikes for existing plans. We expect earnings at each company to shift to a growth phase driven by higher ARPU. On a full-year FY3/27