NTT DoCoMo Inc, Japan's top mobile operator, reported on Tuesday its first drop in annual operating profit and forecast a lower-than-expected profit gain for the current year, hurt by price cuts. DoCoMo is struggling to boost profits amid intensifying competition and a price war in voice and data services. It has also had to grapple with heavy capital spending and promotional costs for its high-speed third-generation (3G) phones. But the mobile unit of Nippon Telegraph and Telephone Corp (NTT) said it expected to post a small increase in operating profit in the current year by cutting costs and phasing out unprofitable businesses such as its personal handyphone system (PHS) operations.

DoCoMo also said it would double its dividend in the current business year to 4,000 yen per share, addressing one key shareholder demand on the cash-rich operator.

In another move aimed at pleasing investors, DoCoMo said it planned to buy back as much as about 5 percent or 2.2 million of its own shares, or up to 400 billion yen ($3.78 billion) worth.

Copyright Reuters, 2005