ADSL turnaround boosts Softbank Q3 performance

13 Feb 2006

Japanese broadband services provider Softbank Corp swung back into profit in its fiscal third quarter to 31 December 2005, thanks to a major turnaround in its asymmetric digital subscriber line (ADSL) operations. Softbank, the owner of Yahoo Japan Corp, reported third quarter net profits of JPY22 billion (USD186.74 million), compared with a loss of JPY26.6 billion in the corresponding year-ago period. In addition, operating profit surged to JPY22 billion from a loss of JPY7.5 billion in 2004, on the back of a 4.5% rise in revenues to JPY287.5 billion. ‘This is the first time that we have posted profit at all levels since we entered the broadband infrastructure business five years ago,’ said Softbank president Masayoshi Son.

The strong performance has been attributed to ‘the rapid improvement of the ADSL business, which had been a drag on us in recent years’ and which is now seen as a key revenue driver. In the third quarter Softbank’s ADSL operations reported operating profits JPY9.3 billion, compared with a loss of JPY12.4 billion a year ago. Masayoshi Son said that the upturn had been aided by the company’s rich content portfolio, which lifted average revenue per user (ARPU) from JPY4.336 a month in the second quarter to JPY4,358 yen in the last three months of 2005. Softbank ended the year with five million broadband subscribers, up from 4.97 million at 30 September, and ahead of rivals NTT East and NTT West. Softbank acquired Japan Telecom in 2005 to compensate for an anticipated slowdown in its ADSL business. In December the newly purchased unit launched a new package combining internet access, fixed line phone and internet protocol (IP) phone services. Commenting on Japan Telecom’s role in the company, Son said: ‘While the fixed line business is still bleeding, we have already passed through the start-up phase that required heavy investment, so this business will start contributing to our profit expansion sooner rather than later.’