Softbank third-quarter net income drops 5.9%; Sprint weighs heavy

10 Feb 2015

Softbank Corp of Japan has reported a 5.9% fall in net profit for its fiscal third quarter ending 31 December 2014 – below market expectations – in part the result of the high costs it is incurring to turn around its loss-making US subsidiary Sprint Corp. The Japanese carrier acquired the US number three operator for more than USD20 billion in 2012, since when the unit has weighed heavy on the group. For October-December 2014, Softbank said operating profit of JPY191.39 billion (USD1.61 billion) was JPY203.46 billion down on the figure reported for Q3 FY2014, and below the JPY219.08 billion mean figure estimated by a Thomson Reuters poll. Net income of JPY32.28 billion was sharply down from JPY93.75 billion in the corresponding year-earlier period; revenue however, edged up to JPY2.32 trillion from JPY1.96 trillion previously. EBITDA stood at JPY487.12 billion for Q3 FY2014, up slightly from JPY477.96 billion. Despite the relatively weak overall performance, the carrier has maintained its operating profit forecast for the full year to 31 March at around JPY900 billion; it trimmed the forecast target by 10% last quarter, citing Sprint-related costs as the reason.

Softbank’s chief executive officer Masayoshi Son told a group of journalists: ‘Overall, Softbank is doing well, but with Sprint … being in a tough situation, I think it will have a long battle to fight.’ The 80%-owned US unit is engaged in an intense fight with larger rivals AT&T and Verizon Communications to retain mobile subscribers; earlier this month it reported a doubling in its net losses to USD2.38 billion, despite implementing new initiatives to attract users by cutting prices and launching new promotions.

Operationally, Softbank Mobile had a total of 37.401 million customers at the end of the period under review, up from 34.760 million a year earlier, of which 10.065 million were Ymobile connections and 5.305 million were PHS. Monthly blended ARPU of JPY4,250 compared with JPY4,490 in Q3 FY2013 as churn moved higher to 1.34% from 1.28% previously. Softbank (Yahoo! BB) reported a total of 1.677 million ADSL lines at the same date, down from 1.921 million, although this was offset by increased take-up of fibre-optic broadband connections; Yahoo! BB Hikari with Flet’s subscribers climbed from 2.378 million to 2.693 million over the same period. Softbank also had 1.704 million OTOKU (fixed voice) subscribers in Japan, down from 1.707 million, while the group’s troubled US venture reported a total of 55.929 million subscribers – including 54.888 million on the Sprint platform, of which 29.495 are post-paid, 15.160 million (pre-pay), 10.233 million (wholesale) and 1.041 million (US Cellular and Clearwire).