SoftBank’s H1 sales, operating income climb, but net profit slides 24%

4 Nov 2015

SoftBank Group Corp, the holding company established by Japanese businessman Masayoshi Son in September 1981, which changed its name from simply SoftBank Corp effective 1 July 2015, reported net revenue of 4.424 trillion (USD36.6 billion) for the fiscal half year ending 30 September 2015, up 10.0% from JPY4.021 trillion a year earlier. Operating income rose 21.4% year-on-year to JPY685.766 billion from JPY564.946 billion, it said, as EBITDA increased by 22.0% to JPY1.316 trillion, but pre-tax net income declined 15.1% to JPY818.616 billion and net income slid an even bigger 23.9% to JPY426.683 billion, impacted by a net loss from discontinued operations (i.e. GungHo online entertainment), as well as other expenses – all of which undermined positive sales growth in all areas of the Group’s business. Net sales for the Group’s ‘Domestic Telecommunications’ segment climbed 5.2% y-o-y to JPY1.490 trillion; the ‘Sprint’ segment in the US increased by 5.3% on an annualised basis to JPY1.868 trillion, aided by the yen’s depreciation against the US dollar; the ‘Yahoo Japan’ segment contributed JPY244.710 billion (up 23.2%), following the successful consolidation of ASKUL Corp by Yahoo in August 2015; and the ‘Distribution’ segment accounted for the remaining JPY628.587 billion (up 31.3%), fuelled by an increase in sales of mobile devices for Sprint.

Commenting on the results, Son told reporters in Tokyo that he expects SoftBank Group Corp to book a one-time charge of between USD1 billion and USD1.2 billion for restructuring its US arm Sprint as early as in the second half of the current financial year. ‘Sprint is now in the position to increase the pace of user acquisition while cutting costs,’ he said. ‘Our confidence in turning around Sprint is growing,’ he added, although industry watchers note that restoring the US number four wireless carrier to profitability is proving a challenging task – and one that is eating up cash to sign up and retain subscribers.

In terms of its operational performance, SoftBank Group Corp reported a total of 44.117 million cumulative mobile communications subscribers in its home market at 30 September 2015, down from 44.886 million at end-March, of which 8.156 million were communications modules and 4.356 million were PHS users. Broadband subscribers stood at 4.602 million, up from 4.357 million, broken down as 2.435 million, 1.452 million and 715,000 for Yahoo! BB Hikari with FLETS, Yahoo! BB ADSL and SoftBank Hikari connections, respectively. TeleGeography notes that on 1 April 2015, SoftBank Mobile Corp, the company that operates the telecommunications business in Japan, absorbed SoftBank BB Corp, SoftBank Telecom Corp and Ymobile Corporation, and was renamed SoftBank Corp effective 1 July 2015.

Sprint, meanwhile, reported a total of 58.578 million cumulative subscribers at end-September 2015, up from 57.141 million six months earlier, of which 57.868 were on the Sprint platform and 710,000 were Clearwire users.