SoftBank Group Corp looks to USD4.4bn share buyback to calm investor nerves

16 Feb 2016

Tokyo Stock Exchange (TSE)-listed SoftBank Group Corp, which is controlled by its founder, president and CEO, Masayoshi Son, has moved to counter market concerns over its struggling US mobile subsidiary Sprint Corp by announcing plans to buy back up to JPY500 billion (USD4.39 billion) of its own shares in what constitutes its biggest buyback ever. The Wall Street Journal notes that the repurchase plan would be equivalent to up to 14.2% of the Japanese giant’s equity, and trumps its August 2015 share buyback of JPY120 billion that resulted in a temporary lifting of the group’s under-pressure share price. Satoru Kikuchi, an analyst at SMBC Nikko Securities, is quoted as saying that whilst the move gives a positive indication that SoftBank is aware of how its stock is performing, essentially: ‘SoftBank and Sprint will need to show concrete accomplishments to gain the trust of investors’.

Earlier this month, SoftBank published its financial results for the nine months ended 31 December 2015 (9M/FY2015), confirming a 26% year-on-year fall in net income attributable to shareholders to JPY428.97 billion from JPY579.45 billion, as it struggles to turn around Sprint Corp, which it acquired for USD22 billion in 2013. Although Sprint has been engaged in a prolonged effort to revive its fortunes, concerns over the US unit’s USD32 billion debt have weighed heavily on the Japanese owner, with market jitters wiping value off its share price. While Sprint recently reported strong subscriber gains and revised upwards its financial targets, its parent’s shares have slumped to their lowest level in over two years.