SoftBank Group Corp, the Japanese fixed and mobile telecoms provider controlled by the businessman Masayoshi Son which changed its name from simply SoftBank Corp effective 1 July 2015, has announced it is reorganising its corporate structure into two distinct wholly owned subsidiaries – one for its domestic business, and one for its international operations. The company says the move is aimed at ensuring its two new segments are ‘future growth drivers’ for the Group. The reshuffle requires shareholder approval, but the board is confident it will complete the restructure by 31 December 2016, noting that any impact on earnings will be minimal.
Under the plan, SoftBank Group Corp will shunt its troublesome loss-making US telco Sprint Corporation and Chinese e-commerce firm Alibaba Group Holding into the international subsidiary, while domestic operations such as Softbank Telecom, Softbank BB (including Yahoo Japan) and Softbank Mobile will go to the other subsidiary focused on its home market. The management team hope to bolster investor confidence and are also counting on the ailing Sprint unit to turn itself around in future via a range of competitively priced deals and improved network services. The reorganisation announcement follows the mid-February decision to embark on its biggest ever share buyback (USD4.4 billion), worth around 14.2% of its total shares. Masayoshi Son will continue as SoftBank Group Corp chairman and CEO, while COO Nikesh Arora will lead the overseas unit and Ken Miyauchi, a SoftBank director, will head up the domestic business. It is understood that the restructure will not result in a separation of earnings for each subsidiary; SoftBank Group Corp will continue to be the listed holding company, controlling 100% of both units.
Last 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.