SoftBank first quarter profit up 19%

28 Jul 2016

Telecoms giant SoftBank Group Corp has reported a 19.1% year-on-year increase in net income to JPY254.157 billion (USD2.41 billion), while operating profit inched up 0.2% on an annualised basis to JPY319.236 billion and revenue rose 2.9% to JPY2.127 trillion. SoftBank, which operates Japan’s third largest mobile carrier by subscribers and owns a majority stake in struggling US cellco Sprint, surprised the market earlier this month when it agreed a USD32 billion deal to acquire UK-based chip designer ARM Holdings, with SoftBank founder and chief executive Masayoshi Son banking on ARM to be ‘most central’ to his company’s future growth amid anticipated demand for internet connectivity in everyday devices such as cars and domestic appliances. Mr. Son now says that he will commit ‘around 45% of his time on turning around Sprint, another 45% of his time on ARM, and the rest on other matters’, according to reports.

The Group’s ‘Sprint Segment’ reported net sales of JPY873.923 billion in the three months to 30 June 2016, down 10.3% y-o-y, as operating income slumped 34.8% to JPY45.368 billion – dragging down the Japanese company’s overall performance; it is noteworthy too that SoftBank’s overall profitability was in part achieved as a result of the sale of stakes in Alibaba Group Holding and Finnish game maker Supercell Oy – generating around USD17 billion in the process. Even after the sell-offs though, the Japanese giant is saddled with around JPY7.1 trillion in consolidated net debt, of which close to half relates to the US operator, which SoftBank bought for USD22 billion in 2013.

Meanwhile, the Group’s ‘Domestic Telecommunications’ segment, which comprise its wireless, broadband and fixed line subsidiaries in Japan, saw net sales rise 5.4% to JPY761.763 billion in fiscal Q1, which it noted ‘reflected an increase in broadband revenue following steady expansion of its SoftBank Hikari fibre-optic service’. The total number of high speed internet subscribers stood at 5.345 million at end-June 2016, up a net 266,000 on the year-ago period, driven by a 526,000 net increase in SoftBank Hikari connections, offset by 211,000 net losses for Yahoo! BB hikari FLETS users and 49,000 fewer Yahoo! BB ADSL users. On the other hand, mobile communications revenue decreased by JPY2.651 billion (0.5%) y-o-y to JPY480.067 billion, mainly reflecting ‘an increase in the total amount of discounts (i.e. the negative impact on revenue) associated with growth in the cumulative number of applications for SoftBank’s Home Bundle Discount Hikari Set, which outweighed an increase in service revenue associated with an expansion in content services’.