Masayoshi Son, who led deals totaling $2.7 billion last month, is tapping record revenue at SoftBank Corp. (9984) to underwrite the turnaround of his biggest acquisition Sprint Corp. (S:US)
Sales will reach more than 6 trillion yen ($61 billion) in the 12 months ending March as Sprint rolls out a new network, Son said yesterday after reporting quarterly profit that beat estimates. The Tokyo-based company expects operating income of 1 trillion yen.
SoftBank paid $21.6 billion for Sprint in July before adding agreements for majority stakes in gamemaker Supercell Oy and U.S. mobile phone distributor Brightstar Corp. in October as Son seeks to build a wireless ecosystem for his customers. The third-largest U.S. carrier plans to spend $16 billion in the next two years for faster services as it tries to catch up to AT&T Inc. and Verizon Wireless.
“We want to be number one not just in handsets but content and platform,” Son said yesterday. “We want to be the number one in every aspect.”
Net income rose to 156.7 billion yen in the three months ended September, according to numbers derived from half year results reported yesterday by SoftBank.
SoftBank rose 3.4 percent to 7,550 yen at the close in Tokyo. The stock is the fourth best performer on Japan’s Nikkei 225 Stock Average so far this year.
The company’s acquisitions include a stake in game company GungHo Online Entertainment Inc. (3765) and local competitor eAccess Ltd. to add bandwidth for smartphones.
SoftBank, Japan’s No. 3 wireless carrier, has been involved in at least 12 deals over the past year, including the July acquisition of Sprint, as Son targets new growth.
The most recent was a deal to buy 57 percent of Miami-based handset distributor Brightstar for $1.26 billion, a transaction targeted to boost SoftBank’s procurement power and improve its competitiveness both in the U.S. and Japan, the company said Oct. 18.
“They’ve done a good job of using M&A to grow,” Yoshihiro Nakatani, a senior fund manager at Asahi Life Asset Management Co., said. “They’ve not had any real failures.”
The Japanese company is also set to buy Finland-based Supercell this month, a deal aimed at strengthening content with games including “Clash of Clans” and “Hay Day.”
Son, the 56-year-old founder of SoftBank, has said he’s seeking overseas opportunities as there isn’t enough potential for significant growth in Japan after narrowing the gap with bigger NTT Docomo Inc. and KDDI Corp. (9433) in wireless subscribers.
SoftBank sold the most Apple iPhones in Japan during the first month of sales for the new 5s and 5c models, beating Docomo and KDDI, researcher BCN Inc. said last week.
SoftBank accounted for 40 percent of Japanese sales of the two models, which were released in September, while Docomo (9437) took a 34 percent market share and KDDI controlled 26 percent, according to BCN’s estimate.
Docomo, which added iPhones to its lineup in September in an attempt to stop losing customers to other carriers, lost 66,800 net users in September, the most subscribers it lost on a monthly basis. SoftBank added 270,700 that month, according to the carriers.
Founded in Tokyo in 1981 as a wholesaler of packaged computer software, Son’s Internet venture capital company has been transformed into a full-fledged telecommunication operator via acquisitions including that of the Japanese unit of Vodafone Group Plc. (VOD)
In 2000, SoftBank invested $20 million in Alibaba.com. The Japanese company now owns about 37 percent of Alibaba Group Holding Ltd., China’s largest e-commerce provider, whose chief executive officer, Jack Ma, sits on SoftBank’s board.
Alibaba is headed toward the biggest initial public offering since Facebook Inc. and has been valued by investment banks at as much as $190 billion.
The profit contribution by Alibaba at SoftBank will probably compensate for losses stemming from Sprint in the coming few years, Daisaku Masuno, an analyst at Nomura Holdings Inc., said before the earnings announcement.
Alibaba last month reported second-quarter net income that more than doubled to $707 million.
Overland Park, Kansas-based Sprint reported Oct. 30 a third-quarter operating loss of $398 million after the company shut down its outdated Nextel network and shed 360,000 monthly subscribers.
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