SoftBank Corp. (9984) President Masayoshi Son is starting to make the case for another acquisition in the U.S. less than a year after buying control of Sprint Corp. (S:US), the country’s third-largest wireless operator.
The billionaire used Tokyo-based SoftBank’s quarterly earnings to explain why he wants to cut another U.S. deal to build up Sprint so it can innovate and reduce prices. Son, who is said to be considering an offer for T-Mobile US Inc. (TMUS:US), declined to comment specifically on any interest in the No. 4 U.S. carrier. SoftBank shares fell the most in more than a week.
“Without industry consolidation, for Sprint alone to become No. 1 in the U.S. is literally just a dream,” Son said yesterday. “I’m not content for Sprint to remain No. 3 because if we could grow bigger, we will offer aggressive discounts and services, just like we did in Japan.”
Son and Sprint Chief Executive Officer Dan Hesse met with regulators in Washington to discuss the idea of acquiring T-Mobile and were told there was skepticism such a deal would help competition, people familiar with the matter have said. SoftBank has been involved in at least eight deals in the past year, including the $22 billion for control of Sprint in July.
Son’s comments came a day after Overland Park, Kansas-based Sprint posted a net loss of $1.04 billion for the December quarter. SoftBank intends to spend $16 billion over two years upgrading its U.S. network in an effort to close the gap with market leaders Verizon Wireless and AT&T Inc.
“There is a huge gap between the bigger two and the smaller two, thus the level of competition isn’t sound or strong,” Son said.
SoftBank yesterday posted third-quarter earnings that beat analyst estimates as the release of Apple Inc.’s new iPhones drove a surge in subscribers to almost 35 million and helped the company withstand a loss of users at Sprint.
Net income was 93.3 billion yen ($910 million) in the three months ended Dec. 31, SoftBank said in a statement, compared with the 39 billion-yen average of three analyst estimates compiled by Bloomberg.
“Their domestic business is going well,” said Makoto Kikuchi, the Tokyo-based chief executive officer for Myojo Asset Management Co. “If overseas business adds to profit, that will be a tailwind to a good domestic business and accelerate profit growth.”
SoftBank maintained its forecast for full-year operating income of at least 1 trillion yen.
Shares of SoftBank fell 3.6 percent to 7,506 yen in Tokyo trading. The stock has dropped 18 percent this year, compared with a 7.9 percent decline in the benchmark Topix index.
Son has transformed SoftBank, founded in Tokyo in 1981 as a wholesaler of packaged computer software, into a full-fledged telecommunication operator via acquisitions, including that of the Japanese unit of Vodafone Group Plc. (VOD) Son has invested in more than 1,000 companies.
The 56-year-old founder has said he’s seeking overseas opportunities because 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.
In the first nine months of the financial year, SoftBank added about 2.3 million mobile customers. The company, which had 24.8 percent of users at the end of December, was the only one of Japan’s three carriers to boost its market share during the quarter.
“In their domestic business there isn’t any problem,” Hideki Yasuda, an analyst at Ace Research Institute in Tokyo, said before the announcement. “Their subscriber base is expanding well, and we can expect stable revenue.”
SoftBank has acquired a 15 percent stake in China’s Wandoujia with an option to double that to 30 percent of the search engine for mobile apps, Son said.
SoftBank led a $1.53 billion bid for a majority stake in Finland-based Supercell Oy, a purchase aimed at strengthening content with games including “Clash of Clans” and “Hay Day.”
The also bought 57 percent of Miami-based handset distributor Brightstar for $1.26 billion, a transaction meant to boost SoftBank’s procurement power and improve its competitiveness both in the U.S. and Japan.
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.
Son said net income at Alibaba rose to 216.7 billion yen in the nine months ended Sept. 30, up from 24.8 billion yen.
Alibaba is said to be preparing for what may be the largest initial public offering since Facebook Inc. with an estimated valuation of as much as $200 billion.
Son’s deals have helped make him the second-richest person in Japan with a net worth of $16.5 billion, according to the Bloomberg Billionaires Index.
To contact the reporters on this story: Mariko Yasu in Tokyo at firstname.lastname@example.org; Takashi Amano in Tokyo at email@example.com
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