In what would be the largest listing of all time, Japan's SoftBank is looking at an initial public offering (IPO) that would value its mobile division at about $90 billion, according to a report from Bloomberg.
The company is said to be in discussions with advisors about selling a third of the mobile business for $30 billion, although a final valuation would depend on the feedback from investors.
SoftBank's share price closed up 6.54% in Tokyo on Tuesday, at 10,050 Japanese yen ($90.35), and has gained nearly 13% since the beginning of the year.
Sources who spoke with Bloomberg believe the high valuation is realistic based on the mobile division's technology partnerships and links with its large parent company. They also reportedly cite its cash reserves and guaranteed dividend yield.
A $30 billion IPO would be even bigger than the $25 billion IPO of Chinese ecommerce giant Alibaba in 2014 -- the largest IPO so far.
A Tokyo listing could happen as early as the fourth quarter, according to Bloomberg's sources.
The update comes just a day after SoftBank Corp. stated during its latest domestic earnings presentation that it was preparing for an IPO. It reported a 4.6% year-on-year increase in sales of domestic telecom services for the second quarter, to JPY880.5 billion ($7.92 billion). Adjusted earnings (before interest, tax, depreciation and amortization) were about the same at JPY334 billion ($3 billion).
Group revenues were up 4%, to about JPY2.3 trillion ($20.7 billion), while net income rocketed to JPY314 billion ($2.8 billion) from less than JPY6 billion ($54 million) a year earlier.
Operating profits were boosted by the investment activities of the SoftBank Vision Fund (SVF), a $100 billion investment vehicle backed by major technology companies as well as Middle Eastern sovereign wealth funds. (See SoftBank to Increase Sprint Stake as Vision Fund Boosts Earnings.)
SoftBank CEO Masayoshi Son has faced criticism about a lack of transparency and consistency in investment activities but told analysts on Monday that a common theme was artificial intelligence.
According to a SoftBank presentation, there are currently about 2,000 internal projects focused on either artificial intelligence or robotic process automation, which aims to use software programs in place of manual tasks.
Under a strategy called "Beyond Carrier," SoftBank aims to expand the customer base at its telecom business and generate new lines of business through closer collaboration with SVF and its portfolio companies.
The overall business is targeting growth in sales and profits for the full year as well as about JPY500 billion ($4.5 billion) in free cash flow.
Outside Japan, SoftBank's main subsidiaries include Sprint, the number-four mobile operator that is trying to merge with rival T-Mobile US, Internet company Yahoo Japan and UK-based semiconductor business ARM. (See T-Mobile & Sprint: Marriage made in hell.)
SoftBank also owns stakes in Chinese ecommerce giant Alibaba and ride-hailing app developer Uber.
The sale of a controlling stake in ARM's Chinese subsidiary was partly responsible for the increase in second-quarter profits.
ARM's chips are central to SoftBank's vision of "edge artificial intelligence," in which network devices ranging from clothing and household goods to industrial equipment contain the processing power for machine learning.
— Iain Morris, International Editor, Light Reading