Sponsored By

SoftBank chief warns of industry resistance over DoCoMo merger

The company is heavily reliant on NTT's optical fiber network and worried competition may be distorted.

Robert Clark

November 4, 2020

3 Min Read
SoftBank chief warns of industry resistance over DoCoMo merger

The NTT Group's plan to reacquire mobile arm DoCoMo faces resistance from other telcos who fear the impact on competition.

SoftBank Corp CEO Ken Miyauchi, who also chairs the key industry body the Telecom Carriers' Association, said members were wary that the move could "distort competition."

"There are many people who are stating their opinions about this as members," he said. "I think that public views must be sought.

"We need to pose the question about whether this might distort competition."

Speaking at an earnings briefing today, Miyauchi admitted he was "very surprised" by the merger, 28 years after DoCoMo had been spun off.

He said NTT owns "everything from the power poles to optical fiber networks," and SoftBank itself was a customer of its optical network.

"If there is a distortion in competition like a change in usage charges for the optical fiber network, that would be problematic."

NTT's plan to take full control of NTT DoCoMo, announced six weeks ago, won't be settled until some time next year.

Miyauchi also pushed back at Prime Minister Yoshihide Suga's claim that mobile operators' margins of above 20% were excessive.

Foreign telcos such as Verizon had operating margins north of 30%, Miyauchi said.

He said SoftBank was diversifying away from its core mobile business. Mobile services accounted for just 29% of revenue in 2019, down from 38% in 2017.

The growth areas were in its Yahoo e-commerce services, which grew 30% in the first half, the enterprise group, up 18%, and the fast-growing payments service PayPay, which now has 33 million users.

SoftBank, the Japanese mobile division of Masayhoshi Son's SoftBank Group, reported flat net income for the first half of 347.7 billion yen (US$3.3 billion) on 2.3% higher revenue of JPY2.43 trillion ($23.3 million).

Mobile service revenue was virtually unchanged at JPY846.5 billion ($8.1 billion), the broadband business grew 2.8% and handset sales were 21% lower due primarily to the effects of COVID-19 pandemic.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

The operator did not disclose any details about its new 5G business, but revealed it planned to invest JPY2.2 trillion ($21 billion) "on 5G and 6G" over the next decade.

It expects to have 10,000 basestations deployed by year-end and 200,000 within five years.

Miyauchi expressed concern about the company's stock price, which is down 18% since the parent company sold JPY1.2 trillion ($11.5 billion) in stock in September.

It was a "serious issue," he said, which he attributed to public controversy over mobile pricing sparked by Prime Minister Suga. "If prices go down 20%, people will think the operating profit will go down 20%," he said.

"In the long term we believe that we can grow and I am confident about that. It comes down to good management."

Related posts:

— Robert Clark, contributing editor, special to Light Reading

Read more about:


About the Author(s)

Robert Clark

Contributing Editor, Special to Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. In addition to contributing to Light Reading, he also has his own blog,  Electric Speech (http://www.electricspeech.com). 

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like