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SoftBank's Stock Slides After $23.6B IPO

Ray Le Maistre
12/19/2018

SoftBank Corp.'s much anticipated public listing (and Japan's largest-ever IPO) has finally taken place, with the mobile operator placing 36% of its shares, with a value of about 2.65 trillion yen (US$23.6 billion), on the Tokyo Stock Exchange Wednesday morning.

But things didn't quite go as planned, as the stock dipped immediately and ended the trading day at ¥1,282, down by 14.5% from its offer price of ¥1,500 per share.

That dip might be disappointing, but for parent company SoftBank Group, headed up by CEO Masayoshi Son, it's a case of mission accomplished: It has raised a nice chunk of capital while at the same time enabled a clear separation between the communications services part of its operations, offered by the now listed SoftBank Corp. , and the global investment activities of the parent holding company, including the near $100 billion Vision Fund.

That broader investment portfolio includes Sprint, which is coming close to a major financial transaction of its own, and chip designer ARM. (See Sprint/T-Mobile Merger Passes Major US Security Reviews and SoftBank Muscles In on ARM in $32B Deal.)

As for SoftBank Corp., headed up by CEO Ken Miyauchi, it has plenty to keep it busy. It is the number three mobile operator in Japan, behind NTT DoCoMo and KDDI, and will soon face a new rival in 4G newcomer Rakuten, which plans to launch in October 2019. It also has the thorny issue of its relationship with Huawei to deal with. (See Rakuten Conducts 5G Trial , Japan Next in Line to Block Huawei, ZTE and Where Huawei Fears to Tread.)

But the operator is growing its revenues and profits. In the six months to Sept. 30, it reported a 6.4% year-on-year increase in revenues to ¥1,794 billion ($16 billion) and a 16.5% increase in operating income to ¥443 billion ($3.9 billion). The main drivers for growth were continued uptake of mobile broadband, for which it has 34 million customers, and fixed broadband customers, for which it has about 7.4 million subscribers.

The operator is keen to be seen as an innovator and has devised a "Beyond Carrier" strategy that make use of developments in AI, analytics and IoT to develop new business opportunities and run more efficient operations, particularly once 5G networks and services are launched: "We will continue to strengthen our business platform in the telecommunications business while enhancing management efficiency by applying new technologies such as Robotic Process Automation (RPA). At the same time, we will launch new business models and deliver added value by introducing various cutting-edge technologies and network services offered by SoftBank Group's affiliates and portfolio companies. Technologies involving IoT, AI and big data, as well as business models leveraging those technologies, will likely continue to evolve at an unrelenting pace. The business environment surrounding SoftBank Corp. will also continue to change. This signifies that societal needs for the SoftBank Corp.'s services will continue to expand further," noted Miyauchi in a statement following the IPO.

— Ray Le Maistre, Editor-in-Chief, Light Reading

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