SoftBank Corp has reported a 22% slide in first half profit despite growing revenue across the business.

It said the lower net was a result of continued heavy mobile discounting and the cost of financial writedowns.

CEO Junichi Miyakawa warned the company was feeling the impact of rising electricity prices and eventually it might have to generate its own power.

"The energy bill is squeezing, to be very honest with you, because we are a telecommunications business and we consume a lot of electricity," he said in an earnings call Friday.

A 1 Japanese yen (US$0.7 cents) rise in the price of electricity per kWh would add around JPY2.1 billion ($14.2 million) a year to its annual fuel bill, the company said.

Figure 1: SoftBank takes 50 billion yen (US$339.6 billion) hit from Japan mobile price wars but forecasts improvement next year.
(Source: SOPA Images Limited/Alamy Stock Photo)

It said it was introducing energy-efficient equipment into the network and was trying to cut electricity consumption by powering down basestations during low-traffic periods.

But Miyakawa said over the long run "we will probably have to generate electricity by ourselves."

The company, a subsidiary of Masayoshi Son's SoftBank Group conglomerate, announced first half earnings of JPY271.6 billion ($1.84 billion) on 3.1% higher sales of JPY2.8 trillion ($19.01 billion).

In its core consumer business, SoftBank added 738,000 mobile subs across its three brands but revenue edged just 0.5% higher and operating income declined 13.5%.

Committed to cutting capex

Miyakawa said mobile price-cutting had cost around 50 billion yen ($339.6 billion) and was forecast to shave another 40 billion yen ($271.6 billion) off revenue in the second half.

But it expected improvement in the mobile business next year, he said. "We are beginning to see the light at the end of the very long tunnel."

The enterprise business grew 13% on increasing demand for digital services and transformation.

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As with a number of other Asian telcos, SoftBank's biggest growth drivers are in non-telecom businesses.

The company formally absorbed the cashless PayPay payments service last month, bringing with it 51 million users and annual revenue of JPY53 billion ($359.8 billion), more than doubling in the past 12 months.

Miyakawa also committed to cutting SoftBank's JPY100 billion ($678.9 billion) capex budget in the next financial year.

SoftBank Corp stock fell 0.95% in trading on the Tokyo exchange Friday.

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— Robert Clark, contributing editor, special to Light Reading