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SoftBank's telco and e-commerce unit doing OK (pity about the parent company)

SoftBank Corp., which provides mobile, fixed-line and e-commerce services, posted a fairly solid set of financial results for its 2019 fiscal year ended March 31.

There was none of the crash-bang-wallop stuff associated with parent company SoftBank Group (SBG), whose balance sheet has taken a pummeling because of wayward "Vision Fund" investments. Instead it was pretty much a case of steady-as-she-goes, although newcomer Rakuten might rattle a few cages this year if it picks up subscriber momentum.

SoftBank Corp. FY 2019 revenue was up 4%, year-on-year, to 4.86 trillion Japanese yen (US$45.2 billion) largely because of an increase in mobile subscribers. Of that sum, telecom service revenue (mobile and broadband) accounted for JPY2.96 trillion ($27.6 billion).

By the end of FY 2021, SoftBank aims to cover more than 90% of the population with 5G using more than 50,000 basestations.

The company claimed that COVID-19 made "immaterial impact" on the telco side of its business, although the e-commerce operation is seeing some decline in online advertising and a drop-off in travel and restaurant usage.

Operating income rose by 11%, to JPY911.7 billion ($850 million), compared with FY 2018. That said, a 32% rise in operating profit during the three months ended March, to JPY116.6 billion ($109 million), undershot the JPY127 billion ($118 million) average of four analyst estimates in a Refinitiv poll quoted by Reuters.

Unlike many other telcos, SoftBank Corp. provides full-year guidance. There seems little expectation of much growth, but some key metrics are expected to improve slightly.

For FY 2020, SoftBank Corp. is predicting a 1% rise in operating income, to JPY920 billion ($857 million). Revenue is forecast at JPY4.9 trillion ($45.7 billion), which is also up a slim 1%. Net income is pegged at JPY485 billion ($452 million), a 3% increase year-on-year.

SoftBank is invariably seen as a vital cash source for SBG, no more so as Masayoshi Son, SBG's eccentric CEO, seems to have lost his Midas touch on tech investments.

SBG will present its FY 2019 results next week and it promises to be a grim affair. Largely because of the disastrous Vision Fund investment in WeWork, an office-sharing startup, SBG expects non-operating losses to be north of JPY1 trillion ($9.4 billion). WeWork's total write-down, which includes investments and loan commitments, amounts to JPY700 billion ($6.6 billion).

Guidance for SBG operating losses in FY 2019 is a humongous JPY1.35 trillion ($12.6 billion).

— Ken Wieland, contributing editor, special to Light Reading

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