SoftBank Group on Monday received an approval to list on the Tokyo Stock Exchange, seeking to raise ¥2.4 trillion (Dh77.26 billion) in the initial public offering of its domestic telecom operations scheduled for December 19.
The Japanese technology conglomerate plans to sell 1.6 billion shares at ¥1,500 apiece, it said on Monday. The IPO price range will be set on November 30, followed by the final price on December 10.
SoftBank founder Masayoshi Son is spinning off the company’s cash cow to raise capital for investments in tech start-ups. The listing comes at a time when the wireless unit faces potential pricing pressure. NTT Docomo, Japan’s biggest mobile carrier, has announced plans to cut rates 40 per cent in response to government pressure to reduce peoples’ phone bills. At the same time, Japanese web retailer Rakuten is jumping into the market as a budget provider.
“Market sentiment is not as good as it used to be, and investor appetite may not be so strong,” said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo. “Still, their focus is on data, AI and communication - industries where they can anticipate growth, so investors can’t exclude SoftBank from their target.”
Domestic telco operations, which include wireless, broadband and fixed-line services, generated ¥1.8tn in revenue and ¥446.9bn of income in the six months to September. Mobile phone offerings accounted for more than 60 per cent of sales. SoftBank has close to 34 million wireless subscribers in Japan.
Japan’s telecom operators have come under government scrutiny for high phone bills and convoluted pricing plans. In August, chief cabinet secretary Yoshihide Suga said carriers had room to lower bills by 40 per cent, even as they step up spending to upgrade their networks. Docomo earlier this month said it plans to “return” ¥400bn to customers, while KDDI said it won’t follow along because it already introduced lower rates.
Mr Son said the competition won’t hurt his company’s profits. He said SoftBank aims to cut costs by trimming about 40 per cent of the wireless business workforce, largely by introducing automation technology. Some employees will be reallocated to other parts of SoftBank.
Last week, the lender reported second-quarter profit that far exceeded the highest analyst estimate largely because of multibillion-dollar gains on a handful of his many deals. Operating profit rose 78 per cent to ¥706bn in the three months ended September, compared with the ¥373bn average of analysts’ estimates compiled by Bloomberg.
Last month, Oyo Hotels, the SoftBank-backed hospitality chain, said it is expanding in the UAE with 139 more properties by 2020 as it seeks to capitalise on the expected influx of visitors to Expo 2020, taking place in Dubai over six months.
The Indian company is planning to grow to 12,000 rooms within two years across Dubai, Sharjah and Fujairah, up from 1,100 rooms currently, Oyo Hotels said.
"With over 170 countries committing to the World Expo 2020, the hospitality sector in the Middle East, and more specifically UAE, is poised to grow substantially," Ritesh Agarwal, founder and chief executive of Oyo Hotels, said. "We are ready to tap this opportunity."