SoftBank mobile unit to go for $21bn IPO

SoftBank’s mammoth IPO will allow the Japanese giant to gamble on innovations in future technology. (Shutterstock)
Updated 13 November 2018

SoftBank mobile unit to go for $21bn IPO

  • The IPO will be one of the biggest ever worldwide, and will provide the group with funds to pay down debt and continue placing big bets on innovations
  • SoftBank’s bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding

TOKYO: SoftBank Group Corp. has won approval to conduct a 2.4 trillion yen ($21.04 billion) initial public offering (IPO) of its domestic telecoms business, in a deal that will seal the group’s transformation into a top global technology investor.
The IPO will be one of the biggest ever worldwide, and will provide the group with funds to pay down debt and continue placing big bets on innovations that CEO Masayoshi Son predicts will drive future tech trends.
SoftBank’s bets so far have been as varied as small gaming startups, ride-hailing firms such as Uber Technologies, and e-commerce behemoth Alibaba Group Holding.
SoftBank Group aims to raise 2.4 trillion yen through the sale of 1.6 billion SoftBank Corp. shares at an tentative price of 1,500 yen each, a filing with the Ministry of Finance showed on Monday.

 

 The amount could rise by 240.6 billion yen if demand triggers an overallotment, taking the total closer to the $25 billion that Alibaba raised in 2014 in the biggest-ever IPO.
The final IPO price will be determined on Dec. 10, and SoftBank Corp. will list on the Tokyo Stock Exchange on Dec. 19 with an initial market value of 7.18 trillion yen — about 1 trillion yen above that of rival KDDI Corp, which has about 10 million more subscribers.
The parent will retain a stake of around two-thirds, depending on the overallotment.
The mammoth offering comes at a time when investors have begun questioning the outlook for Japan’s telecoms companies.
The IPO was initially expected to appeal to investors seeking stability, but the government has recently called on carriers to lower fees while backing more wireless competition, sending shockwaves through the industry.
Yet SoftBank’s brand is still likely to draw retail investors long accustomed to using SoftBank’s phone and Internet services. Many still see CEO Son as a tech visionary who brought Apple’s iPhone to Japan.
Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits. More than 80 percent of the shares will be offered to domestic retail investors, a person with knowledge of the matter told Reuters.
“I think a reasonable amount of money will be attracted to this one,” said Tetsutaro Abe, an equity research analyst at Aizawa Securities. “It’s a mobile company, so the cash flow is steady.”

FASTFACTS

SoftBank to sell 1.6 billion shares at a tentative price of 1,500 yen ($13) each.


Huawei's third-quarter revenue jumps 27% as smartphone sales surge

Updated 16 October 2019

Huawei's third-quarter revenue jumps 27% as smartphone sales surge

  • American companies, significantly disrupting its ability to source key parts
  • Huawei was all but banned by the United States in May from doing business with American companies

SHENZHEN, SHANGHAI: Huawei Technologies Co. Ltd’s third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.
Huawei, the world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.
The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.
Its newest Mate 30 smartphone — which lacks access to a licensed version of Google’s Android operating system — started sales last month.
Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit’s revenue lower by about $10 billion this year.
The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.
Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.
“Huawei’s overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels,” said Nicole Peng, vice president for mobility at consultancy Canalys.
“The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim,” she added.
The company said it has shipped 185 million smartphones so far this year. Based on the company’s previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.
Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.
“Our continued strong performance in Q3 shows our customers’ trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments,” Huawei spokesman Joe Kelly told Reuters.
The US government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.
The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without US components.
It is also developing its own mobile operating system as the curbs cut its access to Google’s Android operating system, though analysts are skeptical that Huawei’s Harmony system is yet a viable alternative.
Still, promotions and patriotic purchases have driven Huawei’s smartphone sales in China — surging by a nearly a third compared to a record high in the June quarter — helping it more than offset a shipments slump in the global market.