Credit Suisse Starts Smartphone Index; Japan Carrier Softbank is Top Pick

Credit Suisse Group AG has started an index tracking shares of smartphone makers such as Apple Inc. in the U.S. and wireless carriers such as Softbank Corp. in Japan.

The index, which tracks 18 smartphone-related companies, aims to highlight stocks that may benefit from a global mobile market “set to grow exponentially,” according to a report by Credit Suisse Japanese analysts including Hitoshi Hayakawa in Tokyo.

“The repercussions of growing smart-wireless-device adoption will sweep across the mobile devices, telecommunication infrastructure and digital content industries, transcending sector boundaries and sparking global investment ideas,” the analysts wrote in a report yesterday.

Increasing global usage of mobile devices such as the iPad and Research in Motion Ltd.’s Blackberry is “ushering in a revolution in digital content usage by unlocking the door to mobile broadband,” the report said. Worldwide mobile data traffic volumes are forecast to double each year until 2014, the analysts said, citing Cisco Systems Inc.

Japanese carriers have an advantage over their North American and European counterparts as they rely less on voice revenue, which is declining, and are more dependent on sales from data usage, which is growing, Credit Suisse said.

iPhone Runaway Success

Of the carriers, Softbank, the exclusive provider of Apple’s iPhone in Japan, is the analysts’ top pick because it is the least reliant on voice revenue, and as the popularity of its smartphones give the company a competitive edge over its rivals NTT DoCoMo Inc. and KDDI Corp., the report said.

“The iPhone remains a runaway success in Japan. Ironically, the more that NTT DoCoMo and KDDI market other smartphones and slate PCs, the more this is likely to highlight the superiority of the iPhone and iPad range,” wrote the analysts. “We believe both these carriers are likely to continue losing subscribers to Softbank as a result.”

Softbank has risen 11 percent to 2,182 yen since the iPhone went on sale in Japan on July 11, 2008. This compares with an 18 percent drop by the Nikkei 225 Stock Average and a 27 percent decline for the broader Topix index during the same period.

Of the 18 stocks tracked in the index, five are Japanese companies, four are from the U.S., three are Taiwanese, two Swedish and one each is from China, India, Canada and South Korea.

To contact the reporter on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

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