SoftBank Seeks Deals in Games, Music to Go Beyond Phones

SoftBank CEO Masayoshi Son & Supercell CEO Ilkka Paananen
Masayoshi Son, chairman and chief executive officer of SoftBank Corp., left, shakes hands with Ilkka Paananen, chief executive officer of Supercell Oy, as they pose for photographs during a news conference in Tokyo on Oct. 31, 2013. Photographer: Junko Kimura/Bloomberg

SoftBank Corp., the Japanese wireless carrier involved in more than a dozen deals the past year, wants to acquire makers of games, music and videos as it tries to generate more revenue from smartphone users.

SoftBank plans to offer exclusive and prioritized content to differentiate itself from rivals selling Apple Inc.’s iPhone and other high-end handsets, Yoshimitsu Goto, general manager for finance, said in an interview yesterday. NTT Docomo Inc., Japan’s largest mobile carrier, began offering the iPhone in September to keep pace with SoftBank and KDDI Corp.

“Strong content helps to increase subscribers,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Holdings Inc. in Tokyo. “Smartphones and tablets are replacing specialized game machines so some gamers may use SoftBank mobiles if it has strong content. It’s the same for music and videos.”

SoftBank said last month that sales will reach more than 6 trillion yen ($61 billion) in the year ending in March, and it reiterated an earlier projection for annual operating income of at least 1 trillion yen. That revenue is helping SoftBank underwrite acquisitions.

“We have to consider boosting content offerings,” Goto said in Tokyo yesterday. “Acquisitions are among the most important strategies for us.” The company is not negotiating a deal currently, he said.

SoftBank fell 0.9 percent to close at 7,480 yen in Tokyo trading. The shares have more than doubled this year while the benchmark Topix index has added 38 percent.

Alibaba IPO

The company founded by billionaire Masayoshi Son paid $21.6 billion for Sprint Corp. in July before adding agreements for majority stakes in gamemaker Supercell Oy and U.S. mobile phone distributor Brightstar Corp. in October. SoftBank plans to spend $16 billion during the next two years for faster U.S. services as it tries to catch AT&T Inc. and Verizon Wireless.

SoftBank also plans to keep its stake in Alibaba Group Holding Ltd. if China’s largest e-commerce company proceeds with what may be the biggest initial public offering since Facebook Inc. The Tokyo-based wireless carrier holds about 37 percent of Alibaba and hasn’t told the Chinese company when to hold an IPO or where to hold it, Goto said.

Hangzhou-based Alibaba is worth as much as $190 billion, analysts at Sanford Bernstein said last month. That potentially values SoftBank’s stake at $70 billion.

Universal Bid

“Alibaba is among the most important companies in our group, so our plan is to hold the stake for a long period of time,” Goto said. “What’s important for us as a shareholder in Alibaba is that the company continues increasing its enterprise value. An IPO is just a passing point to do that.”

Earlier this year, SoftBank made an $8.5 billion bid for Vivendi SA’s Universal Music Group that was rejected by the French media company, according to people with knowledge of the proposal. The company also purchased local competitor eAccess Ltd. to meet bandwidth demand for smartphones.

SoftBank led a $1.53 billion agreement for a 51 percent stake in Supercell last month that values the maker of “Clash of Clans” at $3 billion. The deal evolved after the Finnish gamemaker began working with GungHo Online Entertainment Inc., led by the SoftBank president’s younger brother, Taizo Son.

SoftBank owns stakes in more than 1,000 Internet businesses, and Masayoshi Son is Japan’s second-richest man with a net worth of $14.1 billion, according to the Bloomberg Billionaires Index.