SoftBank's Profit Plummets as Sprint's Losses Persist

  • Company doesn't give forecasts for new financial year
  • Masayoshi Son says U.S. carrier's recovery is on track

SoftBank's Profit Falls on Sprint

SoftBank Group Corp.’s quarterly profit dived 30 percent as the Japanese company struggled to turn around unprofitable U.S. carrier Sprint Corp.

Operating income was 124.2 billion yen ($1.1 billion) in the March quarter, down from 177.1 billion yen a year ago. SoftBank is now trying to revive Sprint as it reduces capital spending, lowers prices to woo users and puts assets up as collateral to lower borrowing costs. 

Masayoshi Son in Tokyo on May 10.

Photographer: Tomohiro Ohsumi/Bloomberg

Sprint is “making solid progress” and showing signs of a turnaround, having gained subscribers on a net basis for the past three quarters, Softbank said in a statement. The smallest of the four nationwide U.S. wireless carriers is on track to improve profit by about 200 billion yen annually, Chairman Masayoshi Son told analysts on a post-earnings conference call.

“They’ve seen two years of declines and it’s about time they put a stop to that and begin growing revenues,” Satoru Kikuchi, an analyst at SMBC Nikko Securities Inc. in Tokyo, said before the announcement. “The turnaround will take some time.”

Son’s 2013 acquisition has weighed on the Japanese company’s stock, even as its domestic telecommunications business taps rising demand for data services. Average revenue per user among its main mobile subscribers came to 4,700 yen last fiscal year, up 30 yen from a year earlier. Cumulative subscribers rose by almost half a million last year to more than 32 million at the end of March.

“The biggest boost will come from recovery at Sprint,” Son said. “Earnings from domestic operations will remain stable, with free cash flow showing particular improvement.”

It reported annual operating profit of 999.5 billion yen, missing estimates for 1.06 trillion yen. It didn’t release forecasts for the current fiscal year.

Net income came to 474.2 billion yen in the 12 months ended March, missing expectations for 576.5 billion yen. Shares of SoftBank closed at 5,992 yen in Tokyo before the results were released. The stock has declined 2.4 percent in 2016 and is on pace for its third straight annual decline.

(An earlier version of this story was corrected to fix the year-ago comparison for profit.)

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