SoftBank Corp booked a 24 percent rise in quarterly profit as users switched to data-heavy plans, pinning future growth on the rise of 5G services in the mobile carrier’s first earnings report as a public company.
With concerns over a changing mobile market keeping its shares below their blockbuster IPO price, investors are looking for reassurance that the telco can keep its promise of paying 85 percent of annual profit in dividends.
Others are looking for any hint of the health of majority shareholder SoftBank Group Corp, which relies on cash from Japan’s third-biggest network provider to fund investments.
Echoing the expansive rhetoric of founder Masayoshi Son, SoftBank Corp’s Chief Executive Ken Miyauchi said new services and the adoption of high-speed 5G networks meant the smartphone market had ample room for growth.
“5G smartphones in a few years will probably take over the entire world,” Miyachu said at an earnings briefing.
Operating profit reached 191.6 billion yen ($1.74 billion) in October-December, SoftBank Corp said in a stock exchange filing.
The results cover a turbulent three months during which SoftBank suffered a network outage, fielded ongoing government calls for lower prices, and faced scrutiny over ties to Huawei Technologies Co Ltd – a Chinese company whose telecoms equipment Western powers fear could be used for espionage.
Pressure is set to continue from October as e-commerce firm Rakuten Inc becomes the fourth major wireless carrier pledging low prices.
The quarter also saw SoftBank conduct Japan’s largest-ever IPO. However, the stock dropped 15 percent on its Dec. 19 debut from its 1500 yen IPO price, stinging its overwhelmingly domestic retail investors and cooling broader investor sentiment, finance executives said.
(For an interactive graphic on SoftBank Corp shares, click here https://tmsnrt.rs/2sWq440)
The stock closed flat on Tuesday ahead of the earnings report, trading about 20 percent below the 1,600 yen average target price of 13 analysts compiled by Refinitiv.
Seven analysts recommend buying the stock, whereas six suggest holding or selling.
Nomura Securities analyst Daisaku Masuno wrote in a report that SoftBank should be able to grow as market uncertainty fades through appealing to heavy users through its industry-leading 50-gigabyte data plan while offering low prices through its Y!mobile brand.
SoftBank maintained its forecast for operating profit to rise 10 percent to 700 billion yen for the year through March, versus the 691 billion yen average of 13 analyst estimates. ($1 = 109.8800 yen)―CNBC