SoftBank plans near $1 billion buyback as confidence in Sprint renewed
Reuters
Published Aug 06, 2015 06:16AM ET
SoftBank plans near $1 billion buyback as confidence in Sprint renewed
By Ritsuko Ando
TOKYO (Reuters) - SoftBank Corp (T:9984) announced a near $1 billion share buyback and a higher quarterly profit as loss-making Sprint Corp (N:S) fared better than expected, with the Japanese telecoms group forecasting "light at the end of the tunnel" for its U.S. unit.
The share buyback worth up to 120 billion yen ($961.69 million) would be SoftBank's biggest ever if carried out in full. CEO Masayoshi Son attributed the surprise move to its lackluster share price and renewed confidence in Sprint which SoftBank bought for more than $20 billion in 2013 but has struggled to turn around.
"Repurchasing shares is an effective way of returning profit to shareholders. But it's also a message from management to markets, regarding the share price," he told reporters on Thursday. "We've now become fully confident."
SoftBank's April-June operating profit rose to 343.6 billion yen from 319.4 billion a year ago, helped by the boost from Sprint and growth in smartphone customers at its domestic telecoms business. That was better than the 320 billion yen average of three analysts' estimates surveyed by Thomson Reuters.
Sprint on Tuesday reported a smaller-than-expected quarterly loss and lower churn, or defections, a rare sign of improvement for a carrier that has struggled to compete against larger rivals AT&T (N:T) and Verizon Communications (N:VZ).
Son had made a rare appearance on Sprint's conference call to say SoftBank had no plans to sell its stake in the wireless carrier, a commitment he reiterated on Thursday.
"There was a time when I lost confidence in managing Sprint," he said. "Now I have no intention of selling."
SoftBank has used cash from its telecoms business to fund investments in global mobile and Internet businesses, and the Sprint buy was aimed at growth outside Japan's sluggish economy.
Son said the latest buyback did not signal a change to its acquisitive strategy. SoftBank is also the largest investor in Chinese e-commerce giant Alibaba Group Holding (N:BABA).
Jefferies estimates its 23 largest investments have delivered returns of 30 times with an average investment period of over 9 years. Excluding highly lucrative Alibaba, returns have been around 6 times.
SoftBank did not give a full-year outlook, but the market's average forecast prior to Thursday's announcement was for an annual operating profit of 1.04 trillion yen.
Based on such views, SoftBank shares have lately been trading below 8 times forward earnings estimates, lagging multiples of over 10 for Japanese telecoms rivals KDDI Corp (T:9433) and NTT DoCoMo (T:9437). Analysts have said the comparatively low valuations were due to concerns about Sprint.
Get The News You Want
($1 = 124.7800 yen)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.