Business Essentials for Professionals


$21 Billion IPO For Its Japan Mobile Business To Be Launched By Softbank

$21 Billion IPO For Its Japan Mobile Business To Be Launched By Softbank
Japan’s SoftBank Group is set to launch an the initial public offering for its domestic telecom operations on December 18 this year, the Japanese firm is hoping to raise about 2.4 trillion yen ($21.1 billion) from the IPO.
In a statement issued by the Japanese technology group on Monday, about 1.6 billion shares of the company is being planned to be put up for sale for the public at 1,500 yen apiece. The firm’s telecom business would carry a value of 7.18 trillion yen at that rate.
The aim of putting up the company’s cash cow on the stock exchange is to enable the company to raise capital for continued investments in tech start-ups according to SoftBank founder Masayoshi Son. The timing of the offering coincides with the wireless telecom business being under pressure because of pricing issues. Rate cuts of up to 40 per cent have been announced by NTT Docomo Inc., Japan’s biggest mobile carrier, bucking under pressure from the government to reduce the mobile bolls of people in the country. coinciding with that announcement is increased competition from Japanese web retailer Rakuten Inc. which has decided to venture into the telecom market as a budget provider.
“Market sentiment is not as good as it used to be, and investor appetite may not be so strong,” said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo. “Still, their focus is on data, AI and communication — industries where they can anticipate growth, so investors can’t exclude SoftBank from their target.”
The price range for the IPO would be first tentatively set on Nov. 30 and the final price for the shares would be fixed on Dec. 10 by SoftBank. The company has chosen Nomura Holdings Inc., Goldman Sachs Group Inc., Deutsche Bank AG, Mizuho Financial Group Inc., JPMorgan Securities and Sumitomo Mitsui Financial Group Inc. to act as its joint global coordinators for the IPO. Individual investors are the target market for the IPO for SoftBank and the largest portion of the to-be listed share for retail investors by Nomura, according to reports published earlier in the month.
In the six months to September, Softbank’s domestic telecom services moped up 447 billion yen of income and generated 1.8 trillion yen in revenue. In Japan’s domestic market the services offered by the firm include wireless, broadband and fixed-line services. More than 60 percent of sale was accounted for by mobile phone offerings in the period. There are almost 34 million wireless subscribers of SoftBank’s services in Japan
High phone bills and convoluted pricing plans by Japan’s mobile phone companies have been criticised by the Japanese government. Mobile carriers had room to lower bills by 40 percent, said Chief Cabinet Secretary Yoshihide Suga in August. This despite the current trend of telecom companies stepping up spending to upgrade their networks.
Earlier in the month, Docomo announced its plans for returning 400 billion yen to customers. At the same time, KDDI said it won’t follow along because it already introduced lower rates.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc