The Strategist

SoftBank to hold IPO of its mobile division

01/15/2018 - 14:03

SoftBank Group Corp. plans to hold an IPO of the Japanese telecommunications division SoftBank Corp., which could bring the company about 2 trillion yen ($ 18 billion), the newspaper Nikkei writes.

SoftBank to hold IPO of its mobile division
According to the newspaper, SoftBank intends to apply for the division’s IPO in the spring of this year, and expects that the company's shares will begin to trade in the fall. The company is also considering the possibility of getting a new listing on a foreign exchange at the same time, perhaps in London, Nikkei writes.

A message from SoftBank, published in response to Nikkei’s publication, says that "the company always studies various options for money management strategies." "The listing of SoftBank Corp. is one of these options, but a decision that would allow us to move further in this direction has not been taken yet," SoftBank noted.

According to Nikkei, SoftBank intends to sell about 30% of the unit to investors, retaining approximately 70% of the company's share. The company expects that it will be able to attract foreign investors.

The volume of IPO of SoftBank Corp. could compete with the placement of Nippon Telegraph and Telephone shares in 1987, in which the company raised 2.2 trillion yen. SoftBank expanded its main telecommunications business in Japan through acquisitions: in 2004 the company bought Japan Telecom, and in 2006 - a local unit of the British Vodafone Group.

SoftBank Corp., which manages the telecommunications operations of SoftBank, is one of the three largest mobile operators in Japan along with NTT Docomo and KDDI.

In the first financial half-year (April-September 2017) SoftBank Corp. has received an operating profit of more than 400 billion yen.

In recent years, SoftBank Group has become more of an investment company: in 2013 it acquired the US operator Sprint, and in 2016 - the British chip maker Arm. Last year, the company raised about $ 93 billion in a fund for investment in the technology sector. Among the fund's investors are the state investment funds of Saudi Arabia and Abu Dhabi, as well as Apple Inc., Qualcomm Inc. and other companies.

Allocation of SoftBank Corp. in a separate company will give this business more independence, experts say.

SoftBank’s debt by the end of 2017 has grown to a record 14 trillion yen ($ 126.42 billion) due to a line of foreign acquisitions. In 2013, the company bought the US mobile operator Sprint for $ 21.6 billion, in the summer of 2016 SoftBank bought the British developer of ARM processors for $ 32.2 billion, in May 2017 the company bought 4.9% of Nvidia shares for $ 4 billion, and at the end of 2017 the company announced buying a 20% stake in Uber for $ 1.25 billion. By 2027, the company plans to invest about $ 880 billion in the IT company.

The newspaper's interlocutors say that the company does not intend to use the raised funds as debt repayment, but will direct them to purchase foreign telecommunications companies and investments.