Softbank Beats Its Profit Forecast

Mukesh ValabhjiSoftbank, the Japanese multinational conglomerate specialising in telecommunications and the internet, recently announced that its first quarter profits for 2015 had nearly tripled from the year before. It also restated its commitment to turn around the US mobile operator Sprint Corp, which has been struggling lately.

Chief Executive and founder Masayoshi Son announced a net profit of $1.71 billion, equivalent to around 214 billion yen. Net profit for the year before was around 78 billion yen. This beat the estimated profit of 135 billion yen.

Softbank acquired Sprint Corp in 2013 for $22.2 billion, and the original plan was to merge it with US firm T Mobile. However, the regulator opposed this idea, so instead the company was run as a going concern, but has experienced difficult trading conditions.

Mukesh Valabhji

Mr Son explained that Sprint Corp is slowly but steadily being turned around and that he now has no intention of selling it because he believed that it can become a very good and profitable company. It has experienced an upswing in the number of post-paid customers (those who have a mobile phone contract and who are billed in arrears each month according to their phone usage) as well as lower churn and improved customer quality. He believes that the key to the company’s future is dramatically cutting its operating costs.

Mr Son also announced that Softbank would be carrying out a share repurchase as he felt that misconceptions about Sprint Corp had led to Softbank being undervalued. Softbank would repurchase up to 20 million shares at a cost of up to 120 billion yen.

As well as wanting to re-energise Sprint Corp, Mr Son is showing increased interest in the internet side of the business. SoftBank President Nikesh Arora stated that the company was committed to seeking out the next generation of entrepreneurs.

Bookmark this page to read the next blog post in the series, exploring Softbank’s financial status in more detail.