Japan's SoftBank Explores Listing Its Telecom Business -- WSJ
January 16 2018 - 3:02AM
Dow Jones News
By Mayumi Negishi and Kosaku Narioka
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 16, 2018).
TOKYO -- SoftBank Group Corp. said Monday it may list shares of
its profitable Japanese cellphone operator, a move that could raise
nearly $20 billion and help SoftBank make big bets on technology
companies.
Among multiple ideas under consideration is listing roughly 30%
of the cellphone unit on the Tokyo Stock Exchange, as well as a
separate listing overseas, possibly in London, a person familiar
with the discussions said.
"We are always studying various capital strategy options,"
SoftBank Group said in a statement. It said the listing was "one
such option, but no decision has been made."
SoftBank Group includes well-established cellphone businesses in
Japan and the U.S. -- where it controls Sprint Corp. -- and
separate operations that make big and risky bets in mostly unproven
internet businesses. It manages the world's largest tech investment
pool, the $93 billion Vision Fund, which is backed by the
sovereign-wealth funds of Saudi Arabia and Abu Dhabi.
SoftBank Group shares closed 3.2% higher in Tokyo trading Monday
as some investors welcomed the prospect of raising cash without
issuing more debt. The group's total interest-bearing debt has
grown fourfold in five years to Yen14.65 trillion ($132 billion),
prompting ratings company Moody's Investors Service to give
SoftBank bonds a speculative rating.
Markets have been concerned about SoftBank's large debt load
when U.S. interest rates are on the rise, said Matsui Securities
analyst Tomoichiro Kubota. He said the "key point is how they'd
spend" any money raised -- preferably, he said, to pay down
debt.
SoftBank's recent investment spree includes spending $7.7
billion to take 15% of ride-hailing firm Uber Technologies Inc. It
also has bought stakes in the top ride-hailing apps in China and
Southeast Asia.
Analysts value SoftBank's Japanese telecommunications business
at around Yen6 trillion to Yen6.6 trillion. Listing 30% of the
shares would raise roughly Yen2 trillion ($18 billion), making it
one of Japan's biggest public offerings in recent years.
The business is a cash cow, making up nearly half of SoftBank
Group's earnings. Three companies -- NTT DoCoMo Inc., KDDI Corp.
and SoftBank Corp. -- control almost all of the market.
Still, SoftBank's subscriber growth has slowed since NTT DoCoMo,
the market leader, began offering Apple Inc.'s iPhone in 2013. On
Monday, as SoftBank responded to the first report of the potential
listing in Japan's Nikkei newspaper, it was also holding a press
event showing off a line of phones for children and teenagers in a
bid to win subscribers back from its two rivals.
SoftBank Group's founder and chairman, Masayoshi Son, has spent
less time in recent years on the Japanese cellphone business,
SoftBank officials say, because he is busy trying to turn around
Sprint in the U.S. and looking for investments for his Vision
Fund.
SMBC Nikko Securities analyst Satoru Kikuchi said a separate
listing for the telecoms unit could give it more autonomy and allow
it to make investments on its own terms rather than competing with
Mr. Son's other priorities.
Although Mr. Son has borrowed heavily in Japan, where the
central bank has kept interest rates exceptionally low, he has felt
he is nearing the limits of what he could procure through issuing
debt, people familiar with the matter said. One of the reasons
SoftBank decided to form the Vision Fund was to allow it to
continue to invest without raising its leverage, Mr. Son has
said.
The Tokyo Stock Exchange requires companies listing on its first
section to offer at least 35% of their shares to the public, or 30%
for the less commonly used second section. However, the exchange
has made exceptions to the rules, including in cases where a
company's primary listing is outside Japan.
Write to Mayumi Negishi at mayumi.negishi@wsj.com and Kosaku
Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
January 16, 2018 02:47 ET (07:47 GMT)
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