Japan mobile business buoys Softbank ahead of T-Mobile bid

Net profit climbs 34 percent amid Softbank's acquisition drive

Japanese mobile carrier Softbank posted solid earnings for the year to March 31 on Wednesday, with net profit up 34 percent.

The country's third-largest mobile phone carrier booked net profit of ¥586.15 billion (US$5.8 billion), up from ¥438 billion a year earlier.

Income at its Mobile Communications Segment, which includes its mobile business in Japan, was up nearly 18 percent.

The company attributed the results to increases in subscribers and handsets sold at SoftBank Mobile, as well as consolidating GungHo Online Entertainment, a mobile game producer in Japan, Supercell, a game maker based in Finland, and U.S. cellphone distributor Brightstar.

The acquisitions have further swollen Softbank's roster of group companies, which number more than 1,300, according to the company.

"These were solid results, boosted by returns from its acquisitions over the last year," wireless operator analyst Phil Kendall of Strategy Analytics wrote in an email. "The domestic business in particular is performing well in a tough climate."

The performance could put Softbank in a better position to push for a merger of Sprint, which it acquired last year, with T-Mobile USA as part of CEO Masayoshi Son's vision to establish a company that would be a global leader.

Son has promised to bring price and speed competition to the U.S., noting slower download speeds for LTE service compared to other countries and calling U.S. broadband speeds "terrible."

U.S. media reports have said that the Softbank chief may be preparing for an official bid for T-Mobile in June or July. Sprint officials have apparently been meeting with bankers to discuss funding options for a takeover.

"The upside is that if Softbank is allowed to merge Sprint with T-Mobile, it would control about a third of the American market with a strong LTE network, and possibly cheaper prices," Clement Teo, a mobility analyst with Forrester, wrote in an email.

"The downside is whether Softbank truly understands U.S. mobile users to grow this base and grab subscribers from AT&T and Verizon, and if CEO-potential John Legere is the person to lead post-merger."

Legere is the current CEO of T-Mobile.

It's unclear, however, whether U.S. regulators will approve the merger.

"Ultimately, we are not convinced the improving profits are going to change its strategy around acquiring T-Mobile -- that is more an issue of regulatory backing, rather than access to funds to make the purchase," Kendall added.

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Tim Hornyak

IDG News Service
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