SoftBank reported a sharp fall in fiscal Q3 net income as continued high costs from its Sprint acquisition in the US dragged down profitability.
The operator’s net income fell to JPY32.28 billion (US$270 million) in the quarter ending 31 December from JPY93.75 billion the same period a year ago. Its revenue increased 18.5 per cent to JPY2.32 trillion.
SoftBank CEO Masayoshi Son (pictured) told reporters that overall the company is doing well but admitted Sprint has “a long battle to fight”.
SoftBank Mobile is Japan’s third largest mobile operator with 37.4 million connections and a 21 per cent market share. It added 1.47 million connections in 2014, and 355,000 in the last quarter. ARPU dropped 5.3 per cent to JPY4,250 last year, but churn improved from 1.66 per cent to 1.34 per cent in 2014.
SoftBank owns 80 per cent of Sprint, which is fighting to gain share from the US market’s top two players – AT&T and Verizon, with a combined market share of 66 per cent. SoftBank took over the number three US mobile player for more than $21.6 billion in 2012.
Sprint’s net loss more than doubled to $2.38 billion last quarter. It has just cut thousands of jobs, forcing SoftBank to book a loss of JPY29.51 billion to cover severance costs.
Sprint added 30,000 postpaid subscribers in the last quarter after losing almost 700,000 in the previous quarter. It now has 55.9 million customers. But postpaid ARPU fell from $63.52 at the end of 2013 to $62.10 last quarter, while prepaid ARPU rose from $26.45 to $27.20.
SoftBank’s EBITDA increased 2 per cent to JPY487 billion, while its EBITDA margin fell to 20.9 per cent last quarter from 24.3 per cent a year ago.
The company has forecast operating income of JPY900 billion for the fiscal year ending 31 March, down from JPY1.1 trillion the previous year.
The company said last week it would not consolidate Sprint’s impairment charge of $2.1 billion because it operates according to different accounting standards from its US subsidiary.
SoftBank also plans to merge its four telecoms units – SoftBank Mobile, SoftBank BB, SoftBank Telecom and Ymobile – into a single company, SoftBank Mobile, on 1 April. It said the merger will enable it to improve operational efficiency through structural reforms and boost cooperation with other SoftBank companies in areas such as the Internet of Things, robotics and energy.