SoftBank profit jumps as Sprint trims loss; readying launch of US$100b fund

[TOKYO] Japan's SoftBank Group Corp reported a better-than-expected 71 per cent rise in third-quarter operating profit due to shrinking losses at US unit Sprint Corp and strength in its domestic telecommunications business.

SoftBank, which owns a majority stake in Sprint, said October-December profit increased to 295.7 billion yen (US$2.63 billion) from 172.8 billion yen in the same period a year earlier.

That beat a Thomson Reuters Starmine SmartEstimate of 246.30 billion yen drawn from three analysts. SmartEstimates give greater weight to recent forecasts by top-rated analysts.

Sprint trimmed its quarterly loss as the No 4 US wireless carrier added more subscribers than Wall Street expected.

This was the first full quarter since SoftBank completed a US$32 billion acquisition of Britain's most valuable technology company ARM, but SoftBank's earnings are still highly dependent on Sprint and the performance of the domestic telecommunications business.

Founder and CEO Masayoshi Son aims to make SoftBank a company with cutting-edge tech investments into what he calls the "Berkshire Hathaway of the tech industry", as the telecoms services markets mature.

To speed up the transformation, SoftBank, a diverse company that holds stakes in Chinese e-commerce giant Alibaba and other firms, announced with Saudi Arabia in October a planned creation of a US$100 billion tech fund. "We are preparing to launch a fund that would be far larger than all venture capitals combined," Mr Son said at an earnings briefing.

SoftBank expects to invest over the next five years at least US$25 billion in the tech fund, which would be one of the world's largest private equity investors and a potential kingpin in the technology industry.

Apple Inc has revealed plans to invest US$1 billion in the tech fund. Foxconn of Taiwan, Oracle founder Larry Ellison's family office and chipmaker Qualcomm are said to be intending to invest in the fund.

The giant tech fund could also be part of a US$50 billion investment in the United States that Mr Son pledged when he met with Donald Trump in December. Mr Son has said his investment would create 50,000 new jobs.

The investment pledge also revived speculation that Sprint Corp might rekindle merger talks with T-Mobile US Inc that died under pressure from US regulators, sending SoftBank shares up more than 30 per cent.

Such speculation intensified as President Donald Trump last month tapped Republican Commissioner Ajit Pai to head the US Federal Communications Commission, which is expected to roll back many of the Obama Administration's telecommunications and internet policies.

The new chairman vowed to pare back outdated commission regulations.

REUTERS