Softbank mobile unit flops on market debut

[TOKYO] Shares in Japanese telecoms giant SoftBank's mobile unit traded well below its IPO price on Wednesday in a disappointing debut on the Tokyo stock market despite raising a record amount.

A spokesman for the firm confirmed it had raised around 2.65 trillion yen via the unit's IPO, making it Japan's largest as expected, but the stock opened at 1,463 yen (S$14.80), down from the 1,500 yen IPO price.

Shares then dipped further in early exchanges, falling by as much as 10 per cent to a low of 1,344 yen.

The firm sold the full offering of 1.76 billion shares, which represents more than one third of the company.

The blockbuster IPO is seen as part of SoftBank boss Masayoshi Son's strategy of transforming from a Japan-based telecoms company to a global hi-tech investment firm.

The IPO will help raise cash for Son, whose SoftBank Vision Fund is worth an estimated US$100 billion and has taken stakes in some of the hottest tech firms, including Uber, Slack, WeWork and Nvidia.

The disappointing offering comes after an embarrassing episode earlier this month when tens of millions of SoftBank and UK mobile phone operator O2 customers were unable to access data due to a glitch with software made by Sweden's Ericsson.

One market player from a securities company, who declined to be named, added that the timing of the IPO was tricky.

"This also came at a time when worries over a global slowdown are intensifying. The Nikkei 225 has fallen since the listing was announced (earlier this year)."

"And, the business environment for mobile phones is expected to toughen ahead with a new entry in the sector and government calls for a deep cut in fees," he told AFP.

"The SoftBank Group has already been listed, which made the listing of the mobile unit less fresh," added this analyst.

The wider Nikkei 225 market was down 0.21 per cent.

SoftBank and Son have come under the spotlight recently as nearly half the money in the SoftBank Vision Fund comes from Saudi Arabia and the firm maintains close ties with the kingdom.

Those links were highlighted after the murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul.

Last month, Son condemned the killing but said he would continue to do business with Saudi Arabia.

Analysts at S&P Ratings have said the IPO "would further underline SoftBank's transition to an investment holding company."

Another ratings agency, Moody's, said the IPO would "enhance transparency" in the parent company's investment portfolio because the mobile unit's "share price and daily market value will be available to the public."

The SoftBank parent company itself has said the listing would give the mobile unit "greater managerial autonomy to develop its own growth strategy."

It has also said the listing would also help clarify the roles of the parent company and its mobile unit.

The mobile unit said in a statement alongside the market debut that it expects net profit of 420 billion yen on sales of 3.7 trillion yen for the full year to March 2019.

In the year that ended March, it has logged net profit of 400.75 billion yen on sales of 3.58 trillion yen, it said.

AFP