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The
share buyback worth up to 120 billion yen ($961.69 million)
would be SoftBank's biggest ever if carried out in full. CEO
Masayoshi Son attributed the surprise move to its lackluster
share price and renewed confidence in Sprint which SoftBank
bought for more than $20 billion in 2013 but has struggled to
turn around.
"Repurchasing shares is an effective way of returning profit to
shareholders. But it's also a message from management to
markets, regarding the share price," he told reporters on
Thursday. "We've now become fully confident."
SoftBank's April-June operating profit rose to 343.6 billion yen
from 319.4 billion a year ago, helped by the boost from Sprint
and growth in smartphone customers at its domestic telecoms
business. That was better than the 320 billion yen average of
three analysts' estimates surveyed by Thomson Reuters.
Sprint on Tuesday reported a smaller-than-expected quarterly
loss and lower churn, or defections, a rare sign of improvement
for a carrier that has struggled to compete against larger
rivals AT&T <T.N> and Verizon Communications <VZ.N>.
Son had made a rare appearance on Sprint's conference call to
say SoftBank had no plans to sell its stake in the wireless
carrier, a commitment he reiterated on Thursday.
"There was a time when I lost confidence in managing Sprint," he
said. "Now I have no intention of selling."
SoftBank has used cash from its telecoms business to fund
investments in global mobile and Internet businesses, and the
Sprint buy was aimed at growth outside Japan's sluggish economy.
Son said the latest buyback did not signal a change to its
acquisitive strategy. SoftBank is also the largest investor in
Chinese e-commerce giant Alibaba Group Holding <BABA.N>.
Jefferies estimates its 23 largest investments have delivered
returns of 30 times with an average investment period of over 9
years. Excluding highly lucrative Alibaba, returns have been
around 6 times.
SoftBank did not give a full-year outlook, but the market's
average forecast prior to Thursday's announcement was for an
annual operating profit of 1.04 trillion yen.
Based on such views, SoftBank shares have lately been trading
below 8 times forward earnings estimates, lagging multiples of
over 10 for Japanese telecoms rivals KDDI Corp and NTT DoCoMo.
Analysts have said the comparatively low valuations were due to
concerns about Sprint.
($1 = 124.7800 yen)
(Reporting by Ritsuko Ando; Editing by Muralikumar Anantharaman)
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