SoftBank eyes sales surge after Sprint, handset deals

By Nobuhiro Kubo

TOKYO (Reuters) – Japan’s SoftBank Corp aims to boost its sales past the 7 trillion yen (44 billion pounds) milestone next year, putting it in the same league as electronics giants like Sony Corp by leveraging acquisitions to boost its mobile business.

While the tech giant suffered a profit drag from an operating loss at U.S. mobile operator Sprint Corp, it reported record six-month operating profit of 715.1 billion yen on Thursday – a rise of more than 60 percent and on track to meet billionaire founder Masayoshi Son’s target of 1 trillion yen in the year to next March.

Son acknowledged that it would take time, however, to achieve a turnaround at Sprint, the No. 3 U.S. mobile carrier which it acquired this summer for $21.6 billion (13.5 billion pounds).

“In one year, we will improve the network. I think it will take one year, but after one year, I think it will be a complete transformation,” he told a news briefing.

Bolstering his confidence was the recent, $1.26 billion acquisition of handset distributor Brightstar, which Son said would serve as a “weapon” for his expanded mobile empire.

SoftBank’s bulk-up, he said, would give it the buying power to negotiate down procurement costs. The SoftBank-Sprint-Brightstar combination buys in two or three times as many handsets as AT&T Inc or Verizon Wireless, five to six times those of NTT DoCoMo and 10 times those of KDDI Corp, its Japanese rival, he said.

HANDSETS AS WEAPONS

Son illustrated the strategy by recalling how an exclusive iPhone supply deal with Apple Inc helped him to make a success of his deal to buy out Vodafone Group Plc’s Japanese unit in 2006, transforming SoftBank from a broadband Internet service provider into one of Japan’s largest mobile phone operators.

“Just before buying Vodafone Japan, I went to Steve Jobs and asked him to let SoftBank have exclusive sales of the iPhone in Japan … before he announced the iPhone,” Son told a news conference after Thursday’s earnings announcement.

“I got a verbal agreement from him, so I put down nearly 2 trillion yen and made a bet on the Vodafone Japan acquisition. I’m not so stupid that I would go into battle without any strategy or weapons.”

SoftBank also announced this month a $1.5 billion purchase of Finnish mobile game maker Supercell, whose titles include “Hay Day” and “Clash of Clans”, expanding on the offerings of its GungHo Online Entertainment unit which contributed strongly to first-half profits.

SoftBank has forecast its sales this financial year will breach the 6 trillion yen mark, while the targeted break above 7 trillion yen next year would put it around the same level as Sony, which has forecast sales this year of 7.7 trillion yen, and Panasonic Corp, which is projecting 7.4 trillion yen.

SoftBank is already Japan’s most valuable technology company by market capitalisation and its shares have more than doubled since the start of the year, outpacing a nearly 40 percent rally in Japan’s benchmark Nikkei average as investors are drawn to Son’s aggressive strategy.

In the mobile phone sector, SoftBank for the first time beat domestic mobile phone rivals DoCoMo and KDDI in sales, net profit and operating profit with its first-half results, although it still lags in subscriber numbers.

(Additional reporting by Mari Saito; writing by William Mallard and Edmund Klamann; editing by Tom Pfeiffer)

SoftBank eyes sales surge after Sprint, handset deals