SoftBank Corp to spend $4 billion to up Yahoo Japan stake, sees profit rising 24 pct

SoftBank Corp to spend $4 billion to up Yahoo Japan stake, sees profit rising 24 pct

TOKYO (Reuters) – Japanese telco SoftBank Corp said on Wednesday it would spend $4 billion to up its stake in Yahoo Japan and turn the internet company into a subsidiary, which would help boost its profit by 24 percent this year.

FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato/File Photo

The telco said it would buy 456.5 billion yen ($4.2 billion) worth of new shares to be issued by Yahoo Japan, increasing SoftBank Corp’s stake to 44.64 percent from 12.08 percent.

With that addition, SoftBank Corp, which listed in December in Japan’s largest ever initial public offering, forecast its operating profit would rise 24 percent to 890 billion yen in the current financial year.

The deal will strengthen cooperation between SoftBank Corp, Japan’s third largest telco, and Yahoo Japan, an internet heavyweight in areas such as news and shopping.

Concern over the outlook for the telco, which faces government pressure to cut carrier fees and competition from new entrant Rakuten, has kept the share price below its IPO price. The stock closed up 0.6 percent ahead of the earnings.

But some analysts still see the telco as well positioned to weather the price squeeze as it targets data-heavy smartphone users with premium-priced plans while offering low-cost options for thrifty customers under separate branding.

The telco reported a 17 percent drop in quarterly operating profit to 84.5 billion yen from a year earlier, missing analysts’ expectations even as revenue grew.

That compared with a 93 billion yen average of three analyst estimates compiled by Refinitiv.

SoftBank Corp, with its ample cashflow, is a key indicator of the health of parent SoftBank Group, which reports its fourth-quarter earnings on Thursday.

($1 = 110.1300 yen)

Reporting by Sam Nussey; Editing by Himani Sarkar and Sonali Paul

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