SoftBank raising stake in Sprint, reports falling profit
TOKYO (AP) — Japanese internet and solar company SoftBank Group Corp. is raising its stake in Sprint Corp. after merger talks with T-Mobile collapsed, signaling its commitment to a turnaround at the U.S. wireless carrier.
Tokyo-based SoftBank reported Monday that July-September net profit tumbled to 113 billion yen ($991 million) from 528 billion yen a year ago.
Quarterly sales rose nearly 4 percent to 2.23 trillion yen ($19.5 billion) on improved results at Sprint, as well as revenue from Arm, a British chips company SoftBank acquired last year.
Helping bring profit lower was the absence of last year’s foreign-exchange gains, as well as derivative losses that came from its sale of part of its stake in Chinese e-commerce giant Alibaba.
T-Mobile and Sprint are the third- and fourth-largest wireless carriers, respectively, in the U.S., but they are significantly smaller than AT&T and Verizon, which effectively have a duopoly over the U.S. wireless service.
Wireless carriers Sprint and T-Mobile called off a potential merger Saturday, saying the companies couldn’t come to an agreement that would benefit customers and shareholders.
The two companies have been dancing around a possible merger for years, and were again in the news in recent weeks with talks of them coming together after all. But in a joint statement Saturday, Sprint and T-Mobile said the negotiations were off for the foreseeable future.
Sprint has debt and has been losing money, but its results had been improving gradually, partly because of additional investments from SoftBank, which also sells the Pepper humanoid.
But both analysts and SoftBank had said they believed Sprint needs a deal, rather than trying to compete on its own.
But Washington regulators have frowned on a possible merger. D.C. spiked AT&T’s offer to buy T-Mobile in 2011, and signaled in 2014 they would have been against Sprint doing the same thing. But with the new Trump administration, it was thought regulators might be more relaxed about a merger.
SoftBank Chief Executive Masayoshi Son told reporters that the talks fell apart because T-Mobile did not want to be equal partners in management. But he insisted Sprint will prove a gold mine because of the move to IoT, where SoftBank’s investment in Arm will pay off, especially in the U.S.
“We are entering an era where billions of new connected devices and sensors will come online throughout the United States,” he said. “Sprint is a critical part of our plan to ensure that we can deliver our vision to American consumers and we are very confident in its future.”
Son said he felt “absolutely great” after the merger talks ended because worries over indecisiveness were gone.
“It was an important decision,” he said. “But the day will come when having Sprint will pay off.”
Although Arm’s sales grew from the previous year, its losses grew as well because of costs for hiring engineers.
Son, credited as a visionary and seen in the company of high-profile people like Microsoft Corp. co-founder Bill Gates and President Donald Trump, has been aggressive in investing in artificial intelligence, the internet of things and renewable energy.
Son has set up a $100 billion SoftBank Vision Fund specially for the technology sector with money from Saudi Arabia, United Arab Emirates and other investors.
SoftBank’s Japanese mobile business continued to do well in the last quarter, increasing smartphone subscribers, according to the company. SoftBank was the first carrier in Japan to offer Apple’s iPhone.
It also owns the SoftBank Hawks baseball club, which recently won the Japan Series, this nation’s equivalent of the World Series.
Yuri Kageyama can be reached at twitter.com/yurikageyama
Her work can be found at https://www.apnews.com/search/yuri%20kageyama