Softbank to Split Domestic, Overseas Units

The Japanese conglomerate's move may ease investor concerns that it would use money earned in Japan to help turn around loss-making Sprint.
Katie Kuehner-HebertMarch 7, 2016

Japanese telecom conglomerate SoftBank said Monday it would split its domestic and overseas businesses, making another move to boost shareholder value after announcing its largest ever share buyback plan.

The overseas division would oversee Softbank’s investments in U.S.-based Sprint and China’s Alibaba, while the domestic unit would be responsible for all domestic businesses including its investment in Yahoo Japan.

A SoftBank spokesman told Reuters that earnings for the two business units would not be separated, as SoftBank remains the single listed company that controls 100% of both units.

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“This makes perfect sense, considering how large SoftBank’s overseas holdings have gotten,” Nomura Holdings’ chief credit strategist Toshihiro Uomoto told Bloomberg. “This may speed things up at SoftBank, allowing domestic and overseas operations to race against each other.”

The reorganization comes just weeks after SoftBank’s announcement of a record $4.4 billion share buyback plan. SoftBank shares had fallen nearly 40% year-over-year amid investor concerns about the company’s majority stake in loss-making Sprint.

While Softbank will retain full ownership of both business units, analysts said the move could lay the groundwork for a range of options down the road, including a possible stock-market listing of the overseas investment arm.

“It’s a reflection of how the company’s weight is shifting toward its overseas businesses,” Hitoshi Sato, senior analyst at InfoCom Research, told the Wall Street Journal.

Softbank paid $21.6 billion for 78% of Sprint in 2013 and, according to Sato, some investors have been concerned that some investors that money earned in Japan might be used to support turnaround efforts at Sprint.

“SoftBank has relied on its domestic mobile unit for the bulk of its operating profit to finance efforts to turn around Sprint,” Reuters said.

Group President Nikesh Arora will head up Softbank’s operations abroad. Billionaire Masayoshi Son, who remains group chairman and chief executive officer, has entrusted him with overseeing global expansion and the turnaround of Sprint.

Ken Miyauchi, a SoftBank director, will lead the domestic business.