Japan Cell Outage Dims View of SoftBank IPO -- WSJ
07 December 2018 - 7:02PM
Dow Jones News
By Mayumi Negishi
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 7, 2018).
TOKYO -- SoftBank Group Corp.'s Japanese mobile unit suffered an
hourslong nationwide network breakdown Thursday, tarnishing the
unit's planned $23 billion initial public offering later this
month.
Television footage showed long lines forming at phone booths
during the four-and-a-half hours that the network went down at
Japan's third-largest carrier.
The network failure, which began Thursday afternoon local time
and was resolved by the evening, arose because of a software glitch
that affected Ericsson telecom equipment world-wide, SoftBank
said.
A spokesman for Ericsson, which competes with Huawei
Technologies Co. and Nokia Corp., said the Swedish firm will be
working with SoftBank to prevent a recurrence.
Telefonica's O2 also reported network outages that affected
customers in Britain on the same day.
The SoftBank IPO -- which is expected to approach the $25
billion record set by Alibaba Group Holding Ltd. in 2014 -- was
fully subscribed on strong demand from Japanese retail investors,
including an overallotment of extra shares, a person familiar with
the matter said.
SoftBank is aiming for a dividend yield of nearly 5%, based on
the net profit at the mobile unit last fiscal year. That is an
alluring offer when most bank deposits in Japan pay virtually zero
interest.
But the unit faces challenges beyond Thursday's breakdown,
including pressure to slash phone charges. SoftBank's two main
rivals plan to reduce charges by as much as 40%.
SoftBank is paring back its mobile-carrier holdings as Chief
Executive Masayoshi Son focuses on running the Saudi-backed
technology-focused Vision Fund, which last month said it secured
more capital commitments to bring its total war chest to $98
billion. The Vision Fund has invested in some of the world's most
valuable startups including WeWork Cos. Inc.
SoftBank plans to give up control of U.S. carrier Sprint Corp.
if regulators approve T-Mobile US Inc.'s acquisition of a
controlling stake in Sprint. Meanwhile, the Dec. 19 IPO in Tokyo
means the SoftBank parent will give up more than one-third of its
Japanese mobile unit while raising some Yen2.65 trillion ($23
billion).
Shares of SoftBank Group shed 4.9% in Tokyo Thursday. Analysts
said the high interest among retail investors in the mobile unit
could cannibalize demand for the parent's shares. About 90% of the
IPO shares will be offered in Japan.
Also weighing on SoftBank was the arrest in Canada of the chief
financial officer of SoftBank supplier Huawei for alleged
violations of Iran sanctions.
SoftBank is conducting tests of high-speed networks with Huawei,
using the Chinese telecom equipment maker's lower-cost products to
keep pace with network upgrades by bigger carriers NTT Docomo Inc.
and KDDI Corp. It also faces pressure from Japanese e-commerce
company Rakuten Inc., which is preparing to enter the market with
low-cost services.
Write to Mayumi Negishi at mayumi.negishi@wsj.com
(END) Dow Jones Newswires
December 07, 2018 02:47 ET (07:47 GMT)
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