TOKYO: 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 per cent this year.
The telco said it would buy $4.2 billion worth of new shares to be issued by Yahoo Japan, increasing SoftBank Corp’s stake to 44.64 per cent from 12.08 per cent.
With that addition, SoftBank Corp, which listed in December in Japan’s largest ever initial public offering, forecast its operating profit would rise 24 per cent 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 per cent 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 per cent drop in quarterly operating profit to 84.5 billion yen from a year earlier, missing expectations even as revenue grew. — AFP
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