December 19, 2018 – SoftBank Group Corp.’s mobile phone unit made a disappointing debut today on the Tokyo stock market in Japan’s biggest initial public offering, ending more than 14 percent below its IPO price.
The share price of SoftBank Corp. ended at ¥1,282 after opening at ¥1,463 on the first day of trading on the First Section of the Tokyo Stock Exchange, falling far short of the IPO price of ¥1,500.
The poor debut reflects investor concerns over the outlook for the mobile phone unit due to repeated requests by the government to lower service fees amid intensifying competition, while the downturn in the overall market also weighed on investor sentiment toward the newly listed shares, brokers said. The benchmark Nikkei index ended below the 21,000 line for the first time in nine months on the Tokyo bourse.
Market players were also cautious about the possible impact of SoftBank’s ties with Chinese technology company Huawei Technologies Co. after its chief financial officer temporarily was detained by the Canadian authorities, brokers said.
“It is also a risk factor how much it will cost to replace Huawei’s equipment used in SoftBank Corp’s telecommunication networks (in line with a government plan to exclude Huawei and Chinese tech firm ZTE Corp. from public procurement),” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management Co.
As the mobile phone operator was preparing for its IPO, a nationwide disruption to SoftBank’s telecommunication service earlier this month also dented its operation credibility, Ichikawa said.
Despite the sluggish performance of the mobile phone unit on the first day, SoftBank Group raised ¥2.65 trillion by offering 1.76 billion shares, or a 36.85 percent stake, it had held in the subsidiary in the IPO.
Still the market capitalization of the mobile phone service operator is estimated at ¥6,137 billion based on the closing price, the highest on the Tokyo bourse since Japan Post Bank Co.’s listing in 2015 with a market valuation of ¥6,299 billion excluding treasury shares.
Nippon Telegraph and Telephone Corp. logged Japan’s largest ever market capitalization based on the opening price in 1987 at ¥24.96 trillion.
The parent company is shifting its focus to investment in global tech start-ups such as semiconductor designer ARM Holdings and graphics chipmaker Nvidia Corp. through its nearly $100 billion Saudi-backed Vision Fund.
“I would like to use the money raised through the IPO for additional investments in the Vision Fund and to pay back debt,” SoftBank Group CEO Masayoshi Son said at a press conference last month.
SoftBank Group and its subsidiaries owed as much as about ¥18 trillion in total as of September this year, weighing on the share price of the telecommunication and investment giant, brokers said.
Japanese e-commerce giant Rakuten Inc. will become the fourth major mobile phone carrier in October 2019 joining the three current dominant operators NTT Docomo Inc., KDDI Corp. and SoftBank Corp.
The newly-listed company said Wednesday its group net profit outlook for the business year through March will reach ¥420 billion, up 4.8 percent from a year earlier.
The dividend per share will be ¥37.50 for the period from today’s listing through March, the company said.
The share price of the parent company SoftBank Group fell ¥75, or 0.9 percent, to ¥8,184.