Business

SoftBank announces $4.4 billion share buyback program

The buyback scheme is the Japanese tech giant's largest to date.

Written by Charlie Osborne, Contributing Writer Feb. 16, 2016 at 2:16 a.m. PT

SoftBank has revealed plans to launch a stock buyback program worth up to $4.4 billion in order to increase its share price.

Announced on Monday, the Japanese telecommunications giant said as much as 500 billion yen, or roughly $4.4 billion, would be purchased through the buyback program.

This amount accounts for up to 14.2 percent of the conglomerate's overall stock.

Shares rocketed by almost 16 percent on Tuesday, having dropped by over 28 percent this year prior to the announcement.

SoftBank says the latest share repurchase will take place over the course of a year and will be funded through cash reserves and the sale of items in the company portfolio.

Over the past year, SoftBank has received approximately 300 billion yen in the sale of investment securities and other assets.

In August 2015, SoftBank launched a separate 120 billion yen buyback program, leading to a temporary increase in the share price of the Japanese company.

Featured

The buyback program may help soothe investors witnessing the drop in share prices for Sprint, a US telecommunications firm which SoftBank purchased for $20.1 billion in 2013. While SoftBank CEO Masayoshi Son was confident he could turn around the failing US telecommunications provider in two years -- despite stiff competition from companies including Verizon and AT&T -- Sprint is now heavily in debt, leading investors to worry over the firm's bet on the expensive acquisition.

In February, Son attempted to reassure investors that purchasing a controlling stake in Sprint was worth it and the signs of recovery were "clearly visible," despite Sprint's troubling financial status and a share price which has fallen by 27 percent this year.

At the time SMBC Nikko Securities analyst Satoru Kikuchi told the Financial Times:

"Sprint's network is improving but the recovery is not speedy enough to change views of consumers and the market."

Last week, SoftBank reported (.PDF) a 7.3 percent rise in third-quarter operating profit as the company continues to slash costs and trim the business to stay afloat.

The Japanese firm may be conducting a balancing act between the Sprint acquisition and stakeholder relations, but this doesn't mean the firm is staying clear of business investments. In June last year, SoftBank led a $20 million funding round for Fetch Robotics, a developer of robotics destined for manufacturing and factory work.

SoftBank also holds stakes in Alibaba and Yahoo Japan.