Japanese telco SoftBank's revenue remained stable for FY19

It earned ¥4.86 trillion in revenue for the fiscal year ended 31 March 2020.
Written by Campbell Kwan, Contributor

In SoftBank Corp's FY19 earnings forecast briefing, the company revealed that all of its business segments experienced revenue growth for the fiscal year ended 31 March 2020, paving the way for the company to earn ¥4.86 trillion in revenue -- an increase of 4% year on year.

Tax-wise, the company paid ¥304.5 billion in taxes for 2019. This was an increase of just over 20% compared to the year prior and was mainly due to the recording of ¥19.5 billion in income taxes related to business integrations between Z Holdings and Line Corporation, SoftBank said.

This, combined with operating expenses remaining steady, resulted in SoftBank posting operating income of around ¥910 billion, a 11.4% increase from ¥818 billion year on year.

Meanwhile, net income was just over ¥506 billion for FY19, a slight increase of 2.5%, and adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) was ¥1.6 trillion, up 17% from around ¥1.37 trillion last year.

In dissecting the Japanese telco's various business segments, the consumer segment -- the core business of SoftBank -- increased its revenue to almost ¥2.7 trillion, an increase of over ¥16.2 billion. This was primarily comprised of revenue from its telecom services, which contributed just over ¥2 trillion, while sales of goods provided ¥636 billion.

According to SoftBank, this increase was mainly due to an increase in smartphone subscribers and a decrease in monthly discounts, as well as an increase in subscribers to the SoftBank Hikari fibre-optic service.

Its enterprise segment, meanwhile, saw revenue increase by around ¥18.4 billion to almost ¥640 billion, a 3% increase year on year. Much like the consumer segment, the enterprise segment's income also increased, experiencing a 9.5% year-on-year uptick to ¥83.6 billion.

Its mobile services from both its consumer and enterprise segments -- through its SoftBank, Y!mobile, and Line Mobile brands -- accrued a total of 45.8 million mobile subscribers for 2019, an increase of 1.23 million from the year prior.

For broadband services, SoftBank had more than 7.8 million subscribers as of March. The subscribers were primarily from SoftBank Hikari, which contributed almost 6.4 million subscribers, while Yahoo! BB Hikari with FLET and Yahoo! BB DSL provided 786,000 and 673,000, respectively. 

SoftBank executive vice president Ken Miyauchi added in the company's earnings presentation that demand for digitalised enterprise had increased during the coronavirus pandemic, with remote access to corporate systems through SoftBank's networks increasing by six times since the outbreak began.

Discussing SoftBank's 5G network, which was deployed in March, Miyauchi added that he expects the company to have 90% 5G network coverage by the end of FY21 through the installation of over 50,000 base stations.

In regards to the company's Yahoo segment, which offers various services in the e-commerce, financial, and payment sectors, revenue increased by 10.3% year-on-year to ¥1.05 trillion. According to SoftBank, the increase was mainly due to the consolidation of Z Holdings into Zozo as a subsidiary of the Yahoo segment.

Finally, its distribution segment -- which offers products and services primarily addressing IT, cloud services, and IoT solutions -- jumped from ¥417 billion to ¥482 billion, up 15.6% year on year. This was mainly due to firm sales of existing products such as PCs and servers, in addition to an increase in the number of licenses for cloud services. 

The distribution segment's operating income was slightly over ¥17 billion, an increase of 13% year on year.

With another steady annual performance for its FY19 results, SoftBank Group -- the holding company of SoftBank -- hopes it will soften the blow from last week's announcement that it expected to see a loss of around ¥700 billion solely from its investment in WeWork for the fiscal year ended March 2020. The ¥700 billion loss amount reflects new losses from loan commitments and financial guarantees that were made to WeWork, SoftBank said last week.

With the novel COVID-19 outbreak still ongoing, SoftBank founder and CEO Masayoshi Son also said last month that he expected 15 companies in the Vision Fund to go bankrupt as the company tightens its financial belt.

SoftBank also recently announced a $41 billion share buyback scheme that involves the sale of assets to shore up share prices and reduce debt. A $4.8 billion buyback scheme, separate from the latest program, is also in motion.

Updated at 9:05am AEST, 12 May 2020: Clarified results are for SoftBank Corp, the subsidiary of SoftBank Group Corp.


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