Vision Fund sets Softbank back ¥225 billion in Q3

CEO said it would slow down its rate of investing for the Vision Fund after experiencing another quarter of losses.
Written by Campbell Kwan, Contributor

SoftBank has once again taken a hit from its struggling Vision Fund and other investments, with the fund suffering a ¥225 billion operating loss in the third quarter.

The Vision Fund's hit to SoftBank's bottom line almost completely wiped out the operating profit of the Japanese technology giant's other segments, which earned ¥228 billion during the quarter. 

Of those other segments, SoftBank's telcos -- SoftBank, Y!mobile, and Line Mobile -- had net sales of ¥3.6 trillion, an increase of almost 5% compared to last year. The telcos, combined, also increased their smartphone subscriber base to 23.5 million, up from 1.4 million year on year. 

Also, the cumulative number of subscribers to SoftBank Hikari, a fiber-optic service, increased by 330,000 from the previous fiscal year-end to 6.25 million. 

For its US telco, Sprint, sales increased by 6.4% to ¥2.6 trillion but segment income deteriorated by 46% to ¥137.8 billion.

Overall, the company's operating profit -- of almost ¥2.6 billion -- was a 99% drop from the figure posted during the same period a year ago. Its net profit for the quarter was ¥124 billion, which is a 82% drop year on year.

Looking at SoftBank's performance over a longer period -- the nine months to 31 December 2019 -- the SoftBank Vision Fund and other investments have given the company a ¥798 billion loss, which is a deterioration of ¥1.9 trillion year on year. 

The Vision Fund currently has 88 investments in its portfolio, including Uber, Slack, and Oyo. As of December 31, Uber has given the fund a gross loss of over $1 billion.

SoftBank's remaining operating income, which excludes the income of the Vision Fund and other related investments, also dropped 25.3% to around ¥785 billion for the nine month period.

Consolidated EBIT for the nine months to December was negative ¥13 billion which is a ¥1.87 trillion deterioration compared to last year. The Vision Fund segment, along with other investments, during the nine month period accounted for negative ¥955.7 billion of the EBIT, while the Softbank and Sprint segments provided around ¥942 billion. 

During the investor's presentation on Wednesday, SoftBank CEO Masayoshi Son told investors that the company would slow down its rate of investing for the Vision Fund after it experienced two consecutive quarters of operating loss. 

When asked about the status of its second Vision Fund, which SoftBank previously said would consist of $108 billion in funds, Son said that the performance of the original Vision Fund has "caused concerns among potential investors" and that it would look at feedback before making any further moves. 

Son told investors to remain positive however, as a US District Court judge on Tuesday approved the merger between Sprint and T-Mobile.

Over the past 12 months, SoftBank has experienced various setbacks, such as the disappointing initial public offerings of Uber and Slack, on top of the aborted WeWork attempt

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