June 17, 2014 2:00 am JST

SoftBank aims for 100 billion yen US operating profit in fiscal 2014

TOKYO -- SoftBank plans to lift its U.S. operating profit to around 100 billion yen ($971 million) this fiscal year, expecting streamlining measures and recovering subscriber numbers in the second half to bring it into the black.

     Restructuring will be the main driver of the rise. U.S. mobile provider Sprint, a SoftBank acquisition completed last summer, logged a 1.2 billion yen operating loss last fiscal year according to the Japanese parent's earnings report, due in part to differences in goodwill accounting.

     Sprint has been cutting costs companywide, helping it turn an operating profit in the January-March quarter. It plans to spend $165 million or so this fiscal year to reduce employees, including those in managerial positions, in a move to boost the bottom line.

     Steps will be taken to stem the outflow of customers as well. Cancellations are declining thanks to such measures as new fee plans. "From summer on, Sprint will shift to a net increase in subscriber numbers," SoftBank Chief Executive Officer Masayoshi Son says.

     SoftBank will also start using U.S. mobile wholesaler Brightstar, which it acquired earlier this year, for joint smartphone procurement within the group, aiming to improve profits.

     The Japanese company posted a group operating profit of 1.08 trillion yen in the fiscal year ended March 31, breaking the 1 trillion yen mark for the first time. Valuation gains on shares of subsidiaries gave the figure a boost of more than 200 billion yen.

     "We'll reach 1 trillion yen this fiscal year even excluding (the valuation gains)," Son says, effectively targeting an increase of at least 20%.

     In Japan, SoftBank's main market, earnings growth is slowing. With such developments as rival NTT Docomo offering preferential rates to longtime customers, competition is heating up. SoftBank is unlikely to continue enjoying rapid growth fueled by customers switching from other wireless carriers.

     Sprint plans to build up infrastructure for high-speed LTE data service using funds from SoftBank. The Japanese parent plans to first cut costs to bring the U.S. business into the black, then work to lift profits through increased sales from fiscal 2015 on.

     SoftBank is reportedly considering buying T-Mobile US through Sprint. T-Mobile logged a $996 million operating profit for the fiscal year ended Dec. 31. If the acquisition goes through, it could prove a massive boost to SoftBank's American business.