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Shares of SoftBank's mobile arm eclipse IPO price for first time

Investors encouraged by strong earnings and steady dividends

The initial public offering of the mobile arm of SoftBank Group last December was a major disappointment. (Photo by Tsuyoshi Tamehiro)

TOKYO -- Shares of SoftBank Corp., the mobile arm of SoftBank Group, on Friday exceeded their offering price of 1,500 yen ($14) for the first time since the company's listing in December as investors were buoyed by strong first quarter earnings and a fat dividend target amid falling global interest rates.

At one point during the day the shares reached 1,509 yen, 17 yen or 1.14% higher than their previous day's close. They ended the day at 1,495 yen, up 0.2% from Thursday's close.

SoftBank's profit continued to rise in the April-June quarter, while those at rivals NTT Docomo and KDDI fell.

The initial public offering was a major disappointment. Days earlier, SoftBank subscribers were angered by a major telecommunications malfunction. That helped push SoftBank shares down to 1,176 yen during their debut.

On Friday, a business owner in his 70s told Nikkei, "I was relieved, honestly, but expecting higher prices, about up to 1,800 yen."

Another investor who had bought publicly offered SoftBank shares said he had been regretting the move. "But I feel good now seeing them trading around their IPO price," he added.

SoftBank has a dividend payout ratio target of 85%, higher than those of its peers.

"Private investors appreciate [being able to receive] stable dividend yields amid generally slowing business earnings," said an analyst at Ichiyoshi Asset Management, a Tokyo-based investment advisory company.

A sales representative at a Japanese brokerage said some investors are switching from Nissan Motors to SoftBank, fearful that the automaker will cut its dividend due to significant losses.

One senior analyst at Osaka-based Iwai Cosmo Securities said SoftBank shares are stable thanks to the telco's rising profits. In contrast, Japan's top cellphone service provider NTT Docomo and No. 2 carrier KDDI reported net income declines for the April to June quarter.

The analyst said it is less likely SoftBank will reduce its dividend and that the company's share price could climb to about 1,800 yen.

"I was lucky that I did not buy," one individual investor in his 50s said. He got many phone calls from brokerage houses asking him to buy before the IPO but said no because a relative had suffered past losses after buying NTT shares.

Besides, he said, "if I had invested I would have lost the opportunity to invest in other promising stocks."

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