TOKYO -- SoftBank's mobile service breakdown Thursday, which disconnected millions of subscribers in Japan for more than four hours, is giving retail investors second thoughts about the carrier's initial public offering on Dec. 19.
Further raising investor concern is Friday's news that Japan's Ministry of Internal Affairs and Communications is considering taking action against SoftBank for the service failure.
The service glitch sent the SoftBank IPO's lead underwriters, including Japan's largest brokerage, Nomura Securities, on an emergency search for the cause of the problem. Among the questions being asked is whether the outage is in any way related to SoftBank's partnership with Chinese telecom equipment supplier Huawei Technologies, which has been caught in the crosshairs of the trade war between Washington and Beijing.
Among Japan's three major mobile carriers, SoftBank is the only one that uses Huawei base stations for its service.
Much is at stake in SoftBank's market debut. Parent SoftBank Group is expected to raise as much as 2.6 trillion yen ($23 billion) by selling a big chunk of its stake in the mobile unit, making it the largest IPO ever in Japan. Of the shares made available for trading, 90% will be sold in Japan and the bulk of them to retail investors.
Brokerages are becoming increasingly alarmed as the ripple effects of the signal outages reach some of their doorsteps.
One Tokyo man in his 70s spent Thursday and Friday visiting Nomura, Daiwa Securities and Mitsubishi UFJ Morgan Stanley Securities to cancel 100 million yen worth of orders to buy SoftBank shares at each brokerage. "There is too much negative information being released," he said.
Generally, investors have until Friday to notify brokerages of their intention to buy SoftBank shares. Payments are made during the four days through next Friday. It appears people are making inquiries about cancellations ahead of that date.
"I'd rather take a pass on buying shares at the time of the listing, then purchase them when I see signs of their hitting bottom," said one investor.
SoftBank said early Friday it had no plans to revise its outlooks on earnings or dividends. Later in the afternoon, a brokerage-hosted teleconference for institutional investors was held. SoftBank executives reportedly said the wireless disruption will have little effect on earnings projections.
One potential hit to earnings could come from paying restitution for damages. Some drivers for Sagawa Express, the core ground delivery unit of SG Holdings, were unable to use their company-issued devices or mobile phones during the outage. The exact scope of the problems has yet to be determined, but the affected drivers were unable to pick up packages or process redeliveries.
Sagawa Express declined to comment when asked if it will seek damages from SoftBank.
Individuals could also pursue compensation from SoftBank. The company says the possibility of being pressed for damages is "uncertain at this stage."