ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Companies

SoftBank's service crash rattles investors ahead of IPO

Some cancel stock purchases before Dec. 19 debut

SoftBank, Japan's No. 3 mobile carrier, is scheduled to go public on Dec. 19. Some investors canceled share purchases following the company's service disruption on Dec. 6. (Photo by Taichiro Sunaga)

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."

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more