LONDON • SoftBank Group is considering seeking a valuation of about US$90 billion (S$123 billion) for its domestic wireless business in a planned initial public offering (IPO), people familiar with the matter said.
SoftBank is speaking to advisers about selling a third - or about US$30 billion (S$41 billion) - of the business in the IPO, sources said.
Discussions are preliminary and the final valuation will depend on investors' feedback, they said.
A US$30 billion IPO would make SoftBank Mobile the largest listing ever. Alibaba Group Holding made its market debut in 2014 with a US$25 billion offering, the biggest so far.
SoftBank is seeking a higher price-to-earnings premium for its wireless business than its closest publicly traded peers, NTT Docomo and KDDI Corp, the sources said.
Shareholders believe the cash-rich company's guaranteed dividend yield, as well as its technology partnerships and the benefits of being linked to the parent firm, may help achieve that higher valuation, they said.
The SoftBank unit could be listed as early as the fourth quarter.
Other companies coming to market this year with high expectations on valuations have found that investors do not always agree with them. Chinese smartphone maker Xiaomi currently has a market value of almost US$50 billion following its debut last month, or just half of the figure touted when it began the process last year.
SoftBank founder Masayoshi Son said in his investor presentation on Monday that he is working towards a listing on the Tokyo Stock Exchange. The division's free cash flow more than doubled to 154 billion yen (S$1.9 billion) in the three months ended June.
Revenue from domestic telecommunications operations, which include wireless, broadband and fixed-line services, rose 4.6 per cent to 880.5 billion yen in the quarter.
Profit was little changed. SoftBank had 33.6 million mobile subscribers, an increase of 434,000 from the previous quarter.
The Internet has been at the heart of Mr Son's vision of the future for years. During the advent of mobile Internet via the smartphone, the billionaire got exclusive rights to sell the iPhone in Japan.
But recently, Mr Son has begun turning SoftBank into a giant investment portfolio - with money injected into industries ranging from ride-hailing to co-working spaces - while looking to offload mobile assets. In April, SoftBank agreed to sell a controlling stake in Sprint - its US telecoms business - to T-Mobile US.
SoftBank's first-quarter earnings results released on Monday gave an early taste of what Mr Son is aiming for. Operating profit rose 49 per cent, fuelled mainly by investment gains, including a 245 billion yen boost from the Vision Fund and 161 billion yen from the sale of subsidiary ARM's Chinese unit.
The fund's contribution was mainly due to a valuation gain from the planned sale of Flipkart Online Services, the leading Indian e-commerce player, to Walmart and an increase in fair value of WeWork Companies.
"On the positive side, there's the impressive performance of the Vision Fund's investments, a performance which essentially showcases Son's deal-making capabilities," said Mr Pelham Smithers, whose London-based firm offers equity research on Asian tech firms.
"The mobile business is doing much better than feared, though performance may be dressed up, ahead of October's anticipated IPO."