SoftBank mobile unit tumbles 14.5% on debut

TOKYO • Shares of SoftBank's mobile unit, SoftBank Corp, tumbled more than 14 per cent on its debut, as investor appetite for Japan's biggest IPO was hurt by a recent service outage at the telecoms operator and worries over its exposure to Chinese telecoms gearmaker Huawei.

The poor start for the unit of investment giant SoftBank Group Corp meant that for Japan's mom-and-pop investors, concerns about the company and the nation's telecoms market trumped the appeal of the group's charismatic founder Masayoshi Son.

Such a debut is also uncommon in the Japanese initial public offering (IPO) market.

Of 82 IPOs so far this year, SoftBank Corp's US$23.5 billion (S$32.2 billion) float was only the seventh to open below the offer price. Among recent major IPOs, Japan Display was the only one to flop, suffering a fall in its 2014 debut.

"There was a disruption in its network early this month as well as Huawei's issues. There hasn't been good news involving SoftBank recently," said Mr Tetsuro Ii, chief executive officer at Commons Asset Management.

Shares of SoftBank Corp closed at 1,282 yen, or 14.5 per cent lower than its IPO price of 1,500 yen. They opened at 1,463 yen.

SoftBank Corp shares were the most heavily traded on the Tokyo Stock Exchange's first section.

SoftBank Group lost 0.9 per cent and the broader Tokyo market eased 0.4 per cent.

The IPO was just shy of the world record US$25 billion 2014 listing of Chinese e-commerce giant Alibaba Group Holding, a SoftBank Group portfolio company.

SoftBank Group raised 2.65 trillion yen (S$32.3 billion) in the IPO. It will retain about 63 per cent of the newly listed unit should a greenshoe option be exercised in full.

Adding to investor worries, SoftBank Corp's relationship with Huawei Technologies came under scrutiny as governments around the world moved to shut out the Chinese firm amid worries that its gear could facilitate Chinese spying.

SoftBank Corp, which has the most exposure to Huawei among Japanese telecoms firms, plans to replace Huawei-provided 4G network equipment with other suppliers' hardware, two sources said, in a process likely to be time-consuming and expensive.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 20, 2018, with the headline 'SoftBank mobile unit tumbles 14.5% on debut'. Print Edition | Subscribe