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SoftBank Earnings Sunk by Sprint

By Staff Author | February 10, 2015

SoftBank reported a large profit decline in its latest quarter, due in large part to a big loss related to Sprint. SoftBank

The Japanese company, which owns an 80-percent stake of Sprint, reported a GAAP impairment loss of $2.13 billion from Sprint. Although, SoftBank’s IFRSs accounting practices means the loss is reflected differently in its earnings.

SoftBank’s net profit for its fiscal third quarter plummeted by about two-thirds.

SoftBank CEO Masayoshi Son acknowledged the challenges with turning around Sprint and said that the business plan has changed since SoftBank acquired Sprint in 2013.

“One of the pillars of our strategy was to merge Sprint with another player. That was the plan,” Son said during a press conference.

SoftBank’s and Sprint’s efforts last year to acquire T-Mobile fell short on resistance from U.S. regulators. Sprint has since lowered its amount of postpaid subscriber losses but T-Mobile has continued its rapid subscriber growth and has drawn close to surpassing Sprint as the third-largest U.S. carrier.

Son declined to comment on when Sprint will return to positive growth but insisted that the carrier is making step-by-step progress. He gave credit to Sprint CEO Marcelo Claure, appointed last summer, for helping spark a recovery that’s narrowed losses and improved the carrier’s network.

In RootMetrics’ newest network performance report, Sprint rose to third overall among the top four U.S. wireless providers and made performance progress, particularly on calls, on the state and metro market level. But Sprint’s LTE network is still the slowest in the country.

Claure said in an interview with CNET that T-Mobile would be in for a rude awakening when the new RootMetrics report arrived. But, in a separate interview, RootMetrics CEO Bill Moore told us that both Sprint and T-Mobile saw network improvements. Although T-Mobile fell to fourth overall nationwide, the carrier is now on par with Verizon for data speeds in the all-important metro markets where the majority of the U.S. population lives.

Sprint has stressed that network improvement and compelling offers are priorities for the carrier right now. Son Tuesday highlighted Sprint offers like the on-going deal to cut in half Verizon and AT&T customers’ bills.

Aside from Sprint’s top priorities, Claure has said it’s essential the carrier expands its presence and distribution channels. Last week, Sprint may have achieved just that with a deal to take over many of RadioShack’s retail locations as the electronics company files for bankruptcy.

As Sprint expands and gradually improves, Claure and Son have both discussed the possibility of selling some of Sprint’s vast spectrum holdings in the 2.5 GHz band. Sprint got the airwaves when it bought Clearwire and, following the record $41.3 billion haul for the FCC’s auction of AWS-3 spectrum, Sprint’s spectrum may have gone up in value.

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