SoftBank's mobile unit plunges 15% after second biggest IPO in history

SoftBank's blockbuster IPO has flopped in its market debut.Shares in the Japanese company's mobile te...

Posted: Dec 19, 2018 4:07 PM
Updated: Dec 19, 2018 4:07 PM

SoftBank's blockbuster IPO has flopped in its market debut.

Shares in the Japanese company's mobile telecommunications unit plummeted 15% in Tokyo on Wednesday, their first day of trading. The stunning plunge wiped out billions of dollars in market value.

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Initial public offering

The business is one of Japan's biggest wireless carriers and has provided the foundation for SoftBank CEO Masa Son's vast tech empire. By listing a big chunk of it, SoftBank Group (SFTBY) raised about $23.5 billion.

That makes it Japan's biggest ever stock float — and the world's second largest after Alibaba's (BABA) $25 billion listing in New York in 2014.

Strong demand from investors for a piece of the mobile business had prompted SoftBank to increase the number of shares it was selling. But it went public at a tough time for stocks: Japan's benchmark Nikkei index has fallen 7% since the start of December and is down about 14% from its recent high in early October.

SoftBank's mobile business, which has a market value of about $55 billion, also suffered some negative headlines this month. It suffered an embarrassing service outage on December 6 and said last week it's reviewing whether to remove equipment made by Chinese manufacturer Huawei from its network, a potentially costly move.

The CEO of SoftBank's mobile division, Ken Miyauchi, blamed the disappointing debut on poor market conditions. At a news conference after the market closed, he said that SoftBank had originally planned the IPO for September or October, before delaying it until December.

Fears of a price war

Japanese mom-and-pop investors, who bought up most of the shares in the IPO, were dumping the stock on the first day partly over fears of a damaging price war, according to analysts.

Japan's biggest wireless carrier, NTT Docomo (DCMYY), will slash the prices of its cellphone plans by as much as 40% next year after pressure from the Japanese government. Softbank is expected to follow suit.

Travis Lundy, an analyst at investment research platform Smartkarma, said the main reason for investors to buy the stock is because it pays a 5% dividend, which is large by Japanese standards. If a price war hits earnings, that dividend could come under threat.

Listing the mobile business is a key part of Son's efforts to reposition SoftBank as a global tech investor. The move splits the company in two, allowing investors to choose between its mobile unit and its tech investment business, which includes a big stake in Alibaba.

Son, SoftBank's billionaire founder, has become a major player in the global tech industry after launching the almost $100 billion Vision Fund last year. But the fund's heavy ties to Saudi Arabia came under scrutiny in October following the murder of Saudi journalist Jamal Khashoggi.

The Saudi sovereign wealth fund is the biggest single investor in the Vision Fund.

Son expressed "strong regret" last month over the killing of Khashoggi, but said it would maintain its ties with Saudi Arabia.

Mississippi Coronavirus Cases

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Cases: 319948

Reported Deaths: 7371
CountyCasesDeaths
DeSoto22285267
Hinds20719421
Harrison18431317
Rankin13901282
Jackson13718248
Madison10263224
Lee10059176
Jones8467167
Forrest7832153
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Washington5425137
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Pike3371111
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Holmes190474
Stone188433
Clay187954
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Clarke178980
Calhoun174132
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Smith164134
Walthall135347
Greene131834
Lawrence131124
Montgomery128643
Noxubee128034
Perry127238
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Jefferson Davis108234
Tunica108127
Claiborne103130
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Humphreys97533
Kemper96629
Franklin85023
Quitman82216
Choctaw79118
Wilkinson69632
Jefferson66228
Sharkey50917
Issaquena1696
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Alabama Coronavirus Cases

Cases: 548657

Reported Deaths: 11306
CountyCasesDeaths
Jefferson810031566
Mobile42105831
Madison35690525
Tuscaloosa26173458
Shelby25607254
Montgomery25081614
Baldwin21868314
Lee16278176
Calhoun14719327
Morgan14629285
Etowah14175364
Marshall12453230
Houston10781287
Elmore10293214
Limestone10179157
St. Clair10162251
Cullman9952201
Lauderdale9603250
DeKalb8972190
Talladega8460184
Walker7338280
Autauga7241113
Blount6945139
Jackson6932113
Colbert6413140
Coffee5635127
Dale4928116
Russell454841
Chilton4476116
Franklin431382
Covington4275122
Tallapoosa4138155
Escambia401680
Chambers3728124
Dallas3607158
Clarke353061
Marion3240107
Pike314378
Lawrence3133100
Winston283472
Bibb268564
Geneva257981
Marengo250565
Pickens236962
Barbour234559
Hale227278
Butler224271
Fayette218862
Henry194543
Randolph187544
Cherokee187345
Monroe180041
Washington170539
Macon163051
Clay160059
Crenshaw155957
Cleburne153444
Lamar146837
Lowndes142254
Wilcox126930
Bullock124342
Conecuh113630
Coosa111729
Perry108626
Sumter105732
Greene93634
Choctaw62125
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