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November 01, 2012

Japan's Softbank to Spend More on Capex

By Ed Silverstein, TMCnet Contributor

Japan's Softbank – which is planning to buy a $20 billion share in Sprint (News - Alert) Nextel – recently announced it will spend $8.8 billion on capex expenditures for the fiscal year through March 31.

In addition, Softbank plans capex of $6.9 billion in the next fiscal year to March 2014, according to Reuters.

Softbank’s share in Sprint Nextel (News - Alert) Corp represents 70 percent of the company. Sprint Nextel Corp is the third-largest U.S. carrier.

In other recent news, Softbank saw an increase of 6.7 percent in operating income to $2.6 billion in the most recent quarter, which includes the three months which ended in September, according to Bloomberg News.

On the other hand, Softbank saw its half-year net profit drop 22 percent when compared to the same time period a year ago.

Profits dropped in part because of the weak performance of such companies as Zynga, in which Softbank has a share. Also, last year Softbank sold shares in such companies such as Yahoo.

However, the strength of Apple's iPhone (News - Alert) and iPad helped Softbank’s financial situation. Softbank has also increased the number of smartphone subscribers.

Also, the new stake in Sprint Nextel adds 56.4 million mobile subscribers, so Softbank’s new total is 96 million subscribers in the United States and Japan.

Softbank will pay $12.1 billion to Sprint shareholders under the terms of the acquisition. Another $8 billion will go to company. After the deal is complete, the company expects to earn annual revenue of $32 billion, according to TMCnet.

“The Softbank/Sprint deal represents the second major transaction announced this month in the U.S. wireless market, following the agreement between T-Mobile (News - Alert) and MetroPCS,” Dexter Thillien a senior analyst of mobile communications at IHS, was quoted in a statement carried last month on TMCnet. “Both of these agreements are intended to bolster the competitive positioning of relatively small wireless carriers in the North American wireless market, which increasingly is being dominated by the AT&T (News - Alert)/Verizon duopoly.”

Edited by Brooke Neuman
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