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Softbank to pump money into Vodafone unit after Q1 profits

by Staff Writers
Tokyo, Aug 8, 2006
ATTENTION -president quotes /// Softbank Corp said Tuesday it returned to profit in the first quarter on a broad business turnaround and vowed to spend aggressively to make its acquisition of telecom giant Vodafone's Japanese unit a success.

Softbank said its Internet service and fixed-line Japan Telecom telephone business shaped up, helping the conglomerate post a net profit of 1.42 billion yen (12.39 million dollars) in the three months to June.

The company had posted a loss of 11.15 billion yen in the first quarter last year.

"We are no longer saddled with any loss-making businesses, as both our broadband business and Japan Telecom turned profitable," said Softbank president Masayoshi Son, one of Japan's richest entrepreneurs.

Softbank, which owns search engine Yahoo Japan, said operating income reached 54.36 billion yen for the quarter, against a loss of 3.19 billion in the same period last year, as revenue jumped 91 percent to 494.23 billion yen.

Son built the sprawling Softbank group by buying stakes in hundreds of companies.

In April, it completed a deal to buy Vodafone Japan for 15 billion dollars. It plans to rebrand it "Softbank Mobile" on October 1, ditching the name of the British giant which struggled to penetrate the tough Japanese market.

"To prepare for the brand change ... and to speed up the construction of mobile base stations, we will make aggressive investments in the second quarter and also in the third quarter," Son told a news conference.

Vodafone Japan had earlier planned to spend some 500 billion yen over the next three years to March 2009 to expand its third generation (3G) network amid intense competition with industry leader NTT DoCoMo.

"But we may spend a major portion of this three-year budget in the current fiscal year alone to double the number of 3G base stations in order to improve the connectivity," Son said.

"Even though we will spend heavily in starting up the 3G service in the next two quarters, I am sure that we can continue to post operating profits in those quarters," he added.

Softbank saw a particular turnaround in the first quarter in its ADSL service, which racked up 9.3 billion yen in profit in the first quarter as opposed to a 12.4 billion yen loss a year earlier.

"The ADSL business is now quickly expanding, and this allowed us to return to quarterly operating profit," Son said.

Softbank also earned operating profit of 27.3 billion yen in its mobile phone service.

Softbank had acquired Japan Telecom to offset a slowdown in the growth rate of subscribers to the ADSL business two years ago.

The move is now paying dividends with the group posting operating profit of 1.2 billion yen in the fixed-line phone service for the quarter, reversing an operating loss of 14.1 billion yen a year earlier.

"While we took four and a half years to turn around the ADSL business, we managed to make the fixed phone service profitable in just a little over one year," Son said.

For the full year to March 2006, Softbank also returned to profit thanks to brisk sales of its broadband services. Softbank did not provide any forecasts for the year to March 2007.

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Japan's Softbank returns to profit in Q1
Tokyo, Aug 8, 2006
Japan's Softbank Corp said Tuesday it returned to profits in the quarter to June as its loss-making Internet service business turned around and its mobile phone operations brought in cash.







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