Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> results were weak as expected as mobile price reductions carved into the consumer revenue base</li>
<li>Management released some further details on PayPay including a revenue number that implies continued improvement in take rates and plans to carve out a new segment for financial services</li>
<li>Both KDDI and Softbank net adds were weaker sequentially v Q4 which bodes well for NTT and possibly Rakuten</li>
</ul>



Softbank Corp (9434 JP) results were weak as expected as mobile price reductions carved into the consumer revenue base
Management released some further details on PayPay including a revenue number that implies continued improvement in take rates and plans to carve out a new segment for financial services
Both KDDI and Softbank net adds were weaker sequentially v Q4 which bodes well for NTT and possibly Rakuten


Softbank Corp (Buy) - Q1 22 Results Reaction: Largely In-Line with Reduced Expectations

<ul>
<li>Softbank and Z Holdings have confirmed the conversion of PayPay preferred equity into common in-line with previous guidance for ownership levels and a revaluation gain</li>
<li>Z Holdings will sell the credit card business to PayPay to align transactional fintech which makes distribution, product development and branding easier</li>
<li>Our outlook has not changed but we are lowering our target price to reflect diminished expectations announced at Q4 results. We remain at Buy but prefer NTT/KDDI in telcos</li>
</ul>


Softbank and Z Holdings have confirmed the conversion of PayPay preferred equity into common in-line with previous guidance for ownership levels and a revaluation gain
Z Holdings will sell the credit card business to PayPay to align transactional fintech which makes distribution, product development and branding easier
Our outlook has not changed but we are lowering our target price to reflect diminished expectations announced at Q4 results. We remain at Buy but prefer NTT/KDDI in telcos


Softbank Corp (Buy) - PayPay Conversion, Re-Valuation Gain Confirmed for Q3

Thematic (Sector/Industry)

<ul>
<li>MIC data provides further support that regulatory pressure was successful in driving down industry prices with 40mn users on discount plans that are among the cheapest globally</li>
<li>That has led to ¥230-250bn in service revenue erosion for both FY21 and FY22e but evidence of a solid win for regulators reassures that further action isn't needed</li>
<li>Handset pricing is on the rise as 5G proliferates, which is good news for incumbents that can lock users in through instalment payment plans</li>
</ul>


MIC data provides further support that regulatory pressure was successful in driving down industry prices with 40mn users on discount plans that are among the cheapest globally
That has led to ¥230-250bn in service revenue erosion for both FY21 and FY22e but evidence of a solid win for regulators reassures that further action isn't needed
Handset pricing is on the rise as 5G proliferates, which is good news for incumbents that can lock users in through instalment payment plans


Japan Telecoms - Update from Regulators’ Competition Working Group

<ul>
<li>KDDI's entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints </li>
<li>There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)</li>
<li>Looking past near-term weakness, KDDI remains an attractive defensive play </li>
</ul>


KDDI's entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints 
There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)
Looking past near-term weakness, KDDI remains an attractive defensive play 


KDDI (Buy) - Network Outage Is a Bad Look but Concerns Should Fade over Time

<ul>
<li>The regulator says that subscribers to discount mobile plans have exceeded 40mn, 15 months after mobile operators first launched them  in response to regulatory pressure</li>
<li>Net additons have stepped down as the rush of early adopters has passed and the data seems supportive of financial guidance for erosion that is modestly higher YoY</li>
<li>A press release touting the success of <em>ongoing</em> efforts to control mobile pricing comes at a good time</li>
</ul>


The regulator says that subscribers to discount mobile plans have exceeded 40mn, 15 months after mobile operators first launched them  in response to regulatory pressure
Net additons have stepped down as the rush of early adopters has passed and the data seems supportive of financial guidance for erosion that is modestly higher YoY
A press release touting the success of ongoing efforts to control mobile pricing comes at a good time


Japan Telecoms - New (Discount) Mobile Pricing Plan Users Exceed 40mn

Japan

Softbank Corporation provides mobile phone telecommunication and networking services. The Company offers mobile communication opening, short messaging function opening, video function opening, and other services. Softbank also provides mobile phones.

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Softbank Corp (9434 JP)

Softbank Corp (Buy) - Q1 22 Results Reaction: Largely In-Line with Reduced Expectations

Softbank were slightly below expectations but consumer downside tracks guidance for the year. There were bright spots (utility, corporate) whilst...

Kirk Boodry

Softbank Corp (Buy) - PayPay Conversion, Re-Valuation Gain Confirmed for Q3

Softbank / Z Holdings have finalized the PayPay convert for Q3 22. This is largely as expected and our outlook does not change although we have...

Kirk Boodry

Japan Telecoms - Update from Regulators’ Competition Working Group

Further evidence that price reductions have met expectations as regulator working group prepares its final report on the competition. NTT remains...

Kirk Boodry

KDDI (Buy) - Network Outage Is a Bad Look but Concerns Should Fade over Time

KDDI's network outage was large-scale but financial and operational impacts should be limited to Q2 and our overall outlook on the stock as an...

Kirk Boodry

Japan Telecoms - New (Discount) Mobile Pricing Plan Users Exceed 40mn

The regulator says there are users of new discount mobile pricing plans have exceeded 40mn. That tracks with financial guidance and is a positive...

Kirk Boodry

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