Japanese telecommunications and internet company SoftBank reported a 27 percent drop in net profit for the fiscal year ending March 31, and a 30 percent drop in operating profit in the three months through March, as it struggled to turn around the fortunes of Sprint — the Kansas-based wireless carrier it bought two years ago.
The Tokyo-based company reported 558.2 billion yen ($5.1 billion) in net profits in the fiscal year ending March 2016, down from 763.7 billion yen it reported in the previous year. However, its operating profit rose 8.8 percent to 999.5 billion yen from 918.7 billion yen while revenue surged 7.6 percent year-on-year to 9.153 trillion yen.
Operating profit in the January to March quarter dropped to 124 billion yen from 177 billion yen in the year-earlier period. Net profit in the quarter also fell to 45 billion yen from 89 billion yen in the same period last year.
“They’ve seen two years of declines and it’s about time they put a stop to that and begin growing revenues,” Satoru Kikuchi, an analyst at SMBC Nikko Securities in Tokyo, told Bloomberg. “The turnaround will take some time.”
SoftBank, with the aim of offsetting stagnating growth in the domestic market, bought Sprint for $22 billion in 2013. However, since the acquisition, concerns about the American wireless carrier’s massive debt burden, estimated at over $30 billion, have impacted SoftBank’s bottom line and share prices.
However, on Tuesday, SoftBank founder and CEO Masayoshi Son said that Sprint was “making solid progress.”
“Sprint aims to return to a growth trajectory by turning around the ongoing declining trend in net sales while promoting large-scale cost reductions and liquidity improvement. As for net sales, Sprint is focusing on increasing the number of postpaid phone subscribers, which are the largest source of revenue and profit,” SoftBank said in a statement. “Meanwhile, in cost reduction and liquidity improvement, Sprint is making solid progress on multiple initiatives as described below. ... Sprint set a target of reducing operating expenses by $1.5 billion in the fiscal year and reviewed the budget from scratch across all areas.”