Tough luck for wireless carrier SoftBank which has reported huge third quarter losses as their subscriber growth remained the same. Their net income has fallen to 18.7 billion yen in just three months starting with December. That’s equivalent to $158 million – ouch.
Japan has three primary carriers among which SoftBank has the slowest growth in terms of new subscribers. They also have the lowest customer spending with users making very few voice calls every month. SoftBank also has a serious debt which it has amassed over the years, a debt equivalent to $22 billion. Having ended the third quarter, the Japanese company only reports 355,000 new subscribers, as compared to around 700,000 that NTT Docomo Inc. reported, and even lower than KDDI Corp.
If we look at 2013, we can also see a decrease in the revenue generated by every user of the carrier’s mobile service. In the third quarter 2 years ago we saw each customer generate a revenue of 4,490 yen, as compared to 4,250 yen in the third quarter of 2014. Things are definitely going downhill for the Japanese carrier, so it will have to take some big measures in order to avoid a disaster.
Fortunately, SoftBank has some plans to recover from these losses, with a series of measures. One of those will begin on the 1st of March where it will start offering discounts to all its subscribers on smartphone bills. This decision is based on a similar strategy by NTT Docomo and KDDI. They will also reduce operatings in Silicon Valley in order to reduce their costs.
Sprint is also reporting huge losses as of late, from $765 million in 2013 to $2.4 billion. There were some talks of T-Mobile merging with Sprint in order to create a powerful carrier to compete with AT&T and Verizon Wireless Communications Inc., but they didn’t come to an agreement.
Softbank was founded in 1981 and contains about 1,300 companies per total, which is more than 32% of Alibaba and they’re still expanding. These losses have a huge impact on every one of the shareholders, so the stakes are pretty high. The Japanese wireless carrier will probably recover in time, but if it won’t, then it will have to consider some really drastic measures.