Recent Business Results | SOFTBANK CORP.

Earnings results for the six-month period ended September 30, 2011

On October 27, 2011, SOFTBANK CORP. announced its consolidated earnings results for the six-month period ended September 30, 2011 (second quarter).

In its consolidated financial results for the second quarter, SOFTBANK recorded net sales of 1,535.6 billion yen (a year-on-year increase of 5%) and EBITDA^*1 of 533.1 billion yen (an increase of 16%). Operating income was 373.2 billion yen (an increase of 18%) and ordinary income was 314.4 billion yen (an increase of 24%). Operating income marked record high^*2 for six consecutive periods, outperforming KDDI again as in the same period of the previous fiscal year. Net income significantly grew by 2.8-fold to 217.2 billion yen, outperforming KDDI for the first time.
Net interest-bearing debt^*3/EBITDA^*1 multiple was 0.7 times, below 1.0 times which is an indicator of financial soundness. With increase of profit and reduction of debt, the financial soundness keeps improving.

Progress on the commitments

The SOFTBANK Group is making steady progress on the commitments, while improving its financial condition significantly.

Reducing net interest-bearing debt^*3 as of the end of March 2009 by half over three years (by the end of March 2012) was accomplished in the end of September 2011, 6 months earlier than its original target.
Generating an aggregate total of 1 trillion yen in free cash flow^*4 over the three years from fiscal 2009 (period from April 1, 2009 to March 31, 2012) was also accomplished 6 months earlier than its original target.
Consolidated operating income for fiscal 2010 was 629.1 billion yen, much higher than its original target of 500.0 billion yen, achieving the target for three consecutive periods from fiscal 2008.

Strong results of Mobile Communications segment

SOFTBANK MOBILE Corp. recorded 1,490,000 net additions for the six-month period ended September 30, 2011, retaining its overwhelming No.1 position. With WILLCOM, Inc.^*5 which became a member of the SOFTBANK Group late last year, cumulative number of subscribers reached 31,050,000 as of the end of September 2011, doubling the number in 5 years. Data ARPU^*6 also showed a steady increase, contributing to the telecommunications revenue in the Mobile Communications segment with 71.18 billion yen (an increase of 14%). As a result, operating income of the mobile communications segment also outperformed that of KDDI for the first time.

[Notes]

*1EBITDA＝operating income (loss) + depreciation and amortization (including amortization of goodwill) + loss on disposal of fixed assets included in operating expenses.
*2Since SOFTBANK CORP. applied consolidated accounting in FY1994.
*3Net interest-bearing debt = interest-bearing debt - cash position.
Interest-bearing debt = short-term borrowings + commercial paper + current portion of long-term debt + long-term debt. Lease obligations are not included. FY2007 interest-bearing debt is calculated with retroactive adjustments by adding the cash receipts as collateral relating to marketable security lending transactions. This excludes the corporate bonds (WBS Class B2 Funding Notes, issued by J-WBS Funding K.K.) with a face value of 27.0 billion yen acquired by SOFTBANK CORP. during fiscal 2010 that were issued under the whole business securitization scheme associated with the acquisition of Vodafone K.K.
Cash position = cash and cash equivalents + marketable securities recorded as current assets (excludes Yahoo! Inc. shares held by a subsidiary of the Company in the United States of America) + time deposits with original maturity over three months.
*4Free cash flow = cash flows from operating activities + cash flows from investing activities.
*5SOFTBANK CORP. owns 100% shares issued by WILLCOM, Inc. However, WILLCOM is in the process of rehabilitation under the Corporate Rehabilitation Act and SOFTBANK does not have effective control over WILLCOM. Therefore, WILLCOM is not treated as a subsidiary and not included in any of the above figures.
*6ARPU: Average Revenue Per User. Revenue and number of mobile phone subscribers include prepaid mobile phones and communication module service subscribers.

Confidence in the sustainable growth

As for iPhone 4S, number of preorders, net additions and performance are continuously showing good trend, although iPhone was also launched by KDDI from this October.
At the same time, SOFTBANK MOBILE keeps putting every effort to enhance its network quality to overcome its “only weakness”. Number of base stations is now eight-fold in five years, and the coverage at home improved to almost the same level as the competitors', which was the major customer concern. Number of Wi-Fi access points is 125,000, outperforming the competitors, and since November 2011 wireless LAN service has been made available at every station of Tokyo Metro in addition to Toei Lines. We keep strong desire to obtain 900 MHz bandwidth, which we are scheduled to apply for in December 2011. SOFTBANK MOBILE announced to spend 1 trillion yen of CAPEX in two years from fiscal 2011 for the further improvement of the network to sustain its continuous growth.

Evolution as an Internet company

Mobile Internet

Over the last few years the SOFTBANK Group made a significant development by promoting the mobile Internet. Especially, launch of iPhone and iPad had a strong impact on the domestic mobile phone market. Internet machines such as smartphones and tablets keep playing a major role in the mobile Internet strategy of the SOFTBANK Group.

Two investments

As a part of the Internet strategy in Asia, SOFTBANK made two new investments.
One of the investments was in InMobi of the InMobi Group which develops one of the largest mobile advertisement networks in the world. SOFTBANK made an investment of 100 million dollars, and will become the largest shareholder after an additional investment of 100 million dollars by April next year.
In addition, SOFTBANK established a joint venture called “Bharti SoftBank Holdings Pte. Ltd.” together with the Bharti Group which includes Bharti Airtel Ltd, India's largest^*7 mobile services provider. It aims to develop India's mobile Internet market which has high growth potential, and plans to expand its business through investments in promising mobile Internet companies mainly focused on the social media, game and ecommerce areas.