Japanese telco, SoftBank Corp, said on Wednesday it would spend $4 billion to up its stake in Yahoo Japan Corp and turn the Internet company into a subsidiary, a move that would help boost its profit by 24 percent this year.
The telco said it would buy 456.5 billion yen ($4.2 billion) worth of new shares to be issued by Yahoo Japan, increasing SoftBank Corp’s stake to 45 percent from 12 percent.
With that expansion, SoftBank Corp, which recorded in December in Japan’s biggest ever first sale of stock, gauge its working benefit would ascend to 890 billion yen in the current money related year through March 2020.
SoftBank Corp will buy the shares at 302 yen each, or a 2.3 percent discount to Wednesday’s closing price.
Separately on Wednesday, SoftBank Corp’s parent, SoftBank Group Corp, said it would sell its 36 percent stake in Yahoo Japan back to the Internet company.
The arrangement will fortify participation between SoftBank Corp, Japan’s third-biggest telco, and Yahoo Japan, a web heavyweight in territories, for example, news and shopping.
The closer relationship will help drive growth at shared ventures such as QR code payment app, PayPay, SoftBank Corp Chief Executive Ken Miyauchi, said at a news conference.
Concern over the viewpoint for Japan’s telcos, which face government strain to cut transporter charges just as rivalry from the new contestant, Rakuten Inc, has kept SoftBank Corp shares beneath their IPO cost.
Some analysts see the telco as well positioned to weather the price squeeze as it targets data-heavy smartphone users with premium-priced plans while offering low-cost options for thrifty customers under separate branding.
The telco reported a 17 percent drop in fourth-quarter operating profit to 84.5 billion yen from a year earlier, even as revenue grew.
The result missed the 93 billion yen average of three analyst estimates compiled by Refinitiv.
SoftBank Corp, with its ample cash flow, is a key indicator of the health of parent SoftBank Group, which reports its fourth-quarter earnings on Thursday.
