reports
- Chris Hoare
Rakuten (Reduce, TP: ¥400, -47%) Not on track to hit breakeven targets
Rakuten has seen stronger customer growth recently. In this note, we analyse whether Rakuten is on track to hit its target 8-10m customers and ¥2,500-3,000 ARPU by year end, and what this means for Rakuten’s target EBITDA breakeven by Dec 2024.
- Chris Hoare
- Chris Hoare
Asia Telco Tour Feedback, Improving growth, ROCE and shareholder remun...
We ran our Asia Telco tour last week. This time we met 12 companies in 3 countries (Korea, Japan, Thailand). Telco share prices in all 3 of these countries have been pretty strong recently as telcos continue to benefit from generally positive themes: growth, return on capital and shareholder remuneration are all typically improving.
- Chris Hoare
Japanese Telcos Takeaways from Meetings with the Japanese Telcos + Ra...
We met with all 3 of the incumbent Japanese Telcos & Rakuten in Tokyo this week. Every time we visit we are reminded of how much better the telco industry is in Japan vs other DMs and we continue to be of the view that Japanese incumbents are in a “Golden Age”; ARPU inflection is being held back a little we think by voice weakness post-Covid but is likely to come through over time. The integration of financial services though is a game changer and means SB is the likely medium term “winner” in t...
- Chris Hoare
Japanese Telcos Q3 FY23 review: Gearing up for a strong Q4
Service revenue trend was softer on slower non-mobile this quarter. Collectively, mobile revenue trend (Consumer + Enterprise) maintained its second consecutive of growth and operators are implying a strong Q4. For instance, Softbank is expecting Consumer MSR to rebound this year (at flat YTD); NTT implying a strong Q4 EBIT on cost reductions and streamlining of non-core assets like Real Estate.
- Chris Hoare
- Chris Hoare
Rakuten (Reduce, TP: ¥400, -45%) Why did the stock go up 16%? Is this...
Such a sharp rally in a stock that we are negative on impels us to question our thesis. In this short note we try to address the question of whether Rakuten is at a turning point, or, in other words: “Are we wrong to be negative”. Plus model update.
- Chris Hoare
Japanese Telcos What if Japan introduces Spectrum Auctions? Could it ...
Wireless spectrum is one of the most valuable commodities in the telecoms market. Japanese telcos have previously been issued spectrum for free. But what if it starts to be auctioned? In this note, we use our new proprietary SpectrumHub Global Database to calculate the likely cost of mmWave spectrum in Japan. We also look at the total value of all spectrum held by the incumbents, to address the implications if Japan were to move to auction for all spectrum.
- Chris Hoare
Rakuten (Reduce, TP: ¥400, -37%) Q4 23 Quick Take: Mixed - better on ...
Rakuten’s topline trend was slower but overall losses eased further on lower mobile losses. Despite this, EBIT was still behind consensus this quarter (Q4: -¥33bn vs ¥-28bn consensus). Non-GAAP Mobile loss improved from ¥81bn to ¥71bn but the loss was still higher than expectations.
- Chris Hoare
Rakuten (Reduce, TP: ¥400, -39%) Strong headwinds below EBIT
We update our model for better subscriber figures, offset by increased interest payments as Rakuten refinances. With minority interest also rising driven by the sale of stakes in Rakuten Bank and Securities, Rakuten’s P&L is facing strong headwinds even as mobile improves and we see the Group overall loss-making at net profit level until 2030 as a result. We stay at Reduce and our price target stays at ¥400.
- Chris Hoare
Rakuten (Reduce, TP: ¥400, -41%) Rakuten starts refinancing debt moun...
Rakuten announced plans to issue USD denominated senior notes due 2027 to repurchase up to USD 1 billion of its USD denominated debt due this year. The company also stated intentions to repurchase its JPY senior bonds (c. USD 712m due in 2024) in the near future.
- Chris Hoare
- Chris Hoare
Japanese Telcos At a MAJOR inflection as Fintech integration drives A...
Something significant has shifted in Japan. The telcos, and especially KDDI and SB Corp are now using their strength in financial services to drive customers towards unlimited offers. The result is likely to be an acceleration of ARPU recovery, and suggests we are at an important inflection point. We lift ARPU forecasts and price targets. SoftBank Corp is our new top pick, PT ¥2,500, from ¥2,200.
- Chris Hoare
- Chris Hoare
- David Lopes
Japanese Telcos Q2 FY23 review: Better all around, driven by ARPU inf...
Japanese telcos delivered better service revenue growth in Q2, driven by an inflection in mobile and non-mobile segments. Mobile performance for KDDI and Softbank were very encouraging, with the former hitting inflection on both mobile revenue (expected) and ARPU growth (earlier than expected) while Softbank witnessed an earlier than expected bottoming of MSR and upgraded its full year ARPU guidance from ¥3,680 to ¥3,720. Across the board, EBITDA trend was also better.
- Chris Hoare
Rakuten (Reduce, TP: ¥400, -27%) Rakuten, Q3 23 Quick take – Selling ...
Rakuten’s Q3 trends were weaker in aggregate, with disappointing figures from mobile and overall losses were worse than expected. Importantly, Mobile loss barely improved, from ¥82bn to ¥81bn, and sequential MNO revenue remains weak in our view; only up by ¥2.1bn (Q3: +¥1.8bn).
- Chris Hoare
Rakuten (Reduce, TP: ¥400, -30%) 700 MHz band allocation. Our thought...
Yesterday, and as expected, Rakuten received approval from the MIC for base station deployment using the 700MHz band. Our thesis on Rakuten remains unchanged and as we have detailed before, platinum band is not the saviour. Our thoughts below.
- Chris Hoare
- Chris Hoare
- David Lopes
Feedback from Meetings with the Japanese Telcos plus Rakuten in Tokyo
We met with all 3 of the incumbent Japanese Telcos & Rakuten in Tokyo last week. We continue to be of the view that Japanese incumbents are in a “Golden Age” with ARPU likely to inflect relatively sharply, Rakuten threat fading fast, capex and opex under control and therefore cash flow growth likely to be ahead of expectations.
- Chris Hoare
Japanese Telcos Q1 FY23 review: Softer quarter; mobile inflection rem...
Japanese telcos reported a slower service revenue growth driven by non-mobile, which was a reflection of lumpiness rather than weakness in fundamentals. Mobile growth continue to be supportive of our V-shape recovery thesis, with declines easing across the board.
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