Service revenue slowed for the incumbents but stayed in the low-single digit band, with Softbank still ahead followed by NTT. Mobile divergence continues to play out with SB leading the pack and is likely to remain so in our view. Industry EBITDA improved as NTT inflected to growth and led to a strong EBIT beat this quarter.
Pelham Smithers reviews the FY24 Q3 performance of Rakuten which saw the firm move into the black, boosted by a +53% YoY increase in the Fintech business. The key question is whether the stock is likely to hit EV/adj OP of 15~16x within three years?
Rakuten reported mixed results as revenue and EBIT were slightly ahead of expectations, but net profit recorded a large miss. The company has redefined Mobile EBITDA to include ecosystem benefits which seems disingenuous to us when it is apparent it is unable to achieve breakeven within by the end of this year.
KDDI today announced an increase in their share buyback from ¥300-¥400bn this year. On the call, the company indicated that this pace could be maintained at least for next year suggesting a structural increase in share buybacks. Thoughts below.
In our latest Asia Monthly, we discuss the performance of major Asian credit indices and review UST curve movements in October 2024. We also provide a recap of major news and macroeconomic releases, including those from the US, China, India, Indonesia and Japan. In addition, we summarise the Top/Bottom performers, recent USD bond issuances and rating actions in Asian corporate credit, as well as a list of our recent research. The Asia Monthly publication serves to keep investors updated on d...
KDDI’s results were okay in Q2 as it was pegged against a tougher comparable. Topline remained ahead of expectations while EBIT was slightly behind YTD though we believe it is likely to improve on the back of DX, synergies from Lawson, mobile and declining roaming losses from Rakuten
Rakuten has announced that the company is no longer proceeding with its Fintech reorganisation, preferring instead to enter a deep alliance with (and probably stake sale to) Mizuho. In this brief note, we address what we think Card is likely to be worth in a sale and the implications for Rakuten.
When the BoJ raised rates in March, it had been 17 years since it had last done so, though the world was very different then. While the July rate hike was unlikely to move the economic needle, the question now is what else might follow the subsequent financial market maelstrom. Pelham Smithers discusses the outlook for Japan’s macro environment, what new fiscal policies the new PM might introduce, how the BoJ might react and the all-important trend in corporate earnings. This then leads us to...
Rakuten has ditched its FinTech reorganization plans since it was announced six months ago. Instead, the Group is now opting to deepen the collaboration between its main arm of the FinTech segment, Rakuten Card, with Mizuho, presumably by selling a stake in Rakuten Card to the latter . While details are not disclosed yet, we share our preliminary view below.
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, as the MNOs continue to expand their scope of operations beyond traditional telco driving higher returns and growth.
Today, Rakuten Mobile launched a new mobile plan aimed at seniors (65 years old and above). In addition, an update on its mobile subscribers figure reflected a slowdown in net additions, which was behind consensus and our forecasts for Q3. We share our thoughts below.
Digital Bridge has announced a tender offer for the shares of JTower, the leading Japanese Tower Company. Although the valuation is fairly low, we would not see that as bearish for Global Towers. Thoughts and implications below.
Incumbents led a faster service revenue growth in Q1 driven by non-mobile, with Softbank ahead. Industry mobile growth kept steady but the continued divergence in mobile trend between NTT and peers appears to confirm the benefits of integrated financial services. Softbank was the notable share gainer this quarter (1.1% MSR gain sequentially), having grown its mobile ARPU for the first time since FY19.
Despite beating on topline sparked by Fintech, overall profitability was still below expectations. While Mobile has seen improvements, pace of improvement remains too slow in our view to justify the share price. ARPU continues to lack traction.
KDDI reported after close today, with both topline and EBIT tracking slightly ahead of full year guidance. Enterprise continued to show good momentum and helped support the topline beat. With Lawson delisted since July, the deal is expected to be completed by September, as planned. Multi-brand mobile revenue continues to trend positively, with positive commentary around the transition from UQ mobile to AU brand.
Service revenue trends for the three incumbents were faster as mobile inflected, coupled with improvements in non-mobile. Meanwhile, the sector’s EBITDA grew strongly which was well flagged in Q3. Divergence in mobile trend appears to confirm the benefits of integrated financial services with mobile as NTT and peers diverged further; former extended its decline while peers accelerated to near 3% YoY.
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