With annual revenue of over $82 billion, SoftBank Group Corp. (SFTBF) is currently the 72nd largest company in the world, by revenue, according to Fortune magazine. Moreover, going by the magazine’s rating, SoftBank is also the seventh largest company in Japan, a country where some of the largest automakers in the world are headquartered. In several other countries, the U.K. for instance, SoftBank would be the largest company by far. Here's a closer look at what SoftBank does, by segment, which makes it so large.
SoftBank currently conducts business under several major segments including domestic telecommunications, Sprint, Yahoo Japan, distribution and ARM segments. Here’s a breakdown of what each major segment is all about. (For more, see also: Why SoftBank Is Interested in Robotics.)
The domestic telecommunications segment is SoftBank’s second largest reporting segment. Under this segment, SoftBank sells mobile devices and provides mobile communications and broadband services to customers in Japan. The company also provides telecom services – data communications and fixed-line telephone offerings, for instance – to enterprise customers in Japan.
SoftBank’s domestic telecommunication segment is a result of an April 2015 merger of SoftBank’s four domestic telecommunications subsidiaries – SoftBank Mobile Corp., SoftBank BB Corp., SoftBank Telecom Corp., Ymobile Corporation – into SoftBank Corp. Since the merger, the domestic telecommunications segment has had two core companies including SoftBank Corp. and Wireless City Planning Inc., which offers wireless broadband access services.
SoftBank classifies the services rendered in the domestic telecommunications segment into two categories. They include communication services and mobile commerce services. Under the communications services, SoftBank offers mobile communications services to consumers through the SoftBank and Y! Mobile brands. In addition, the company offers data and fixed-line communication services to both consumers and businesses through the "SoftBank Hikari" and "Yahoo! BB" broadband services as well as Wireless City Planning’s Broadband Wireless Access systems.
Under the mobile commerce services, SoftBank, in conjunction with Yahoo Japan offers online shopping services. The domestic telecommunications segment reported net sales of $21.97 billion in the nine months ended December 31, 2017.
With net sales of $24.85 billion in the nine months ended December 31, 2017, the Sprint segment is SoftBank’s largest operating segment and as the name suggests, the segment reflects the results from SoftBank’s stake in Sprint Corporation (S). SoftBank had acquired a majority stake in Sprint in July 2013. Sprint provides mobile communications and fixed-line telecommunications services as well as the sales and lease of mobile devices in the U.S. SoftBank has over 80% voting rights in Sprint. While it was trying to orchestrate a merger to create a much larger telecom footprint in the U.S., SoftBank decided to call off Sprint's merger with T-Mobile (TMUS) on account of disagreements over the ownership and structure of th emerged entity.
The Yahoo Japan segment reports the results from SoftBank’s stake in Yahoo Japan Corporation. Yahoo Japan was formed as a joint venture between U.S. internet company Yahoo Inc., which recently changed its name to Altaba Inc. (AABA) and SoftBank. According to Yahoo Japan's corporate website, with a 36.4% stake, SoftBank is the largest shareholder in Yahoo Japan.
Overall, Yahoo Japan makes money from online advertising, e-commerce and membership services. Hence, for SoftBank’s Yahoo Japan segment, the core companies include Yahoo Japan Corp. and Askul Corp, both offering services through platforms like Yahoo News, auction site Yahuoku and B2C e-commerce site Lohaco. This segment reported net sales of $5.94 billion in the nine months ended December 31, 2017, making it the fourth largest segment for SoftBank.
The distribution segment features two core companies including the American mobile device distribution company Brightstar Corp. and SoftBank Commerce & Service Corp. SoftBank had initially purchased a 57% stake in Brightstar in October 2013, but bought the company entirely in 2014.
According to SoftBank, Brightstar offers “mobile device and accessory wholesaling, supply chain management solutions for mobile device distribution and inventory management, mobile device insurance and buyback, retail solutions and financial services” to mobile device manufacturers and operators.
SoftBank Commerce & Service Corp. offers software and hardware items, network infrastructure and consulting services to both consumer and corporate customers in Japan. In the nine months ended December 31, 2017, the distribution segment, plus uncategorized services, reported net sales of $9.35 billion.
The ARM segment was only added to the SoftBank Group in September 2016 after SoftBank acquired ARM Holdings Plc, a British semiconductor and software design company. The acquisition of ARM was based on the anticipation that ARM would be at the forefront of the paradigm shift to the internet of things, or IoT. Given that the ARM segment was only included in September 2016, it reported net sales of just $1.4 billion for the nine months ended December 31, 2017.
Softbank made headlines in June of 2017 when it announced the purchase of Boston Dynamics for an undisclosed sum. The Boston based robotics firm is known for their four-legged robo-dogs and bipedal human-like robots. One of their recent inventions, Atlas, stunned the wold when Boston Dynamics released a video of the humanoid doing a backflip. Softbank also makes Pepper, a Japanese speaking robot that is meant to be used for conversation and as a personal assistant, kind of like a cross between Alexa and The Jetsons' robot maid. (For more, see also: SoftBank Buys Google's Boston Dynamics.)
In May 2017, SoftBank announced a $100 billion fund to invest in technology companies. Other investors in this fund include the Saudi Arabian Government, Foxconn Technology, Apple Inc., Qualcomm and Sharp Corporation. Softbank has already begun deploying this cash, announcing a $4.4 billion investment in WeWork. However, SoftBank has been investing in companies much longer than that. Its portfolio includes companies such as Uber, Didi Chuxing, Slack, etc.