Dec 20 (Nikkei) - The CEO of SoftBank Group's Japanese mobile unit on Wednesday acknowledged the "challenging conditions" facing the company after its shares fell nearly 15% on their first day of trading, leaving retail investors nursing losses.
Japanese investors flocked to buy into the world's largest IPO this year and the second biggest in history, which raised 2.6 trillion yen ($23 billion) for the group. Roughly 90% of the shares were allocated to domestic investors, the majority of which were sold to individuals.
Buyers hoping for an opening-day pop watched as shares sunk to a close of 1,282 yen, 14.5% below the offer price of 1,500 yen, raising concerns over the company's prospects.
One branch manager at a Japanese broker told Nikkei that he will embark on an apology tour to his clients, to whom he had so enthusiastically pitched the purchase. Virtually all of the investors who had taken part in the historic IPO lost money.
The mobile unit's CEO, Ken Miyauchi, vowed to deliver both growth and shareholder returns, calling the listing a "new start" for the company.
"A lot of things happened ... but we had been planning [the IPO] and there was no need to withdraw," Miyauchi said, citing the controversy over its use of China's embattled Huawei Technologies as a supplier, the nationwide network disruption that hit less than two weeks before the listing, and rising price competition.
When SoftBank phones lost signals for four hours on Dec. 6 due to a software glitch, an estimated 10,000 to 20,000 users switched to other carriers out of frustration.
"I truly see a mountain of business opportunities," Miyauchi said. "We would rather focus our energy on that."
Nomura Securities and other lead underwriters wooed retail investors with the IPO's biggest selling point: a high dividend yield of 5% based on the offer price. But as the Japanese telecom market matures, sustaining these high payouts -- the bulk of which will go to the parent company -- may prove difficult.
