April 30, 2009 / 5:46 AM / 11 years ago

UPDATE 2-Softbank forecasts bigger profit, doubles dividend

* Sees 09/10 oper profit rise 17 pct, to double dividend

* Aims to reduce net debts to zero by March 2015

* Shares close up 3.4 pct vs Nikkei’s 3.9 pct rise

TOKYO, April 30 (Reuters) - Softbank Corp (9984.T), Japan’s No.3 wireless carrier, forecast a 17 percent rise in profit this financial year after an aggressive push for more market share, and said it would double its dividend.

The company has been spending heavily to expand its telecom business, accumulating debt and avoiding dividend hikes as it chases market share to catch up with bigger rivals KDDI Corp (9433.T) and NTT DoCoMo Inc (9437.T).

Softbank, which sells Apple Inc’s (AAPL.O) iPhone in Japan, said it aims to halve its net interest-bearing debt by March 2012.

Thanks to aggressive marketing campaigns and fees that undercut its rivals, Softbank has won more net new users than its bigger rivals for 22 months in a row, with a 38 percent market share of sign-ups minus cancellations.

Its advertisements featuring a talking white dog have won awards and helped capture more fans.

But en route, Softbank’s investments have piled up, starting with its purchase of Vodafone Japan in 2006, to the point that its net interest-bearing debts stood at about 1.7 trillion yen ($17.4 billion) as of the end of March.

Softbank now says the peak for its capital spending is over and its business has reached a phase where it generates stable cash flow.

“We are now shifting from investments needed to expand to a time for reaping the fruits,” Softbank CEO Masayoshi Son said at an earnings briefing.

For the year just ended, the firm’s operating profit rose 10.7 percent to 359.1 billion yen, helped by cost-cutting efforts and solid profit growth at Yahoo Japan Corp (4689.T), in which it is the biggest shareholder with a stake of 41 percent.

For this financial year it expects operating profit to rise 17 percent to 420 billion yen, slightly below 424.5 billion yen forecast in a poll of 16 analysts by Reuters Estimates.

It now plans to raise its 2009/10 dividend to 5 yen per share, up from 2.5 yen for the year ended in March, as it expects its free cash flow to grow 38 percent for this business year.

It also aims to reduce it to zero by March 2015, refrain from large-scale investments until it meets the target and raise its dividend as it scales back debt.

Ahead of the announcement, its shares closed up 3.4 percent at 1,550 yen, while the Nikkei average .N225 rose 3.9 percent.

$1=97.50 Yen Reporting by Taiga Uranaka and Mayumi Negishi

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