Japan's Softbank Group seen booking $1.5 billion quarterly profit

Japan's SoftBank Group 9984 is set to make a quarterly net profit of 234 billion yen ($1.54 billion) on Wednesday as shares in its telecommunications holdings edge up and the post-listing performance of Swiggy SWIGGY is seen boosting the value of its portfolio of unlisted technology startups.

Analysts are divided, however, on whether the spate of artificial intelligence-related investments SoftBank has announced in recent weeks will help or hurt the Japanese technology investment conglomerate's bottom line.

The profit of 234 billion yen is based on the average of four analyst estimates compiled by LSEG, and compares with a gain of 950 billion yen in the same period last year.

SoftBank is expected to bank further investment gains on U.S. telecommunications subsidiary of Deutsche Telekom DTE T-Mobile US TMUS, whose shares hit an all time high in late November and rose 7% over the quarter.

Also in November, Indian delivery firm Swiggy jumped 17% on its market debut and had risen almost 20% by the end of December.

This may signal a recovery in IPO markets, particularly in India, and so trigger a bump in the valuations of SoftBank's several-hundred strong portfolio of unlisted tech firms, analysts say.

More uncertain is the future impact of the major artificial intelligence investments announced over the past two months.

SoftBank CEO Masayoshi Son's pledge in December to invest $100 billion in AI projects in the U.S. over four years could entail selling or monetising portfolio assets or taking on excessive debt, Jefferies analyst Atul Goyal wrote in a note.

Alongside, last week Son announced a new joint venture with ChatGPT maker OpenAI to offer AI services in Japan for corporate customers and roll out OpenAI products across SoftBank's portfolio companies.

While some analysts say this may bring efficiency gains at portfolio companies, others say the $3 billion annual usage fee paid to OpenAI could diminish near-term earnings.

($1 = 152.2600 yen)