Softbank's India portfolio - Snapdeal and Ola incurring losses
Published: Feb 09, 2017
By TIOLCORP News Service
NEW DELHI, FEB 09, 2017: IN the last nine months of 2016, the Japanese telco posted ¥39.3 billion ($350 million) in loss recorded as the amount of change in the fair value of the Company's investments, primarily in India, owing to Ola and Snapdeal, according to a February 8, 2017 company filing. The loss comes on top of a $555 million writedown on the value of Softbank's India portfolio in the six-month period ending September 2016.
The company in its filing admitted that its major investments, including Snapdeal and Ola, continue to be recorded on its books at a value in excess of their blended cost basis.
So far, two of Softbank's biggest India investments have taken the brunt of write-downs: Jasper Infotech, the parent company of e-retail giant Snapdeal; and Ola, India's largest ride-hailing startup, which is owned by ANI Technologies. In 2014, Softbank invested $697 million in the former and $210 million in the latter, and has continued to sink money into both companies, which are also positioning themselves to raise more funds and take on American rivals like Amazon and Uber.
Other companies in Softbank's India portfolio have also failed to deliver, including on-demand grocery delivery app Grofers, budget hotel aggregator OYO Rooms, and real-estate search portal Housing.com (which announced a merger with News Corp-backed PropTiger earlier this year). Two years ago, Softbank announced plans to invest $10 billion in India by 2024, and since then has pumped $2 billion into internet-related projects and solar energy efforts in the country. Founder Masayoshi Son, one of Japan's richest men, has also said he hopes to provide 1 million free electric cars to Ola drivers to help India's clean energy initiatives.
Outside of India, Softbank performed well in 2016: The company reported net income of ¥857.4 billion ($7.6 billion) for April to December 2016, nearly doubling its profit in the same period of 2015. Much of that increase can be attributed to its sale of Alibaba shares . A recovery by US cell service provider Sprint , in which Softbank has an 83% stake, also contributed to earnings.
