Japanese mobile operator KDDI plans to buy back some of its shares
Japanese mobile phone operator KDDI has announced implementing a share buyback strategy. This involves approximately 4.8% of the securities owned by Toyota Corporation. KDDI plans to buy for the amount of 213.5 billion yen. The cost per share is 3,896 yen.
Benefits for the parties
It is worth noting that such a decision by the country’s second-largest operator is not isolated. Many Japanese companies are pursuing a share buyback strategy. They aim to reduce the proportion of their shares held by others. This reduces the pressure from outside companies and their interest in management positions. In addition, shareholders often intervene actively in corporate processes and profitability issues.
In the case of KDDI, selling securities also benefits Toyota itself. As the local currency weakens, the company’s costs rise. The main reason for this is the increase in the price of raw materials and product components. In addition, the carmaker plans to buy back its shares. Selling the company’s securities will provide the necessary funds. Toyota plans to buy back 3% of its total share capital, or about 1 trillion shares.
Corporate partnerships
In the summer of 2023, KDDI carried out a buyback of Toyota’s shares. At the time, the operator paid 250 billion yen to the company. The initiative came from the car manufacturer. It wanted to raise funds to implement business development plans. It, therefore, used the money it received for some purposes, including:
– accelerating product electrification;
– increased efforts to improve the range of electric vehicles;
– reducing the cost of producing electric cars.
The Japanese company bought back its shares at 3,900 yen per share, which was higher than the current market price. Following the sale, Toyota’s stake in KDDI fell from 14.7% to 11.7%. The current deal will reduce the automaker’s stake to less than 7%.
The partnership between Toyota and KDDI began in the late 1980s. Japan was undergoing reforms to transform and liberalise the telecommunications sector. Toyota was instrumental in setting up the company that became KDDI. It invested more than 52 billion yen in the operator in 2020. The parties also signed a partnership agreement that included joint research and development. The projects focused on developing and maintaining telecommunications systems for integration into cars. Despite the share buyback, the parties continue pursuing joint projects and working closely in various areas.
