Japan Telecoms and Internet: Apr-Jun 2026 earnings preview

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Japan Telecoms and Internet: Apr-Jun 2026 earnings preview

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09 Jul 2026 07:18:11 ET │ 22 pages

Japan Telecoms and Internet

Apr-Jun 2026 earnings preview

CITI'S TAKE

Keiichi Yoneshima AC

Ahead of FY3/27 Q1 results we present our earnings preview and views on +81-3-6776-8033

the companies in our coverage. In telecoms we do not anticipate any keiichi.yoneshima@citi.com

earnings surprises, but we focus on changes in the mobile competitive

environment, profitability improvement, AI infrastructure development, Otone Tokuda

and the launch of satellite communications. For Internet and SaaS firms we +81-3-6776-5945

think the focus will be on whether companies rerate as happened with otone.tokuda@citi.com

Recruit, which saw its shares rally after FY3/26 results. We believe

companies that dispel AI threat concerns while posting strong results and

guidance could be rerated. Recruit remains our top pick, but we also expect

reratings for Mercari and CyberAgent, where we expect strong earnings.

Telecoms — We recommend SBC, with its relatively high dividend yield and revised

dividend policy from this fiscal year, though FY3/27 Q1 will likely see a YoY profit

decline due to high prior-year hurdles. Looking ahead, we see bright prospects from

H2 onward as we anticipate higher ARPU from telecom price increases. We forecast

NTT and KDDI will be on plan, with no earnings surprises expected. Going forward,

valuations could rise if companies provide specific disclosures on AI data center

progress and revenue contributions.

SBG — We put SBG NAV per share at ¥12,250, based on ARM's stock price at end-

June 2026 ($355). This represents significant appreciation from SBG's announced

March-end NAV of ¥7,029, suggesting marked undervaluation. However, SBG's