Japan Telecommunications: Defensive appeal against market volatility

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Japan Telecommunications: Defensive appeal against market volatility

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Japan Telecommunications

Defensive appeal against market volatility

Reinstatement of Coverage

06 July 2026

Stable telecom revenue; non-telecom drives profit growth Equity

We reinstate coverage of the three telecom operators, with a Buy on SoftBank (9434) Japan

and Neutral ratings on NTT (9432) and KDDI (9433). We view all three companies as Telecommunications

defensive stocks that tend to underperform during broader market upswings. However,

with mobile communication revenue – the core earnings base – remaining stable and HideakiResearchTanakaAnalyst >>

non-telecom segments expanding to support steady profit growth, we think all three BofAS Japan

+81 3 6225 8431

companies offer strong appeal as a hedge against market volatility. hideaki.tanaka@bofa.com

SoftBank: relatively high growth driven by cloud and AI HiromuResearchYabukiAnalyst>>

BofAS Japan

In non-telecom segments, media/EC and finance are led by listed subsidiaries, while EP – hiromu.yabuki@bofa.com

centered on cloud and AI – is expected to drive growth, making SoftBank attractive for

its relatively high growth prospects. While KDDI is also expected to deliver stable growth

in non-telecom segments, we view the share price as broadly fairly valued. For NTT, Exhibit 1: Softbank at Buy

despite the presence of growth areas, we expect overall consolidated growth to remain Japan telecom: PO/Investment ratings

low due to factors such as regional telecom exposure and risks associated with declining

Share

DC disposal gains, although valuation does not appear stretched. TSE Company PO price

9434 Softbank 260 210

Growth drivers in non-telecom segments Buy B-1-7