1988Yasumitsu Shigeta founds Hikari Tsushin in Tokyo at 23
1990Adds door-to-door copier and office-equipment sales (Sharp)
1994HITSHOP mobile-phone stores launch
1996Shares registered over-the-counter
1999Listed on the TSE First Section; market cap briefly tops $26.4B (¥3tn)
Hikari Tsushin was founded in February 1988 by Yasumitsu Shigeta, a twenty-three-year-old who had dropped out of Nihon University and spent four years in part-time work. Japan’s 1985 privatisation of NTT had opened the telecom market, and a wave of new carriers — DDI, Japan Telecom, Teleway Japan — rushed in without sales networks of their own, leaving the whole industry dependent on outside agents to reach customers. Shigeta started in the gap between carrier and customer, selling home telephones door to door, and within six months signed an agency contract with DDI to resell long-distance service.
From 1990 the company widened into office equipment — copiers, business phones — carrying Sharp’s products. Sharp ranked below Ricoh, Canon and Fuji Xerox in office machines, so the small-business market Hikari Tsushin was opening held little competition, and the interests of a weaker direct-sales maker and a hungry agent aligned neatly. As its prospecting list the company used the roughly 5.3 million firms printed in NTT’s Town Pages business directory — public information, zero barrier to entry, yet no rival built an organisation to phone every listing in turn, book a visit and sell face to face. Hikari Tsushin took, almost alone, a market everyone could see and no one would touch.
The mobile phone turned this method into a phenomenon. When carriers shifted handsets from rental to outright sale in 1993–94, Hikari Tsushin opened its first HITSHOP mobile store in 1994 and, from 1998, switched the chain to franchising — franchisees bore the store costs while Hikari Tsushin collected the acquisition fees, letting it pile up outlets with almost no capital of its own. By August 1999 the chain reached 1,816 stores. Amid the internet bubble the market prized Hikari Tsushin as a “telecom-meets-IT” growth company, and after its 1999 listing on the Tokyo Stock Exchange First Section its market capitalisation briefly topped $26.4B (¥3tn). Behind the euphoria, though, the quality of franchise operations was already rotting — unseen by management and investors alike.
2003Mass hiring of salespeople; copier sales rebuilt
2004Returns to a net profit
In 2000 the fraud hiding inside the franchise chain — a practice called nekase, “letting contracts sleep” — came to light. Stores that would lose their franchise for missing quotas had been booking contracts for customers who did not exist: the owner fronted the handset and call charges, reported the phantom line to headquarters to hit the quota, and cancelled it after six months to a year. The scheme had held the company’s reported results far above reality for years. When it surfaced, the stock that had carried Hikari Tsushin to the top of the bubble fell for twenty straight limit-down days and lost roughly 99% of its value in about eight months — an event later retold as a trigger of Japan’s dot-com crash.
The fraud forced a special loss of $635.8M (¥69bn). What saved Hikari Tsushin from collapse was neither management skill nor operating strength but another artefact of the same bubble: SoftBank shares it had bought in the boom. A gain of $742.5M (¥80bn) on selling them offset the loss, and the company eked out a thin net profit for the year to August 2000. A firm inflated by the internet bubble was, just barely, rescued by another of the bubble’s products. Shigeta then chose to steer back to the plain B2B door-to-door model of the founding years, spending three years withdrawing from the glamorous mobile-retail business that had made his name.
Rebuilding began with the balance sheet: interest-bearing debt of $2.1B (¥231bn) at the end of March 2000 was cut to $321.8M (¥37bn) in three years through asset sales, store closures and layoffs, while HITSHOP shrank from some 2,600 outlets to 394. Concentrating on corporate sales again, the company rediscovered the deeper value of the copier — a stock-revenue business, where a single contract earns not only an upfront fee but a stream of per-copy charges over years, unlike the one-shot sale of a mobile phone. In 2003 it hired 1,500 new salespeople on deliberately simple terms — “no experience needed,” a fixed salary plus commission — accepting that more than 1,000 would leave each year, and built a culture around high-volume hiring and high turnover: cold calls in the morning, five or six visits an afternoon, selling copiers to small firms. That unglamorous grind, not brand strategy or technology, became the model that carried Hikari Tsushin back to a net profit in the year to March 2004.
2015Buys WaterDirect by tender offer — the water-server business
2017Enters retail electricity as the market fully deregulates
The rebuilt company treated its recovery as a template. Through the 2000s and 2010s, as office digitisation sapped copier demand, Hikari Tsushin kept the small-business sales platform intact and changed only the goods riding on it — entering home-delivery water servers in 2015, retail electricity when that market fully deregulated in 2017, and small-amount, short-term insurance for smartphones and other devices. What every new line shared was a customer base of small firms and sole proprietors and, crucially, a stock-revenue structure that keeps accruing after each contract is signed.
The essence was never a particular product but the channel itself. On top of a fixed asset — a direct-visit and telemarketing network into small businesses — the company loaded whatever could be sold, and often bought the maker outright by tender offer to bind product capability and its own selling power together in a single stroke. Device insurance in particular grew into a distinctive, low-competition niche. Buying growth this way was as much a way to buy time as to diversify: each acquisition fused an existing operator onto a selling machine that already worked, and one shrinking market could be covered by loading the next product onto the same network.
2018Market cap tops $9.1B (¥1tn) again — a “second trillion-yen company”
2019Long-term listed-equity “net investment” becomes a core pillar
2022Takes listed subsidiary Sic Holdings fully private by tender offer
2022Acquires new-power HTB Energy amid a wholesale-price spike
2024Record net profit of $806.6M (¥122bn)
By 2018 the market value passed $9.1B (¥1tn) again — a “second trillion-yen company,” but built this time on the unglamorous accumulation of sales, not the bubble illusion of the HITSHOP years. Alongside the operating business Hikari Tsushin grew, year by year, into something like a portfolio manager: a “net investment” book of long-held stakes in listed companies that reached roughly $5.0B (¥700bn) at cost, worth over half again as much at market, by the year to March 2023. It measures those holdings by an earnings yield — its share of investees’ operating profit over the purchase price — held steady around 15%, and runs the whole enterprise on two dials, stock profit and net investment, against a public medium-term target of about 10% organic growth and 15% including M&A.
Two rules anchor the discipline Shigeta imposes. One is to hold cash equal to three years of interest-bearing debt at all times; the other is a hurdle rate — the company will not chase share for its own sake, and drops any business that falls below the yield it demands, spinning off the responsible subsidiary along with it. Dispersing operations across more than 150 small subsidiaries is part of the same philosophy, meant to maximise each unit’s sense of ownership. The record shows in the numbers Hikari Tsushin most cares about: dividends not cut for 23 straight years and raised for 15, repeated buybacks, and, in the year to March 2024, a record net profit of $806.6M (¥122bn). Where the HITSHOP peak had been a bubble mirage, this is the arithmetic of a sales machine that finally caught up with its own valuation.
The core of Hikari Tsushin’s founding was that it made the system for selling, not the goods being sold, its source of competitive advantage. Home telephones, long-distance calls, copiers, and later mobile phones — the merchandise changed hand over hand. What did not change was the face-to-face sales force that reached small firms and individuals on foot, the database that raised its efficiency, and a merit-based personnel system that moved people on results alone. That Shigeta asked from the outset for “the organisation and the mechanism that produce the most results” shows that this began not as a company that sells products but as a company that designs the power to sell. The idea of treating the sales channel as an asset was already at its core at the moment of founding.
This design philosophy recurs at every turning point that followed. The method of attacking the fragmented small-business market through the Town Pages directory lived on unchanged in the 2003 rebuild around copiers, and passed into the 2010s diversification that swapped one line of goods for another on the same channel. At the same time, sales and quotas that demand results without mercy also produced the shadow of the 2000 HITSHOP fake contracts. The doubleness by which one and the same mechanism becomes both the engine of growth and the breeding ground of crisis was built into the founding design from the start. A company that set out by pushing “how to sell it” to its limit grows large — and stumbles — for that very reason: the history of Hikari Tsushin shows how the whole of what followed was folded into the single opening move of its founding.
A product of the bubble filled the hole the bubble’s collapse tore open
The core of this affair is that the very mechanism driving the explosive expansion was also the mechanism that bred the fraud. A stock revenue of about $3 (¥300) a month per handset made it possible to calculate that the more contracts you stacked, the more future profit was locked in — an arithmetic that economically justified the franchise-driven surge in stores. But the same arithmetic became the quota imposed on member stores, and pushed those that could not meet it into phantom contracts. The accelerator of growth and the fuse of collapse lived together inside a single business model. President Shigeta’s plea that he was a “victim” did not hold, because it was Hikari Tsushin itself that had designed the mechanism.
And there is a second irony: what saved Hikari Tsushin from failure was not a management judgment but the gain on selling its SoftBank shares. A company swollen by the internet bubble was brought down by the internet bubble, and a different asset acquired during that same bubble filled the loss. Hikari Tsushin’s survival shows that a company’s life or death turns not only on rational judgment but also on the price movements of assets it happens to hold. Discarding the glamorous pillar of mobile retail lost in this crisis and returning to the plain work of corporate sales became the start of the road that later led to a second trillion-yen company.
The heart of this investment failure lies in pouring the money earned in the core business, and a high share price, into outside ventures with no clear yardstick. When the market was euphoric, taking a stake in a company in a growth field looked, in itself, like proof of momentum. But an investment lacking the discipline of yield or price leads straight to losses once the bubble breaks. Worse, Hikari Tsushin did not set out to rescue the company it had backed but stepped into a battle to seize control of it, and ended up bearing the sour price of a feud with the founder and a personal injection of the manager’s own money. Before any question of skill in investing, this was the price of having had no standard by which to invest.
Ironically, this wound throws the later Hikari Tsushin into relief from the opposite side. The “net investment” the company raised as it grew into a second trillion-yen company is discipline through and through: it measures its share of investee operating profit against the purchase price as an earnings yield, and sets the lower bound of the yield it will defend as a hurdle rate. Not investing that rides price rises or momentum, but investing that holds cheap, excellent companies for the long term. Precisely because it had tasted the failure of euphoric investing in Crayfish, one may say, the weight of discipline sank in. The same company’s two investments show, across a span of twenty years, how much the presence or absence of a standard divides the result.
Seeing the sales channel, not the product, as the asset
The core of this diversification is that Hikari Tsushin grasped the object it sells not as a product but as the sales channel itself. Most companies build their business around a flagship product, and when demand for that product thins, so do their results. Hikari Tsushin did the reverse: it saw the network of direct visits and telemarketing that reaches small firms and individuals as an immovable asset, and swapped the goods loaded on top of it from copiers to water, insurance and power. What is more, it did not build each new line from scratch but took it in whole by tender offer, binding a maker’s capability and its own selling power together in a short span. Acquisition was a means of diversification and a means of buying time.
This pattern holds Hikari Tsushin’s strength and its danger together. The versatility of selling one product after another through the same sales network is a strength: when one market shrinks, another product can make up for it. On the other hand, the wider it spreads — water, power, insurance — the more each business demands its own expertise and regulatory handling, and the more territory there is that selling power alone cannot force through. Even so, Hikari Tsushin learned a structure that does not chain the life of the business to the life of the product, and it learned it from the reality of falling copier demand. What to regard as the immovable asset — the answer to that question is the consistent core of the company’s diversification.
Why place the core earnings in long-term holdings of shares
The core of this decision is that, as the place to put the money earned in its business, Hikari Tsushin deliberately chose the long-term holding of listed shares. Most operating companies steer spare cash into deposits, reinvestment in their own business, or returns to shareholders. Hikari Tsushin ran a thick third road alongside these: holding other companies’ shares for the long term and taking its share of their profit. The yardstick of an earnings yield and the discipline of a hurdle rate can be seen as the device that cuts this investment off from hunch and market feel and places it on the same footing as the investment judgments of the core business.
A management that wears the two faces of an operating company and an investment company at once is double-edged. If the earnings or share prices of the investees break down, the thickness of $5.5B (¥600bn) in unrealised gains swings the other way just the same. Hikari Tsushin once posted enormous losses on outside investments in the net-bubble era and made itself part of the cause of its own crisis. That the same company, under the discipline built after that crisis, raised investment into a pillar on a par with its core business carries weight. Where to place the money it earns, and by what yield to govern it — that the company keeps answering this question with a single form is the core of Hikari Tsushin’s management.
The core of this decision is that, in a scene where the whole industry was taking losses and pulling out, Hikari Tsushin turned instead to the side that acquires the very same electricity business. The collapse of the new-power operators drove home that even if you gather customers by selling power, the business cannot stand unless it can absorb swings in procurement prices. Many companies pulled out of electricity here. Hikari Tsushin did the reverse, taking on — customers and all — a business whose value had wasted away in the crisis, and absorbing the market others had vacated. This move to pick up cheaply released assets is connected, at the root, to the thinking of “net investment,” which holds undervalued excellent shares for the long term at a disciplined yield.
That said, a decision to pick up in a crisis can also become a burden if the crisis continues where you picked up. Had the surge in wholesale prices dragged on further, the electricity business it absorbed could have turned straight into a source of losses. Hikari Tsushin could hold onto power without letting go because it had the financial strength to withstand procurement risk and the multi-product stance to keep overall profitability with goods other than electricity. Only a company with a structure in which other lines support the weakness of one can stand on the side that picks up, rather than retreats, in a crisis market. The power crisis tested Hikari Tsushin on both the strength and the danger of that structure.
The core of this capital policy is that Hikari Tsushin does not hold its companies uniformly but sorts them by degree. In “net investment” it holds shares of excellent outside companies for the long term at less than a majority stake, and takes its cut of their profit. A subsidiary that can be deeply combined with its sales network and its goods, by contrast, it delists and takes in at 100%, polishing it as part of the group. The move to unwind parent-child listings and take a company fully private belongs to this latter pole. Hikari Tsushin sorts the companies it has gathered, one by one, into those it holds as investments and those it binds together as operations.
Delisting a listed subsidiary is, for minority shareholders, an exit in which their shares are bought out at a premium, and, for Hikari Tsushin, a means of group integration and cost reduction. Because the interests of the two collide over the level of the premium, full acquisition always carries the question of the fairness of the price to minority shareholders. Even so, a corporate group past the stage of adding companies cannot avoid the question of how to re-bind the ones it holds. Hikari Tsushin’s absorption of its listed subsidiaries shows one form of the sorting that an expanded group confronts as it heads into maturity.
Each heading links to the full Japanese analysis — background, decision and outcome, with sources.
This is a condensed English edition. The full, source-by-source history — with the detailed narrative, financial tables, shareholders and executives — is maintained in Japanese: 日本語版（詳細）— Hikari Tsushin full history in Japanese →
Hikari Tsushin, Inc. — 有価証券報告書 (annual securities reports).
Hikari Tsushin, Inc. — earnings-briefing materials (決算説明会).
Openhouse Group — web column featuring Hideaki Wada of Hikari Tsushin, 2 February 2022. Openhouse Group