TOKYO (Reuters) - Domestic investors have sought nearly double the number of shares offered by SoftBank Group Corp's 9984.T soon-to-list wireless unit, two sources from a lead IPO underwriter said, underscoring strong demand for Japan's third-largest telco.

FILE PHOTO - A woman using a mobile phone walks past the logo of SoftBank Corp in Tokyo May 11, 2015. REUTERS/Toru Hanai

Overseas institutional investors have sought more than three times the number of available shares, the sources said on Friday on condition of anonymity as they are not authorized to disclose the figures publicly. Domestic investors will buy more than 80 percent of the offering.

Strong retail demand for the float was further underscored by Japan's SBI Holdings 8473.T, which earlier in the day said it had sold all its allotted shares in SoftBank's telecoms unit.

SBI is one of the lead underwriters for the domestic portion of what is set to be Japan’s largest-ever IPO. An error with its allocation of shares to investors had earlier led to rumors of lower-than-expected appetite.

The telecoms unit, SoftBank Corp 9434.T, priced its IPO this week at an indicated 1,500 yen ($13.22) per share, and said it would sell an extra 160 million shares to meet the demand, raising about $23.5 billion.

There are, however, some concerns weighing on investors’ minds ahead of the unit’s trading debut in Tokyo on Dec. 19.

Among those is the scrutiny of SoftBank’s relationship with Huawei Technologies [HWT.UL] as governments around the world move to shut out the Chinese firm amid worries its gear could facilitate Chinese spying.

SoftBank plans to replace 4G network equipment from Huawei with hardware from other suppliers, two sources said, a process that is likely to be time-consuming and expensive.

There are also concerns around reliability of alternative suppliers after a software glitch in Ericsson ERICb.ST equipment caused widespread network disruption for SoftBank customers last week, said one of the sources who is a senior government official.

The disruption sent SoftBank Corp CEO Ken Miyauchi rushing to the telecoms ministry to apologize. Japan is considering officially reprimanding SoftBank and telling it to ensure the disruption does not reoccur, the source said.

Shares of SoftBank Group closed down 4.6 percent on Friday, taking this month's decline to about 11 percent. The benchmark index .N225 dropped 2 percent.