SoftBank closing in on T-Mobile stock deal

Tough times: Pedestrians walk past a SoftBank mobile shop in Tokyo. SoftBank Group’s Vision Fund lost 1.9 trillion yen in the most recent fiscal year, triggering the worst loss ever in the Japanese company’s 39-year history. — AFP

TOKYO: SoftBank Group Corp is closing in on a deal to sell about US$20bil of its stock in T-Mobile US Inc, accelerating efforts to raise capital after record losses in its investment business, according to people familiar with the matter.

The Tokyo-based company, which owns about 25% of T-Mobile US, planned to sell a slice of that stake to Deutsche Telekom AG so the German parent could own a majority and consolidate the unit’s financial results, said the people, asking not to be identified because the matter is private. SoftBank would then sell shares in a secondary offering to other investors and retain a smaller stake itself, one of the people said. The deal could be announced this week, the person said.

Talks are still ongoing and the deal could change or fall apart. T-Mobile US’ market cap is about US$126bil, while SoftBank’s stake is about US$31bil.

SoftBank founder Masayoshi Son landed the stake in T-Mobile US just this year, after US regulators approved the sale of his Sprint Corp to its wireless rival. He is in the midst of selling 4.5 trillion yen (US$42bil) of assets to raise cash so he can buy back shares and pay down debt. Among his other prime assets are Chinese e-commerce giant Alibaba Group Holding Ltd and SoftBank Corp, the Japanese wireless business.

“If SoftBank Group can renegotiate that sale, it will reduce pressure on SoftBank Group to sell its stakes in Alibaba or SoftBank Corp, ” Atul Goyal, senior analyst at Jefferies Group, wrote in a report.

The company already raised US$11.5bil from contracts to sell shares in Alibaba, its most valuable holding. Son said at an earnings briefing that the sale is the first tranche in a broader unwinding of assets.

Dow Jones, which reported the T-Mobile US sale earlier, said Morgan Stanley and Goldman Sachs Group Inc are working to draw investors for the deal.

SoftBank Group said on Monday that its Vision Fund lost 1.9 trillion yen in the most recent fiscal year, triggering the worst loss ever in the Japanese company’s 39-year history. SoftBank had to write down the valuations of companies like WeWork and Uber Technologies Inc because of business missteps and the coronavirus fallout.

The Japanese company also said on Monday it planned to spend up to 500 billion yen to buy back shares through next March, on top of an existing repurchase plan of the same size. That has helped SoftBank shares stabilise, rising more than 70% from their low in March.

The stock fell about 2% in Tokyo yesterday, as Japan’s indexes rose. — Bloomberg