SoftBank’s Strategic Move: Gains $7.59 Billion in T-Mobile Shares, Boosting Portfolio Value

This action is the result of conditions outlined in an agreement formed during the merger of SoftBank's U.S. telecommunications entity, Sprint, and T-Mobile.

SoftBank Group Corp (9984.T) has announced a substantial boost to its portfolio as it secures shares in T-Mobile US (TMUS.O) valued at approximately $7.59 billion, and this move has led to a 5% surge in SoftBank’s shares.

The conglomerate, led by Masayoshi Son, confirmed this development on Tuesday, revealing that it had exercised its rights to receive 48.75 million shares of common stock from T-Mobile US.

This action is the result of conditions outlined in an agreement formed during the merger of SoftBank’s U.S. telecommunications entity, Sprint, and T-Mobile.

With this transaction, SoftBank significantly bolsters its listed assets, effectively doubling its stake in T-Mobile US from the existing 3.75% to 7.64%.

This move follows the successful listing of chip designer Arm in September, which has contributed to strengthening SoftBank’s position in the market.

Macquarie analyst Paul Golding commented on this development, highlighting how it increases SoftBank Group’s proportion of listed, measurable equity on its balance sheet.

He also noted that it enhances the proportions of marginable equity relative to the company’s indebtedness.

As a result of this news, SoftBank’s shares witnessed their most substantial gain in over a month.

However, it’s worth noting that the conglomerate’s performance year-to-date has been relatively modest, with only a 14% increase compared to the benchmark index’s nearly 30% rise.

Macquarie’s calculations indicate that SoftBank is currently trading at a discount of approximately 45.5% concerning the value of its assets.

Masayoshi Son, known for his investments in late-stage startups, has experienced several setbacks in recent years, including the WeWork bankruptcy, which was once a highly valued U.S. startup in his portfolio.

In addition to the T-Mobile US transaction, SoftBank’s internal rate of return (IRR) on its Sprint investment has climbed to 25.5%, adding to the positive developments for the company.

Furthermore, the recent surge in Arm’s shares is another bright spot, with the stock closing at around 44% above its initial public offering price on Tuesday.

Overall, SoftBank’s strategic moves and investments in its portfolio companies are helping it navigate the market and increase its value, providing opportunities for growth and recovery from past setbacks.