SoftBank Group Corp has announced that it will be receiving shares in T-Mobile US worth approximately $7.59 billion at no additional cost. This development has significantly impacted SoftBank’s shares, driving them up by 5%. The conglomerate, led by Masayoshi Son, communicated that it had instructed T-Mobile US to issue 48.75 million shares in common stock as part of the agreement made during the merger of SoftBank’s U.S. telco Sprint and T-Mobile. This strategic move doubles SoftBank’s stake in T-Mobile US from the current 3.75% to 7.64%, further enhancing the conglomerate’s listed assets and solidifying its balance sheet. The transaction also contributes to SoftBank’s portfolio optimization, aligning with its broader strategy to increase the proportion of measurable equity and marginable assets relative to its indebtedness. Analysts, such as Macquarie’s Paul Golding, see this as a positive development that enhances the balance sheet strength of SoftBank, especially when considering the recent successful listing of chip designer Arm, which further adds to the conglomerate’s listed equity.
Despite this positive turn of events, SoftBank’s shares have experienced a relatively modest performance throughout the year, gaining only around 14% year-to-date compared to the benchmark index’s nearly 30% rise. The conglomerate currently trades at a discount of approximately 45.5% to the value of its assets, according to calculations by Macquarie. Masayoshi Son, known for his investments in late-stage startups, has faced challenges in recent years, including the high-profile troubles with WeWork’s bankruptcy. However, the T-Mobile US transaction contributes to SoftBank’s internal rate of return (IRR) on its Sprint investment, now standing at 25.5%. Additionally, the recent rally in Arm’s shares, closing around 44% above the initial public offering price, adds to the positive trajectory for SoftBank, signaling potential recovery and growth in its diverse portfolio.