SoftBank set to sell most of its T-Mobile US stake to raise $21bn
Loss-making SoftBank Group is to sell around two-thirds of its stake in T-Mobile US in order to raise 2 trillion yen (US$21 billion).
SoftBank group, led by Masayoshi Son (pictured), will offer 198.3 million shares in T-Mobile US of the 300 million it owns, reducing its stake in the third biggest US mobile company to around 8%. The stake follows the merger of T-Mobile US with SoftBank-owned Sprint in April. Since then SoftBank has had a 24.6% stake in the combined operation, also called T-Mobile US.
The offering is due to take place tomorrow, 24 June, at a price to be set later today. Deutsche Telekom has not announced whether it will take part in the bidding.
Deutsche Telekom, which has a 43.6% stake in T-Mobile will have the option to buy an additional 101.5 million shares from SoftBank. The Japanese company also said today that it will grant, options to acquire its remaining T-Mobile shares between now and 2024. That will put Deutsche Telekom’s stake in T-Mobile US to above 50%.
At the same time, SoftBank will fund Marcelo Claure, former CEO of Sprint, to buy five million T-Mobile US shares. Claure is CEO of SoftBank Group International and is on the board of T-Mobile US.
SoftBank will also pay T-Mobile US a fee of $300 million for facilitating the transactions, according to Bloomberg.
The process is part of SoftBank’s desperate efforts to raise $41 billion by March 2021 to reduce its debts after a series of loss-making investments, including Uber and WeWork.
But SoftBank also blamed Coronavirus, saying it needed “to further enhance its cash reserves” in readiness for “a second and third wave” of the pandemic.
Investment bank Jefferies said Deutsche Telekom had “managed to negotiate a beneficial participation” in the transaction that does not require it to borrow funds. The German company “together with its existing stake of 43.5% remains in control” of T-Mobile US, noted Jefferies.
Ultimately SoftBank’s holding in T-Mobile US might be reduced to a 1% stake, suggested one commentator.