SoftBank raises first $14.8bn in its $20bn T-Mobile marathon

SoftBank raises first $14.8bn in its $20bn T-Mobile marathon

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SoftBank last night set a price of US$103 for each of the shares in T-Mobile US that it is selling – $4 below last night’s closing price of $107.16.

The sale will raise $14.8 billion from institutional investors for debt-laden SoftBank, which has lost money on investments such as OneWeb, Uber, WeWork and Wirecard.

The Japanese technology investment company still has another $6 billion or so to raise in order to achieve its target, stated earlier this week, of selling most of its holding in T-Mobile US for $21 billion. Some of that will come from Marcelo Claure, who will buy five million shares worth some $500 million, with financial assistance from SoftBank.

And Deutsche Telekom, which is the largest shareholder in T-Mobile US, has the option to buy 101.5 million shares between now and 2024: these shares are worth about $10.8 billion at last night’s closing price.

Deutsche Telecom, which owns 43.6% of T-Mobile US, has done well in the past two years, since the plan to merge with SoftBank’s Sprint was announced. In 2018 T-Mobile US shares were trading on Nasdaq at around $59; last night’s close was a record high. T-Mobile US’s market cap is $132.4 billion at today’s share price.

If Deutsche Telekom exercises its right to buy more T-Mobile US shares from SoftBank, it will own more than 50% of the US company, which now stands third behind Verizon and AT&T in the US market.

Among SoftBank’s unfortunate investments, satellite start-up OneWeb went into Chapter 11 bankruptcy protection in March; taxi company Uber lost $8.5 billion in 2019; office rental company WeWork is losing around $1.25 billion a quarter, even before the Covid-10 pandemic; and auditors for German e-payment company Wirecard last week identified a €1.9 billion hole in its balance sheet.

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