Wednesday, 08 April 2020

SoftBank in $41bn push to buy back shares

by Harry Baldock, Total Telecom
Monday 23 March 20

The funds will be raised through an enormous asset sale, as shares nose dive amid the COVID-19 pandemic

SoftBank has announced that it plans to sell around $41 billion of its assets in an attempt to reinforce its falling share prices and reduce its debt. With debt currently totalling around $55 billion, the company has been hit significantly by the coronavirus pandemic, largely due to its investments in hotel groups and ride…

SoftBank has announced that it plans to sell around $41 billion of its assets in an attempt to reinforce its falling share prices and reduce its debt.

With debt currently totalling around $55 billion, the company has been hit significantly by the coronavirus pandemic, largely due to its investments in hotel groups and ride-sharing businesses, as countries around the world go into lockdown to prevent the spread of disease.

Around $18 billion of the money raised from the asset sale will be used to buy back common stock; when combined with the $4.5 billion buy back the company announced at the start of the month, this will represent a total repurchase of around 45% of its stock.

The other half of the fund will be used to ablate a significant portion of the company’s debt.

“This programme will be the largest share buyback and will result in the largest increase in cash balance in the history of SBG [SoftBank Group], reflecting the firm and unwavering confidence we have in our business,”said SoftBank founder and chief executive, Masayoshi Son.

Exactly which of SoftBank’s $245 billion of assets are going to be sold is currently unclear.

The coronavirus outbreak's effect on SoftBank's telecoms interests has not been quite so catastrophic as on its hospitality investments. Seemingly undelayed, SoftBank still intends to launch 5G in Japan later this week, though rival NTT Docomo has stated they will be launching their own commercial 5G network two days earlier.

Similarly, whether or not the COVID-19 outbreak will affect SoftBank group’s merger of their telecoms brand Sprint with T-Mobile is also up for debate, though T-Mobile last week reiterated that it was ready to close the deal, having been in close communication with the banks.

“I’m pleased that right now we have broad support from the banks to finance the closing of this merger – we are very close to unleashing the capabilities of the New T-Mobile, and that is even more important for consumers during the current COVID-19 pandemic,” said John Legere, CEO of T-Mobile.

 

Also in the news:
Dish loans spectrum to AT&T to tackle COVID-19
China Mobile ramps up 5G targets, unaffected by COVID-19
French telcos’ “discipline” over COVID-19 will hit OTT services

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