SoftBank in Talks on T-Mobile Stake Sale -- WSJ
May 18 2020 - 3:02AM
Dow Jones News
By Drew FitzGerald and Cara Lombardo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 18, 2020).
SoftBank Group Corp. is in talks to sell a significant portion
of its T-Mobile US Inc. stake to controlling shareholder Deutsche
Telekom AG as the Japanese technology conglomerate scrambles to
raise funds.
The transaction, if completed, would boost Deutsche Telekom's
nearly-44% stake in T-Mobile above 50%, according to people
familiar with the matter. The German company already has voting
control of the U.S. mobile-phone giant under a prior agreement with
SoftBank, which recently held almost 25% of T-Mobile's common
stock, according to FactSet.
The size of any purchase is still being discussed but it would
likely be significant: T-Mobile's market value stands at about $120
billion.
Details of the discussions couldn't be learned but Deutsche
Telekom would likely buy the shares at a slight discount, as is
typical for a transaction of this type.
A deal isn't guaranteed and the talks could still fall apart,
the people cautioned.
T-Mobile took its current form on April 1 after it absorbed
Sprint Corp., a SoftBank-controlled business that struggled for
years to defend its customer base against competition from rivals.
By combining the third- and fourth-biggest players, the merger
consolidated the U.S. wireless sector into a market dominated by
three national networks.
SoftBank is expected to retain rights to 48.8 million shares it
surrendered to complete the merger that will be reissued if
T-Mobile's stock price reaches certain milestones within two years,
one of the people familiar with the matter said.
SoftBank is seeking to sell assets and improve its performance
after suffering big investment losses and coming under pressure
from activist investor Elliott Management Corp. SoftBank Chairman
Masayoshi Son in March said his company would aim to sell $41
billion of assets to boost its liquidity and help fund a big new
stock-buyback program. The company was expected to look at a number
of holdings, including T-Mobile, to help fund the buyback.
The new stock sale under discussion would allow SoftBank to cash
out some of its bet on Sprint, a holding that recently turned into
a rare bright spot for the Japanese conglomerate. Many other
SoftBank investments -- some through its giant Vision Fund --
including WeWork, ride-hailing service Uber Technologies Inc. and
Oyo Hotels & Homes Pvt. Ltd., operate in sectors particularly
hard-hit by the coronavirus crisis.
SoftBank and Deutsche Telekom had agreed to lockup provisions
that prevent SoftBank from selling most of its position in T-Mobile
over the next four years, with exceptions for small divestitures.
Those rules would likely be tweaked to allow for the stock sale
under discussion.
Deutsche Telekom on Friday reported that its first-quarter
revenue and profit both increased despite the early effects of the
coronavirus pandemic on its operations. Asked whether the German
company had the balance-sheet strength to buy more T-Mobile shares,
Chief Executive Tim Höttges declined to comment but called the U.S.
carrier "a great business to have" with "big, attractive
opportunities going forward."
--Phred Dvorak contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
May 18, 2020 02:47 ET (06:47 GMT)
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