over 3 years ago • 2 mins
First on the chopping block could be T-Mobile US: SoftBank has owned about 25% of the firm since its long-awaited merger with rival telecoms company Sprint. And seeing as T-Mobile US is worth almost $130 billion, a sale could net SoftBank over $30 billion 💰 That’d leave the Japanese giant with an $11 billion shortfall that it could make up by selling off, say, some of its Alibaba shares. Either way, the cash SoftBank raises will go some way to reducing the company’s debt, as well as enable it to repurchase some of its own shares – as it previously said it would.
SoftBank’s core business is in telecommunications, which might be why its shares have been relatively resilient after falling dramatically earlier this year 📈 Telecoms’ earnings are pretty predictable during economic downturns after all, largely thanks to their long contracts. Of course, by cleaving off its other telecoms investment, more of SoftBank’s overall fortunes will be determined by its venture capital Vision Fund – a potentially risky move, given that it’s recently had to make job cuts to stem the business’s losses.
Telecoms stocks tend to be popular among investors because of their “defensive” nature, but anyone looking for safety in T-Mobile US might be in for a nasty surprise. If SoftBank unloads its T-Mobile US stocks publicly – by selling a “blocks” of shares on the stock market – the sudden oversupply could outstrip demand and send its share price drastically lower 🥵 Current investors are probably hoping instead for a “private placement” of T-Mobile US’s shares, which should have a smaller market effect. And SoftBank may already have its first customer: Germany’s Deutsche Telekom is reportedly interested in buying at least some of its stake…
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