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SoftBank’s decision to sell T-Mobile shares is part of the company’s efforts to boost liquidity in a bid to fight the negative economic of the coronavirus pandemic.
The internal responses by companies to ease the economic harm caused by the coronavirus differ. While some companies have had to shed off their staff, others have announced the closure of some business operation outlets in order to cut costs. While a few have practically gone out of business, SoftBank Group Corp (TYO: 9984) one of the parent companies of T-Mobile U.S Inc (NASDAQ: TMUS) plans to sell off 198 million shares worth about $21 billion.
The decision to sell off the shares comes in an effort to partially ameliorate the harsh economic and financial strain the coronavirus plunged the company into. T-Mobile has a $131.73 billion market cap and after hours the stock has seen a loss of 1.60% plunging the lower than Monday’s closing of $106.60 per share.
T-Mobile US, Inc., commonly shortened to T-Mobile, is an American wireless network operator. It is owned majorly by German telecommunications company Deutsche Telekom (DT) with a 43% share, and also by Japanese conglomerate holding company SoftBank Group partially owning the company as well at a 24% share. The remaining 33% share of the company is owned by the public through the common stock. Its headquarters are located in Bellevue, Washington, in the Seattle metropolitan area. T-Mobile is the third-largest wireless carrier in the United States, with 86.0 million customers as of the end of Q4 2019.
The company has annual revenues of over $40 billion. In 2015, Consumer Reports named T-Mobile the number one American wireless carrier. In a series of recent mergers, the company successfully acquired Sprint Corporation on April 1 2020 whilst the coronavirus was blaring hot. Since its inception in 1994, the company has adopted an integrated cutting edge communication technology that has positioned it as one of the telecom leaders in the U.S. and around the world.
SoftBank Needs to Sell T-Mobile Shares
SoftBank Group Corp. is a Japanese multinational conglomerate holding company headquartered in Tokyo. SoftBank owns stakes in many technology, energy, and financial companies. It also runs Vision Fund, the world’s largest technology-focused venture capital fund, with over $100 billion in capital reserve. The share sales represent 65% of SoftBank’s stake in T-Mobile and represent an attempt by the Japanese firm to improve its liquidity as part of its recovery move post-COVID-19. SoftBank had a huge hit with the coming of the coronavirus and reported back in April it will attempt to buy back shares from its chain of investment up to the tune of $41 billion which will help the company meet debt obligations.
The current woes of the company have seen investors like Alibaba’s Jack Ma quit the company as the company’s WeWork, a portfolio company of SoftBank’s $100 billion Vision Fund failed to go public with a record $18 billion loss.
Revival for SoftBank
Softbank Group has an extensive investment in several performing companies to date. While the company is generally not having the best of times, a probable revival is possible with proper management and efficient utilization of funds.
SoftBank’s current dilemma is universal as companies battle a positive resurgence from the coronavirus pandemic. The period of recovery might be the most important turning point for these companies, and market analysts believe a good management decision can make ailing firms recover and rebound.