By
Chimamanda U. Martha
February 13th, 2024
The potential buyer of SoftBank’s stake in T-Mobile is Deutsche Telekom AG that already has voting control of T-Mobile and is likely to buy the shares at a small discount.
Japanese multinational conglomerate holding company SoftBank Group (OTC US: SFTBY) may sell as much as $20 billion of its T-Mobile (NASDAQ: TMUS) shares this week. As reported by the Wall Street Journal and Bloomberg, the potential buyer is T-Mobile’s parent company Deutsche Telekom AG (ETR: DTE). Currently, the Japanese conglomerate and the German telecommunications company are in talks.
If the deal is completed, Deutsche Telekom’s 44%-stake in T-Mobile will rise above 50%. Deutsche Telekom already has voting control of the latter, while SoftBank has held about 25% of T-Mobile’s common stock.
The details of the negotiations are not yet clear but in this type of transaction, Deutsche Telekom is likely to buy the shares at a small discount. Besides, SoftBank will sell the remaining T-Mobile shares as a secondary offering. Morgan Stanley and Goldman Sachs will underwrite it.
SoftBank’s Historic Losses
SoftBank’s intention is not for nothing, it is a choice made under duress. Indeed, the T-Mobile stake sale is a step to help offset SoftBank’s heavy investment losses. On Monday, SoftBank reported its financial results for the fiscal year that ended in March. It turned out that SoftBank’s total annual losses totaled $12.7 billion, the worst figure the company has ever had. Moreover, its venture arm Vision Fund lost $17.4 billion in value for the year considered.
After SoftBank reported historic losses, China’s richest man and Alibaba co-founder Jack Ma decided to leave SoftBank’s board. And this is another bitter blow to the company. The decision will come into effect on June 25, and then, SoftBank and its Vision Fund will lose the highest-profile figure they had on board.
Set up to take risks on innovative companies and support them with capital, SoftBank’s Vision Fund has done several wrong moves. In particular, the fund staked billion on Uber, Indian Chain Hotel Oyo, and more, but their valuation plummeted because of the coronavirus pandemic. In addition, Vision Fund suffered from WeWork’s IPO that failed.
SoftBank and T-Mobile Stocks Down In Pre-Market
Both SoftBank (SFTBY) and T-Mobile (TMUS) stocks ended in the green on May 18. But after hours, they slipped.
SoftBank stock was up 1.8% in early afternoon trading and closed at $21.79, or 2.98% up. However, following the financial report and the sale news, it immediately went down after hours. Today, SoftBank stock is 3.72% down in pre-market, at $20.98 per share at the moment of writing.
T-Mobile stock’s closing price on May 18 made up $101.89, but in the pre-market today, it is also 3.05% down, at $98.79 per share.