SoftBank to Secure 48 Million Shares of T-Mobile US

SoftBank Group Corp said it would receive $7.59 billion in shares in telco T-Mobile US at no additional cost, sending the Japanese conglomerate's stock up 5%. Masayoshi Son's conglomerate said late Tuesday that it had instructed T-Mobile US to issue 48.75 million shares of common stock to it once the conditions set out in an agreement reached as part of SoftBank's merger of Sprint and T-Mobile in the United States were met.

Following the blockbuster listing of chip designer Arm in September, the transaction expands SoftBank's portfolio by doubling its T-Mobile US stake to 7.64 percent from 3.75 percent.

"This increases the proportion of listed, measurable equity in hand on (SoftBank Group's) balance sheet, and, even better, proportions of marginable equity relative to indebtedness," Macquarie analyst Paul Golding wrote in a client note.

SoftBank's shares were on track for their biggest gain in more than a month. The conglomerate has risen only around 14 per cent year-to-date, compared with an almost 30 per cent rise in the benchmark index. The group trades at a discount of around 45.5 per cent to the value of its assets, according to Macquarie calculations.

Son has been a leading investor in late-stage startups, but has experienced a string of setbacks, including the bankruptcy of office-sharing firm WeWork, which was once the most valuable startup in the United States. SoftBank's internal rate of return (IRR) on its Sprint investment has increased to 25.5 percent as a result of the T-Mobile US transaction. Another plus for the company is the recent rally in Arm's shares, which closed on Tuesday around 44% above the initial public offering price.