SoftBank Group Corp has revealed it is to sell off around JPY1.33 trillion (USD12.5 billion) of the stock it holds in domestic wireless arm SoftBank Corp, piling up the recent asset sales it has undertaken as it looks to get back on track after a string of difficult investments in tech start-ups. The Masayoshi Son-led group will reportedly divest 927 million shares in the unit whose share price closed at JPY1.431.5 on Friday (28 August). Concurrently, SoftBank Corp will also look to buy back up to 1.68% of its own shares, Bloomberg notes, paying around JPY100 billion in the process.
TeleGeography notes that SoftBank Group Corp reported a net profit of JPY1.256 trillion in the April-June 2020 quarter, up 11.9% from JPY1.122 trillion in the corresponding period a year ago, thanks in large part to the merger and sale of its stake in US mobile carrier Sprint, marking a return to profitability following its biggest ever loss in the previous quarter. However, SoftBank did not report operating profit for the quarter, saying it was ‘not useful in appropriately presenting the consolidated financial results of a strategic investment holding company’ and that going forward it will report ‘gain (loss) on investments’ in order ‘to show investment performance in the consolidated financial results’.
As part of its revised business focus SoftBank is progressing with the plans it announced back in March to divest USD41 billion of assets during the current financial year. By June this year Son confirmed that it had already completed about 80% of its target by selling off stakes in T-Mobile US and domestic division SoftBank Corp, using some of the proceeds to buy back its own stock. Indeed, by 3 August it had sold or monetised JPY4.3 trillion of assets through the sale of T-Mobile shares, borrowing using T-Mobile shares, pre-paid forward contracts using Alibaba shares, and the partial sale of Softbank Corp shares.
Concerning its assets programme, the Group noted: ‘Given the current concern for a second or third wave of the novel coronavirus (COVID-19), SBG believes that it needs to further enhance its cash reserves. SBG is investing the funds raised until such cash reserves are used for the planned share repurchases and debt reductions, together with other surplus funds, in high-quality, highly liquid marketable securities and other instruments, in addition to holding the funds in cash and deposits, while being firmly committed to its existing financial policies on LTV (loan-to-value, the ratio of liabilities to holding assets) and cash on hand.’