Japan’s SoftBank is considering a sale of up to $20bn in shares of T-Mobile US, only weeks after the US telecommunications group finalised a long-awaited merger with Sprint.
The move comes as the technology group attempts to shore up confidence in its own performance after committing to raising $41bn for buying back shares and paying down its large debt burden.
Banks including Goldman Sachs and Morgan Stanley are advising SoftBank on the sale, which could still fail to materialise if it was unable to sell at attractive prices, people briefed on the discussions said.
Deutsche Telekom, which is the largest shareholder in T-Mobile US, would seek to increase its 44 per cent holding in the company above a majority position through the sales, the people said. SoftBank, Goldman and Morgan Stanley declined to comment.
News of the deal sent T-Mobile US shares down 3 per cent in after-hours trading. The group’s stock is up 1.4 per cent since the US stock market peaked in February, compared to a 13 per cent decline for the S&P 500 index.
The huge $20bn secondary equity offering would rank as one of the biggest since the financial crisis, nearing the $20.7bn sale of AIG stock by the US Treasury in 2012. The deal comes a week after PNC Financial sold its 22 per cent holding of BlackRock in a $13bn share sale.
SoftBank has faced pressure from shareholders including the hedge fund Elliott Management to raise cash and buy back shares. Investments in start-ups such as the property company WeWork have dragged on the company’s earnings, resulting in an $18bn drop in valuation at its Vision Fund.
The investments contributed to a historic $13bn loss for SoftBank during its most recent fiscal year, increasing the chances the group will fail to pay a dividend for the first time since listing in 1994.
Masayoshi Son on Monday compared himself to Jesus Christ in defending the losses and investment approach of the Vision Fund, and said it would continue to address “the biggest challenges and risks facing humanity today”.
SoftBank indicated on Monday it could sell as much as $11.5bn of shares in Alibaba, potentially reducing its stake in another big strategic asset.