SoftBank (SFTB.Y 1.24%), the Japanese technology company, is in discussions to sell some of its stake in T-Mobile US (TMUS 1.50%) to Deutsche Telekom in an effort to shore up much-needed capital.
The Wall Street Journal, citing people familiar with the matter, reported talks are ongoing and it’s not clear what percentage of the stake in T-Mobile it will sell, although it’s expected to be “significant.”
IMAGE SOURCE: GETTY IMAGES.
Deutsche Telekom already owns about 44% of T-Mobile. By acquiring the stake Deutsche Telekom could end up with a more than 50% position, reported The WSJ cautioning the deal could still come unhinged. If a transaction does happen the paper said Deutsche Telekom will likely get the shares at a small discount.
Talk of the stake sale comes on the same day SoftBank reported financial results for the fiscal year ended March 31 which showed its Vision Fund lost 1.9 trillion yen or nearly $18 billion, largely due to write-downs in its investments in WeWork, and Uber Technologies (UBER -1.88%). “Fair values of Uber, WeWork and its three affiliates decreased, and the total fair value of other portfolio companies decreased significantly,” SoftBank said in reporting results for its fiscal year. Bloomberg reported Uber represented $5.2 billion of the loss; WeWork was responsible for $4.6 billion, and the rest of its investments accounted for $7.5 billion of the losses.
The Vision Fund, which sought to invest $100 billion in the technology leaders of tomorrow has fallen on tough times in recent months as the values of its investments resulted in steep losses. Add the COVID-19 pandemic to the mix and the portfolio's value is declining further. “ If the pandemic continues, the company expects that uncertainty in its investment businesses will remain over the next fiscal year,” SoftBank warned in its earnings release.
