Is SoftBank Founder Masayoshi Son ‘Betting the Farm’ on Sprint?


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softbankFollowing the announcement by Softbank and Sprint owner Masayoshi Son that his company would invest $50 billion in the U.S., analysts have been scrambling for clarification. The Economist called it “a vintage performance’ by Son, and the Washington Post labeled it “dubious,” citing Japanese analysts who said Son planned on making the investment regardless of the transition but made the most of the opportunity of meeting with the President-elect.

According to the Wall Street Journal, “given its size ($100 billion), the fund was likely to put most of its money in the U.S., still home to the world’s most-promising technology companies. Last quarter, 60 percent of the money raised by companies backed by venture capital was in North America, according to a report by KPMG and CB Insights.”

The BBC asked “why is Masayoshi Son, one of Japan’s most eccentric businessmen, investing in Trump’s America at a time when the U.S. is seemingly focusing less on Asia?”  

One reason behind the bold and splashy news statement is Softbank is heavily vested in Sprint, according to the BBC, and “betting the farm” on it.  Softbank paid $22 billion for a controlling position in Sprint in 2013, which the competition has chipped away at, causing a loss of around $7B, the BBC reported.  Softbank’s strategy was to “claw back a profit,” the BBC said, “by buying T-Mobile, Sprint’s biggest U.S. competitor. But when U.S. regulators seemed averse to the merger Softbank had to find another way around the impasse.”

“Cozying up to the new U.S. president by doing a deal that makes him look good would be one way to smooth those regulatory issues in the future” the BBC said.

December 9, 2016

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