The Japanese telecommunications company aims to sell a third of its national business unit for 21 trillion dollars to create investment funds in technology
The telecommunications company SoftBank, the third largest in the Japanese market, received green light a few days ago to launch its initial public offering (IPO) in mid-December. With this, it aims to raise around 21 billion dollars and increase its capacity for investment in technology worldwide.
Leer en español: SoftBank: el nuevo jugador del mundo de la tecnología
This in order to expand its activities beyond the world of telecommunications in Japan. This is President Masayoshi Son's most recent move in his campaign to transform SoftBank in a technology investment company.
According to a report from Bloomberg, with this offer, SoftBank would sell 1.6 billion shares of a new entity created specifically for this purpose, SoftBank Corp., which would frame all activities in local telecommunications, which encompass wireless services, bandwidth, and landlines.
These shares offered to the public would represent a third of the value of the company, that to achieve the target price of 1500 yen (approximately 13.20 dollars) per share, the company would be valued at 7.2 trillion yen, about 63 trillion dollars.
From telecommunications to investment in technology
This offer is the latest strategy of Masayoshi Son, founder and president of SoftBank, to continue his capital contributions to the technology industry. Already in the past Son has led the SoftBank Group to make bets in this sector, with a presence in Alibaba Group Holding and Yahoo! as better examples of this.
The results of these moves have been the perfect precedent to motivate a new action in pursuit of the transition of capital to the technological sector. Likewise, the investment fund Vision Fund, formed last year with 100 billion dollars from a diverse group of corporate personalities such as Apple Inc. and Saudi Arabia, marked another milestone in corporate history.
This is because, according to an analysis by the Financial Times, it has become a greater revenue contributor to SoftBank than its telecommunications business unit.
Conditions at home require diversification
In recent pronouncements, Masayoshi Son has mentioned that the telecommunications market in Japan, which has been so lucrative since the foundation in 2006 with the purchase of Vodafone Japan, "is reaching a point of saturation."
This trend is also compounded by pressures from the Japanese government to reduce the costs of telecommunications services, which seek to dramatically reduce prices in this sector, in favor of the general population. Measures that his telecommunications competitors have already begun to accept.
In contrast to the tight situation of the original SoftBank sector, the technology industry has had a more promising development, with new areas being explored every day, thus producing a significant new startup flow. It is worth clarifying that the interest of SoftBank and especially of Son for technology startups has already resulted in an investment in Uber Technologies Inc.
It is not an investment that can be done with closed eyes
However, there are doubts about the IPO. On the one hand, there is the fact that SoftBank has a credit reputation described as "unwanted" by the same Wall Street Journal report. From this arises the hypothesis that a large part of the money collected in this IPO would be used to alleviate SoftBank's debt burden.
On the other hand, if the money is really destined to create more funds focused on technology like the one called Vision Fund, it worries what kind of personalities would enter to participate in them. In the case of the Vision Fund, the Saudi presence is worrisome, especially with the recent scandal for the murder of fellow journalist Jamal Khashoggi and the quality of relations between the Saudi kingdom and Son himself.
An atypical company with an atypical CEO
In a 2010 conference on the future of the company, some areas of interest for the expansion of SoftBank were named. Some of the ambitious projects mentioned were: to develop automated and instantaneous translation technology, to develop artificial intelligence capable of generating human emotions, to increase the life expectancy of the Japanese population to 200 years, to create telepathy mechanism.
However, it is in tune if you examine the story of the president. He is a Korean raised in Japan who experienced a strong discrimination and that developed in him a need to prove himself and others.
His luck has not always been good, because, with the bursting Internet bubble in 2000, he lost 90% of his wealth, after briefly being the richest man in the world, as reported by CNBC. However, his early investments in Alibaba allowed him to rebuild and lift the telecom giant SoftBank.
The consequences of this decision will not be evident until next year, when the first investments made with the money raised in this IPO are made. This is parallel to the publication of the first results reports of Softbank's next year in the Japanese telecommunications market, which will say whether the decision to buy its shares was correct at first glance.
LatinAmerican Post | Jonathan Mikler
Translated from "SoftBank: el nuevo jugador del mundo de la tecnología"
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