Billionaire Masayoshi Son said SoftBank Corp. (9984)’s plan to spend more than $40 billion upgrading its network and acquiring Sprint Nextel Corp. (S:US) will help transform Japan’s No. 3 mobile carrier into the world’s No. 1.
At the company’s annual shareholder meeting, Son worked to convince investors his $21.6 billion bid for Sprint will generate growth for the Tokyo-based company as it faces a shrinking population at home. SoftBank (9984) inched closer to the acquisition after Dish Network Corp. (DISH:US) passed on making a new offer by the U.S. carrier’s deadline earlier this week.
The global ambitions of Son, 55, who invited his Twitter followers to attend even if they weren’t shareholders, are also fueling Sprint’s separate offer for full control of Clearwire Corp. (CLWR:US) The broadband company, already majority-owned by Sprint (S), controls valuable wireless airwaves that SoftBank needs to roll out a fourth-generation network in the U.S. to challenge Verizon Wireless and AT&T Inc.
“The money doesn’t matter -- it is getting what he wants,” said Edwin Merner, president of Tokyo-based Atlantis Investment Research Corp. “To do well in the U.S. market will not be easy. I think he can do this.”
SoftBank, which has about 42 million subscribers with its units, is the fastest-growing mobile carrier in Japan and wants to replicate that success with Sprint by improving networks and services, Son said. SoftBank’s shares have gained 77 percent this year, compared with a 28 percent increase in the Topix index.
The stock rose 1.8 percent to 5,560 yen at the close in Tokyo today and the Topix added 0.7 percent.
SoftBank’s annual capital spending will peak in the year ending March at 780 billion yen ($8 billion), before falling to 580 billion yen in the 2014 financial year and 480 billion yen in 2015, Son said today in Tokyo. The company will build towers for its mobile phone network and buy equipment.
“We want to be the world’s No. 1 company in various terms including profit, cashflow and market value,” Son said, without setting a timetable.
Sprint’s capital expenditure wasn’t included in the spending plan unveiled today, SoftBank spokesman Takeaki Nukii said.
SoftBank, founded in 1981, has made almost 100 purchases since 2000, according to data compiled by Bloomberg. The company owns stakes in more than 1,000 Internet operations including Yahoo Japan Corp (4689)., Alibaba Group Holding Ltd (ALIBABZ). and Ustream Inc.
“Son’s got a clear vision and he’s got strong motivation for growth,” said Ryo Tsukui, an individual investor who attended the meeting today.
Son is the 65th richest person in the world with a net worth of $13.7 billion, according to the Bloomberg Billionaires Index. His fortune has increased by $4.7 billion this year.
SoftBank has the backing of Sprint’s board and second-largest investor Paulson & Co. Sprint and SoftBank have received national-security approval for the deal from the U.S. government.
Sprint shareholders are scheduled to vote June 25 on SoftBank’s offer. Overland Park, Kansas-based Sprint has 55.2 million subscribers after losing 560,000 in the first quarter.
SoftBank has gained three of the four regulatory approvals needed do the Sprint deal and the acquisition is going well with the U.S. Federal Communications Commission, Son said today.
Annual savings at Sprint will be about $2 billion in the first four years from cost cutting, he said.
“SoftBank’s win is pretty much assured, so it’s now up to Son whether he can rebuild Sprint,” said Makoto Kikuchi, chief executive officer at Tokyo-based Myojo Asset Management Japan Co.
SoftBank increased its bid for Sprint by 7.5 percent to $21.6 billion last week to ward off a $25.5 billion counteroffer from Dish Chairman Charlie Ergen. SoftBank will pay $16.6 billion to Sprint shareholders and inject $5 billion of new capital into the target for a 78 percent stake, the carrier said June 11.
Englewood, Colorado-based Dish passed on making a new offer for Sprint by a June 18 deadline while declaring it would consider “options,” leaving the door open for a subsequent move. If the Sprint plan falls through, Son has said he will go after the next-largest U.S. mobile company, T-Mobile US Inc.
Separately, Sprint and Dish are competing for Bellevue, Washington-based Clearwire. Sprint, which owns slightly more than half of Clearwire, has been attempting to buy the remaining stake since December, prodded by SoftBank.
Sprint raised its offer for Clearwire to $5 a share early this morning Tokyo time, providing a 14 percent premium over Dish’s proposal. Sprint also struck a deal for the support of a group of Clearwire shareholders that had previously opposed its takeover, hindering Dish’s ability to counter. Clearwire will now have to pay $115 million to Sprint if it doesn’t complete the transaction.
SoftBank benefited from being the sole Japanese carrier to offer Apple Inc (AAPL).’s iPhone from 2008 until last year, when KDDI Corp (9433). started selling the handset. SoftBank added 3.53 million new subscribers in the year ended March 31, compared with 1.4 million for NTT DoCoMo Inc (9437)., Japan’s biggest carrier, and 2.6 million at KDDI, the second-biggest, according to data provided by the companies.
SoftBank forecast record operating income as acquisitions and new subscribers using iPhones stoke earnings. The company bought local competitor eAccess Ltd. to meet bandwidth demand for smartphones.
Operating profit, or sales minus the cost of goods sold and administrative expenses, for SoftBank’s domestic businesses probably will exceed 1 trillion yen in the year started April 1, up from 745 billion yen a year earlier, the company said April 30.
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