SoftBank continues to raise investment in Sprint

Sprint Store sign
SoftBank is increasing its ownership stake in Sprint.

SoftBank has purchased roughly $45 million in Sprint shares during the past week, as noted by the Kansas City Business Journal.

SoftBank’s increased investment is somewhat noteworthy considering the Japanese telecom giant appeared to have paused its purchase of Sprint shares earlier this month. BTIG analyst Walter Piecyk noted that SoftBank has been buying Sprint shares since merger talks collapsed between Sprint and T-Mobile last month. At the time, SoftBank confirmed that it would increase its investment in Sprint from around 83% to as much as 85%.

“In 2017, SoftBank has purchased 25.1 million Sprint shares,” Piecyk wrote on Dec. 15. “We estimate SoftBank can still purchase up to 54.5 million shares before hitting the 85% threshold that would trigger a tender for Sprint. If SoftBank elects not to exercise its warrant to purchase Sprint stock at $5.25 per share (a reasonable choice if the stock drops below this level), it would have an incremental open market buying power of 8.0 million shares. At SoftBank’s current buying volume of ~1.9 million shares per day, it would take 28 trading days to reach 85% ownership, which would extend its purchases into late January 2018, at a minimum.”

The Kansas City Business Journal in an article yesterday pointed out that, based on Security and Exchange Commission filings, SoftBank has bought $193.62 million in stock since Sprint and T-Mobile ended discussions. The company is not likely to own more than 85 percent of Sprint, which could result in the stock being delisted.

Apart from raising SoftBank’s investment into Sprint, SoftBank’s Masayoshi Son also promised to raise Sprint’s capex to up to $6 billion. That figure would represent a major increase from Sprint’s current capex for this fiscal year of between $3.5 and $4 billion. However, Sprint’s CFO Tarek Robbiati said last month that the company would raise its capex to “about $5 to $6 billion per year for the medium term.”

Since Sprint’s merger talks with T-Mobile collapsed last month, Sprint’s shares have fallen from roughly $6 per share to around $5.50 per share today.