SoftBank to invest $50B in U.S., Trump announces, to create 50,000 jobs

MasayoshiSon
SoftBank CEO Masayoshi Son. Image: SoftBank

SoftBank will invest $50 billion in the U.S., Donald Trump said Tuesday, in an effort to create 50,000 jobs. The news comes as speculation of a tie-up between Sprint and T-Mobile is heating up again.

The president-elect made the announcement during a surprise appearance in the lobby of New York’s Trump Tower with SoftBank CEO Masayoshi Son. Trump then took to Twitter to claim that Son “would never do this” if Trump had not been elected president.

It wasn’t immediately clear how SoftBank plans to invest the money or what kind of jobs it plans to create. SoftBank is the parent company of Sprint, and last month Son claimed his U.S. operator “will be the most dramatic large-scale turnaround” in U.S. history.

Son said the money will come from a $100 billion investment fund that he is establishing “with Saudi Arabia’s sovereign-wealth fund” as well as other potential investors, The Wall Street Journal reported.

It’s possible that Son is hoping to ingratiate himself with the incoming administration at a critical time. SoftBank overtly pursued T-Mobile a few years ago in the hopes of merging the two U.S. carriers, creating a market with three major players of roughly the same size. That effort was stymied when federal regulators indicated they were opposed to major consolidation in the market.

Trump’s election victory has once again stoked talk of a tie-up between Sprint and T-Mobile, however. Shares of both carriers have climbed in recent weeks due in part to speculation that a Trump administration would be more welcome of a merger than Obama’s administration has been.

Indeed, the two FCC advisers the incoming president named last week may signal a far lighter regulatory touch than Obama’s administration employed. Trump has vowed to block AT&T’s proposed acquisition of Time Warner, but there’s little evidence suggesting how Trump would view consolidation among wireless operators, Cowen and Company Equity Research wrote in a research note to investors.

“According to Cowen TMT (technology, media and communications) Policy Analyst Paul Gallant, early signs (the Trump FCC transition appointees) indicate benefits to cable/telcos, ISPs and media companies via less regulation,” Cowen and Company analysts wrote last week. “But it is also possible Trump’s previous lack of TMT policy positions, populism and lack of Department of Justice clarity inject a degree of uncertainty including M&A as we think about AT/Time Warner and Sprint/T-Mobile.”

Sprint’s customer base has grown significantly in 2016 thanks primarily to aggressive promotions such as its offer to halve the monthly bills of customers who switch from its rivals. The operator saw 347,000 net postpaid phone additions during the most recent quarter, well outpacing the 275,000 predicted by Wells Fargo Securities.

Sprint appears to gradually be regaining its financial stability as well under SoftBank, although much of that progress has come through severe budget cuts. Walter Piecyk of BTIG Research noted via Twitter that Sprint’s headcount has been reduced by 9,000 jobs since SoftBank bought the carrier in 2013, and its annual capital investment has been cut by 70%.