29 December 2016

Softbank invests in satellite network provider after Trump meeting

Japanese telecommunications giant Softbank is injecting USD 1,000 million in OneWeb, a Virginia-based company that uses satellites to provide rural areas with affordable high-speed internet access. The target’s existing investors are also participating in the funding round and will invest a further USD 200 million. Pending regulatory approvals, the transaction is expected to close in the first quarter next year.

Currently backed by companies such as Qualcomm and Richard Branson’s Virgin Media, OneWeb plans to use the proceeds to construct a satellite-making facility in Florida, aimed at giving the target the capacity to produce 15 satellites per week at a lower cost compared to other manufacturers.  

Just months prior to the news, Softbank’s chief executive Masayoshi Son agreed to establish a USD 100 billion fund with Saudi Arabia’s Public Investment Fund to invest solely in the technology sector. Through the entity, Son pledged to invest USD 50,000 million in the US and create 50,000 new jobs, following a brief meeting with President-elect Donald Trump early this month. The Korean-Japanese billionaire, who calls the OneWeb deal the first step in his commitment to the world’s largest economy, said: “America has always been at the forefront of innovation and technological development and we are thrilled to be playing a part in continuing to drive that growth as we work to create a truly globally connected ecosystem.”

Making headline-grabbing deals in the US is nothing new to Softbank, which acquired Kansas-based telecommunication giant Sprint Corporation for a whopping USD 38,900 million in July 2013. The Japanese conglomerate’s more recent technology-related transactions include its investment in San Francisco-based Social Finance. With other venture firms, including Doll Capital Management and Third Point, also participating in the deal, the investors collectively injected around USD 1,000 million into the student loan refinancing firm last year. In another funding round last December, Softbank, alongside other subscribers, contributed capital worth USD 8 million to New York-headquartered SocialFlow, a social media software company.

Well known for his bold vision, Son has also made big bets elsewhere. Just a few months ago, Softbank acquired the then London Stock Exchange-listed ARM Holdings in a leveraged buyout worth GBP 24,346 million. The computer microprocessors designer is instrumental in Softbank’s strategy to expand into the Internet of Things, which connects everyday items, such as mobile phones and vehicles, via wireless network.

Softbank posted revenue of JPY 9,154 billion (USD 77,825 million) in the 12 months ended 31st March 2016, up 7.6 per cent on the JPY 8,504 billion recorded in the previous year. Net income for the period totalled JPY 558,241 million, compared to JPY 763,682 million in 2015.

© Zephyr