Sprint and T-Mobile both saw their stock prices surge following commitment from Sprint and SoftBank Chairman Son for $50B, 50,000 job investment.
SoftBank Chairman Masayoshi Son, who also holds the same title at subsidiary Sprint, said the Japan-based telecom giant plans to invest $50 billion in the U.S. and create 50,000 new jobs.
The pledge came following a meeting with President-elect Donald Trump in New York City, with Trump stating the investment pledge was bolstered by his election victory last month.
The funds are reportedly set to come from a $100 billion investment trust being set up by Son, a Saudi Arabian sovereign-wealth fund and other potential investors.
SoftBank in October announced its Vision Fund with the main focus of making global investments in the technology sector. As part of the announcement, SoftBank said it had concluded a nonbinding memorandum of understanding with the Public Investment Fund of the Kingdom of Saudi Arabia under which the latter will consider investing in the SoftBank Vision Fund and becoming the lead investment partner, with the potential investment size of up to $45 billion over the next five years.
SoftBank noted it was in talks with other global investors to participate in the initiative, with the overall potential size of the fund set to go up to $100 billion.
“With the establishment of the SoftBank Vision Fund, we will be able to step up investments in technology companies globally,” Son noted at that time. “Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector.”
There are as of yet few details on the investment plans, with numerous reports pointing to previous attempts by Son to merge Sprint with T-Mobile US. Son had initially attempted to lobby the U.S. government to support a potential merger of the domestic market’s No. 3 and No. 4 wireless operators to better compete against industry heavyweights AT&T and Verizon Communications. However, those efforts failed to sway the current administration.
Despite the negative response, Son has repeatedly stated his interest in bolstering Sprint’s position in the market as well as his interest in further consolidation of the domestic wireless space. And, with a new administration set to take office next month, Son appears to be positioning himself in the good graces of the incoming president.
Sprint’s stock (S) surged to a new 52-week high of $8.61 per share following the announcement, before falling back to close the day at $8.17 per share.
The stock surge should be good news for Sprint CEO Marcelo Claure, who in extending his contract last year to lead the carrier was granted a bonus structure tied to Sprint’s stock rising to $8 per share, which the stock has not seen since mid-2014.
In attempting to turn around Sprint’s fortunes, Sprint has slashed thousands of jobs in a move to cut costs. The company has said it was looking to trim as much as $2.5 billion in operating expenses.
T-Mobile US also witnessed a strong day, with the carrier’s stock (TMUS) hitting a new 52-week high of $56.69 per share, before settling at $55.99. However, T-Mobile US parent company Deutsche Telekom, recently stated it was not interested in selling its controlling interest in T-Mobile US despite the impending administration change.
T-Mobile US CFO Braxton Carter, speaking this week at an investor conference, did admit it was likely the new Trump-led administration could be more open to consolidation across the domestic telecom space.
SoftBank has not been shy about throwing around money. The company earlier this year announced a deal to pay $32 billion to acquire ARM Holdings, the British company that designs the cores inside most of the processors built by Qualcomm, Samsung and other makers of smartphone chipsets.
The carrier also pocketed nearly $8 billion earlier this year following the sale of part of its stake in Chinese internet platform Alibaba Group.
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