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SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Charter surges as Japan's SoftBank considers bid

07/31/2017 | 09:48pm EDT
The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo

(Reuters) - Charter Communications Inc's (>> Charter Communications Inc) shares surged to a record high on Monday after a source said Japan's SoftBank Group Corp (>> SoftBank Group Corp) was considering an acquisition offer, even as Charter shot down the possibility of it being the acquirer in any merger with SoftBank's U.S. wireless carrier, Sprint Corp (>> Sprint Corp).

(Reuters) - Charter Communications Inc's (>> Charter Communications Inc) shares surged to a record high on Monday after a source said Japan's SoftBank Group Corp (>> SoftBank Group Corp) was considering an acquisition offer, even as Charter shot down the possibility of it being the acquirer in any merger with SoftBank's U.S. wireless carrier, Sprint Corp (>> Sprint Corp).

A source familiar with the matter told Reuters on Sunday that SoftBank Chief Executive Masayoshi Son is considering making a bid for Charter as soon as the end of August, in what would be by far the Japanese telecommunications conglomerate's biggest ever deal.

Charter has a market capitalisation of more than $100 billion (75.72 billion pounds) and another $60 billion in debt.

The bid would be at least 50 percent in cash and the rest in stock, the source said.

SoftBank is working with JPMorgan Chase & Co (>> JP Morgan Chase & Company), Deutsche Bank AG (>> Deutsche Bank) and Mizuho Financial Group Inc (>> Mizuho Financial Group, Inc.) on raising debt financing for its bid, sources close to the matter said. It may enlist more banks in the future, the sources added.

The prospect of a Sprint-Charter tie-up comes at a time when the telecom industry is preparing for a wave of deal activity. Regulators lifted a ban on merger discussions among telecom companies following the conclusion of an auction of broadcaster airwaves for wireless use in April.

Analysts and investors have said that tie-ups between cable companies and wireless carriers increasingly make sense as the distinction between broadband and wireless connectivity blurs, and consumers demand seamless connections for their devices.

Cable companies have the infrastructure that wireless carriers need for the growing amounts of mobile data customers are using. Cable companies could benefit from ownership of cellular networks as they launch their own mobile services.

Charter is currently planning to launch its own wireless service on Verizon Communications Inc's network (>> Verizon Communications) next year, and analysts have said that renting a network from a wireless carrier will be more costly long term than owning one.

Sprint, which is in the middle of a turnaround plan, has been looking to boost its financial status and better compete amid a fiercely competitive and saturated market for wireless service. The company has been exploring deal options with T-Mobile US Inc (>> T-Mobile US) but faces the hurdle of reaching an agreement on price as well as getting the deal approved by regulators. Both companies have said they are open to other partners.

Charter's shares closed at $391.91, up 5.8 percent, after hitting a record high of $399.95. Sprint shares closed down 2.9 percent to $7.98.

A Charter spokesman declined to comment on Monday on whether the company would sell to the wireless carrier.

A deal between the two could be complex and disruptive, analysts said, noting financing issues, complicated ownerships and the possibility of upending existing partnerships.

Investors said a deal with Sprint would be negative for Charter bondholders as it would likely increase leverage significantly.

JPMorgan analyst Philip Cusick wrote in a research note that a base case scenario would assume a $500-a-share bid for Charter, paid for with $20 billion of new cash from SoftBank and $40 billion of new debt. The deal could drive $2 billion in annual synergies, but he noted that SoftBank could lever Charter up significantly. A deal could also nullify part or all of Charter's network resale agreement with Verizon.

It would also require the blessing of cable provider Comcast Corp (>> Comcast Corporation). Comcast and Charter announced a wireless partnership in May aimed at finding cost savings as both companies enter the wireless market with their own mobile services. That agreement bars either company from tying up with a wireless carrier for a year without the other company's consent.

(Additional reporting by Rishika Sadam in Bengaluru; Editing by Nick Zieminski and Peter Cooney)

By Anjali Athavaley and Liana B. Baker

ę Reuters 2017
Stocks mentioned in the article
ChangeLast1st jan.
BASE CO., LTD. 0.51% 4950 End-of-day quote.-19.51%
BASE, INC. -3.13% 1515 End-of-day quote.-22.39%
CHARTER COMMUNICATIONS, INC. -0.40% 726.75 Delayed Quote.9.86%
COMCAST CORPORATION -0.24% 58.56 Delayed Quote.11.37%
DEUTSCHE BANK AG -0.36% 10.62 Delayed Quote.18.67%
MIRAINOVATE CO., LTD. 3.70% 28 End-of-day quote.-6.67%
SOFTBANK CORP. 0.14% 1469.5 End-of-day quote.13.65%
SOFTBANK GROUP CORP. -0.25% 7088 End-of-day quote.-12.04%
SPRINT CORPORATION 0.00%End-of-day quote.0.00%
T-MOBILE US -0.10% 144.82 Delayed Quote.7.50%
UNITED PARCEL SERVICE INC -6.99% 195.19 Delayed Quote.25.68%
VERIZON COMMUNICATIONS 0.75% 56.2 Delayed Quote.-4.89%
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Sales 2022 5 953 B 54 265 M 54 265 M
Net income 2022 1 045 B 9 528 M 9 528 M
Net Debt 2022 13 879 B 127 B 127 B
P/E ratio 2022 12,8x
Yield 2022 0,63%
Capitalization 12 142 B 110 B 111 B
EV / Sales 2022 4,37x
EV / Sales 2023 4,21x
Nbr of Employees 58 786
Free-Float 47,1%
Duration : Period :
SoftBank Group Corp. Technical Analysis Chart | 9984 | JP3436100006 | MarketScreener
Technical analysis trends SOFTBANK GROUP CORP.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 15
Last Close Price 7 088,00 JPY
Average target price 11 336,00 JPY
Spread / Average Target 59,9%
EPS Revisions
Managers and Directors
Masayoshi Son Chairman & Executive President
Yoshimitsu Goto CFO, Director & Senior Managing Executive Officer
Raul Marcelo Claure Chief Operating Officer & Executive Vice President
Tim Mackey Chief Legal Officer & Group Compliance Officer
Masami Iijima Independent Outside Director
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