Chapter 1 Company Development Overview
1.1 Founder and Development History
SoftBank Group was founded in Japan by Masayoshi Son in 1981 and listed in Japan in 1994. It is a comprehensive venture capital company that is mainly committed to investment in the IT industry, including the Internet and telecommunications.
1981-1996 (Personal Computer and Software Business Period)
SoftBank founder Masayoshi Son studied at the University of California, Berkeley. While studying in the United States, Masayoshi Son saw a striking chip picture on a science magazine , which made him believe that the era of personal computers is coming. After graduation, he decided to return to Japan. In September 1981, he founded a company that sells personal computers and software in various parts of Japan - Japan SoftBank Group, a software bank, which set the foundation for the new information society that Japan is about to establish.
As personal computers become more and more popular in Japan, Japan's SoftBank launched the "Oh! PC and oh! MZ》. Targeting manufacturers and engineers, these monthly magazines are in stark contrast to the average PC magazine that dominated the industry at the time, and SoftBank’s unique style attracted widespread public attention.
In July 1990, Japan's SoftBank (softbank Corp. Japan was renamed SoftBANK Corp.), aiming to transform into a global company. During this period, SoftBank introduced new services from the United States to Japan. Soon after, SoftBank Holdings Co., Ltd. was established in the United States to identify investment opportunities for promising Internet-related companies.
In July 1994, SoftBank registered with the Japan Securities Dealers Association and began to issue shares publicly in the off-market (OTCh) market. The company used the 20 billion yen raised by the issuance to start a large-scale acquisition. From 1994 to 1996, SoftBank acquired a computer trading exhibition operator and a publisher in the United States. Son described the acquisition as a way to “get maps and compass” to get to the center of information technology. The acquisition of Ziff Davis Publishing Co., a publishing division owned by Ziff Communications Company, also helped the company discover Yahoo Inc., which is still in its immature stage.
1996-2006 (Internet business period)
In order to carry out comprehensive Internet business in Japan, SoftBank and Yahoo Co., Ltd. jointly invested and established Yahoo Japan Company. 1996 was an extraordinary year for SoftBank as the company launched more and more Internet-related businesses.
In January 1998, the company split its department into multiple independent companies and became an pure holding company , creating a new business structure and increasing business liquidity.
In 2000, the current two companies, Alibaba Group Holding Limited, and SoftBank Group Corp., established close relationships through business partnerships, joint investments and other cooperations.
In September 2001, in order to provide cheaper and faster Internet access in Japan, SoftBank launched Yahoo! BB, an integrated broadband commercial service using ADSL. The service is twice as fast as its competitors and costs about half the price.
In July 2004, in addition to its rapidly growing broadband services, SoftBank also developed into a telecommunications organization operating fixed-line telecommunications networks and data communication services by acquiring 100% ownership of JAPAN TELECOM CO., LTD.
In January 2005, after completing the acquisition of Fukuoka Daiiei HAWKS, Fukuoka SoftBank HAWKS was born, and the company's reputation and brand awareness were also improved.
2006-2014 (Mobile Business Period)
With the advent of the mobile Internet era, SoftBank plans to establish mobile communications services from scratch. In April 2006, SoftBank entered the mobile communications field by acquiring shares of Vodafone K.K., and in October 2006 it was renamed SoftBank Mobile Corp.SoftBank Mobile has expanded its customer base with reasonable priced and revolutionary mobile plans, further strengthening its network and multiple device options. As the exclusive supplier of iPhone 3G in Japan, the company launched the device on July 11, 2008, with people from all over Japan queuing in front of SoftBank stores.
In June 2010, SoftBank Group announced its vision for the next 30 years, reaffirming its goal: to become the company that people around the world need the most. On March 11, 2011, after experiencing the East Japan Earthquake, Masayoshi Son began to realize the importance of safe and sustainable new energy.
In October 2011, SoftBank Group established SB Energy Company to promote more adoption of renewable energy and expand its business at home and abroad.
In July 2013, SoftBank acquired an American company, Sprinttml6, as a subsidiary, and SoftBank became a telecom operator with one of the largest customer bases in the United States and Japan.
2014 to the present ( Artificial Intelligence , Internet of Things and Intelligent Robotics Business)
In June 2014, SoftBank Mobile and ALDEBARAN Robotics SAS (currently SoftBank Robotics Europe SAS) announced Pepper - the world's first release robot that can recognize faces and emotions.
In September 2014, Alibaba Group Holdings Co., Ltd. was listed in the United States.
In September 2016, before the advent of the Internet of Things era, SoftBank Group acquired Arm, the leader in semiconductor technology, as a subsidiary.
In May 2017, SoftBank Vision Fund was established, aiming to vigorously promote the next stage of the information revolution by investing in innovative technologies and entrepreneurs that are expected to shape the future.
In December 2017, SoftBank Group completed the acquisition of Fortress, a world-leading and highly diversified investment company.
In October 2019, SoftBank Vision Fund 2 was established, which aims to promote the continuous acceleration of the artificial intelligence revolution by investing in market-leading and technically supported growth companies.
Figure SoftBank Group's development history
1.2 Enterprise development strategy and transformation
SoftBank Group follows the corporate philosophy of "Information Revolution - Everyone is happy", and its goal is to become a company that can maximize the value of the enterprise and provide the necessary technology and services to people around the world. SoftBank always believes that companies must continue to evolve to reflect changes in society, rather than focusing on specific technologies or business models. Therefore, the company proposed the "Cluster of No.1 Strategy".
The goal of the "First Cluster Strategy" is to form a diversified group with outstanding technology and business models in specific fields. This strategy encourages companies to form synergies on the basis of capital ties and common vision while making independent decisions, and develop and grow together. This unique organizational strategy has the potential to help the Group achieve growth over the next 300 years through flexible transformation and expansion of its business line.
"First Cluster Strategy" has two distinctive features. First, build a cluster of leading enterprises in various fields to significantly enhance the overall competitiveness of the cluster. Second, the strategy allows SoftBank Group to maintain an extremely flexible management style. As a strategic holding company, UBS will seek to provide guidance on decisions for companies within the cluster, rather than being fully controlled by investment company as a wholly owned subsidiary of . The group will not be committed to acquiring majority stakes or integrating brands to a large extent, because it places more emphasis on protecting the diversity and autonomy of the company. Furthermore, not holding a majority stake means that the group can more easily exit stake in companies that have matured or not grown as expected, thereby facilitating the smooth progress of other investments.
At present, the group has incorporated artificial intelligence into a series of business models in order to reshape value creation and fundamentally redefine all industries.The utilization of artificial intelligence has brought huge opportunities in expanding the market and creating new industries. To seize the opportunity, the group is investing in building a cluster of leading AI companies that are building innovative services and business models around the emerging capabilities of artificial intelligence technology that will maintain the group's future growth. SoftBank Vision Fund plays a leading role in implementing this strategy, providing financial support for the realization of long-term large-scale investment activities.
Chapter 2 Business model and revenue model
2.1 Group industry and listed companies
Investment business
Investment business is led by SoftBank Group, which, as a strategic investment holding company, conducts investment activities directly or through subsidiaries such as SoftBank Group Capital Co., Ltd. and SoftBank Group Japanese companies.
Latin America Fund
SoftBank Latin America Fund was established in 2019 and specializes in investing in the technology sectors of the rapidly growing Latin American market.
Information Technology Industry
SoftBank Corp. provides products and services that have completely changed the lifestyle of customers by leveraging the latest technologies, including artificial intelligence, the Internet of Things and robotics. The company's goal is to adopt a flexible approach to expanding its business to a wide range of areas while seeking synergies with domestic and foreign group companies.
Company has developed three brands to meet the various needs of customers: the main brand "SoftBank", which provides mobile communication services; the sub-brands "Y!mobile" and "LINEMOBILE". Looking ahead to the Internet of Things era, the company launched the 5G service as the next generation of mobile communication services, including commercial LTB standard NB IoT services specialized in IoT devices characterized by low prices and energy savings. In addition to mobile communication services, the company has also established contact points with a wide range of customers by providing power services "SoftBank Power" and fixed broadband service "SoftBank Hikari" to further expand its customer base.
- SoftBank and Yahoo Japan provide mobile e-commerce services, such as users can easily shop Yahoo! Japan online through SoftBank and Y! mobile.
- SoftBank provides a range of network infrastructure products, including ICT (Information and Communication Technology) distribution software and hardware that provides cutting-edge products and services.
- SoftBank is continuing to work with partner companies with the world's most advanced business models, such as SoftBank Vision Fund Investment Company, to cultivate and expand new businesses.
- SoftBank is continuing to work with partner companies with the world's most advanced business models, such as SoftBank Vision Fund Investment Company, to cultivate and expand new businesses. WeWork Japan, PayPay Corporation, DiDi Mobility Japan Corp. and OYO Hotels Japan G.K have been established. In addition, SoftBank has established an joint venture with Alibaba Group and Cybereason Co., Ltd. in the United States to provide cloud and network security services.
semiconductor (chip) technology
processor design enterprise Arm's technology is used in the main chips of almost all smartphones and tablets. In the era of IoT, as the leader in semiconductor technology, Arm is expected to leverage its differentiated technologies in high security and energy efficiency to play a central role in SoftBank Group's strategy.
Other businesses
2.2 Major mergers and acquisitions and sales of assets
Major mergers and acquisitions
SoftBank Group has always focused its investment on growth opportunities brought by the information revolution, and seeking growth of net asset value by supporting the development of companies within the portfolio and by fully leveraging the group's expertise in the technical field to increase the equity value of holdings . The group has always adhered to the " paradigm transfer " of investment, and has achieved further growth in net asset value based on market expansion and the use of artificial intelligence.
Figure The Group's major acquisition and acquisition of
(1) In 2004, the acquisition of japan Telecom
SoftBank Group successfully transformed from its growing broadband and Internet business through the acquisition of japan Telecom, thus officially entering the traditional telecom business field, greatly expanding its business scale, providing consumers and corporate customers with comprehensive communication services including voice, data transmission and Internet connection, becoming a leading company in the Japanese telecom market.
Figure Acquisition details
(2) In 2006, acquiring Vodafone Japanese subsidiary
Vodafone Japan subsidiary is the third largest mobile service operator in Japan. Vodafone is the world's largest mobile operator with more than 510 million customers worldwide. By acquiring Vodafone's Japanese subsidiary, SoftBank has become an integrated telecommunications service provider, providing more than 26 million fixed and mobile communication service lines.
acquisition details
The company after the acquisition formed a mobile communications business alliance with Yahoo! JAPAN, providing various high-quality innovative mobile services to the customer base through its portal website.
(3) The acquisition of Sprinttml6
Sprint in 2013 allows SoftBank to establish an operating base as one of the world's largest mobile Internet companies. The merger has made SoftBank mobile telecom services ranked third among global operators and able to leverage its deep expertise in smartphones and next-generation mobile networks, as well as success in established markets competing with large incumbent companies, to enhance Sprint's competitiveness in the United States. Provide Sprint with $8 billion in new capital for its mobile networks, strategic investments and balance sheet as part of its continued efforts to consolidate its operating base for future growth.
acquisition method: SoftBank established a new US holding company Starburst I, Inc. (HoldCo), and two other subsidiaries Starburst II, Inc. (New Sprint), directly owned by HoldCo, Starburst III, Inc. (Merger Sub), directly owned by New Sprint and indirectly owned by HoldCo.
Through New Sprint, SoftBank invested US$3.1 billion in Sprint in the form of a newly issued convertible bond . The bond has a face-to-face interest rate of , with a maturity date of seven years, and the merger will be converted to 16.4% of Sprint's issued common stock at a price of $5.25 per share. SoftBank injects approximately $17 billion into New Sprint through HoldCo. Approximately $12.1 billion will be allocated to Sprint shareholders for the merger consideration. Merger Sub merged with Sprint to become a wholly-owned subsidiary of New Sprint.
Figure SoftBank’s acquisition of Sprint
(4) Acquisition of ARM in 2016 in 2016, SoftBank Group believes that ARM is one of the world’s leading technology companies and has strong capabilities in global semiconductor intellectual property rights and the “Internet of Things”. This acquisition can strengthen ARM's global leadership in semiconductor intellectual property licensing and R&D outsourcing and promote new technological innovation. Under the terms of the acquisition, UBS Group purchased all issued and pending shares of ARM in cash, with a total acquisition price of approximately £24 billion (about US$31 billion or ¥3.3 trillion).
(5) Founded in 2017, SoftBank Vision Fund 1
As of March 31, 2021, SoftBank Vision Fund 1 had a cumulative investment cost of US$74.9 billion in one financial year, and the total investment fair value was US$120.7 billion. There are nine major fields and 81 investment projects, including 11 listed companies.
Figure SoftBank Vision Fund Investment Field
(6) Acquisition of Line
in 2018 in 2018, after allocating new shares, SoftBank held 51% of Line Mobile's shares. On October 22, 2021, SoftBank completed the 100% ownership acquisition and absorption merger of LINE MOBILE Corporation.
(7) Founded in 2019, SoftBank Vision Fund 2
As of March 31, 2021, the cumulative investment cost of SoftBank Vision Fund 2 in one financial year was US$6.7 billion, and the total fair value of the investment was US$11.2 billion. There are nine major areas and 44 investment projects, including 3 listed companies.
Selling assets
On March 23, 2020, SoftBank Group announced a plan to sell (monetize) 4.5 trillion yen assets held, provide funds for share repurchase, and improve the company's financial status through debt reduction and other measures. The funds obtained from the sale (monetization) are used to repurchase up to 2 trillion yen of company common shares. The balance will be used for debt redemption, bond repurchase and increased cash reserves.
In the six months from April to September 2020, the total sale or amount of assets was 5.6 trillion yen. As of May 12, 2021, the company completed a 2 trillion yen share repurchase. In terms of debt reduction, the company reduced its debt by repurchasing domestic corporate bonds and foreign currencies to pay off priority loans and borrowings before the end of the fiscal year. To further improve financial conditions, the remaining earnings have been invested in highly liquid listed stocks through the company's asset management subsidiary SB Northstar, preparing for future investment opportunities.
Table 2020 Total assets sold
(1) Partially sold T-Mobile shares and borrowed
using T-Mobile shares
On April 1, 2020, the group's US subsidiary Sprint and the US T-Mobile Co., Ltd. completed the merger. As the merger consideration, the company received 304,606,049 shares of T-Mobile. Since then, Sprint is no longer a subsidiary of the group. After the merger, the group holds 24.7% of the new company T-Mobile. Subsequently, the group sold 198,314,426 shares of T-Mobile. On July 30, 2020, SoftBank Group's wholly-owned subsidiary borrowed US$4.38 billion with its T-Mobile shares as collateral.
(2) Partial monetization of Alibaba shares through prepayment of forward contract
From April to August 2020, SoftBank Group's wholly-owned subsidiary signed a number of prepayment of forward contracts with financial institutions with Alibaba shares, with a total amount of US$15.4 billion. The transaction includes a collar contract and call spread, which is expected to be settled between May 2024 and June 2024.
(3) Partially sold SoftBank shares
In May and September 2020, the group sold a total of 1,268,061,400 common shares of its subsidiary SoftBank Corp., with a total amount of 1.5 trillion yen.
(4) signed an agreement to sell all shares of Arm
On September 13, 2020 (US time), the group's wholly-owned subsidiary SoftBank Group Capital Co., Ltd. ("SBGC") and SoftBank Vision Fund 1 ("SVF1") signed a share purchase agreement with US semiconductor manufacturer NVIDIA Corporation ("NVIDIA"), under which the Group will sell all shares of its wholly-owned subsidiary Arm held by SBGC and SVF1 to NVIDIA in a transaction worth up to US$40 billion. After signing the purchase agreement, the transaction is expected to take about 18 months to complete. The Group decided to transfer the Internet of Things Services Group (ISG) business (not included in the share purchase transaction) and manage it separately from Arm's remaining business.
Chapter 3 Valuation and major domestic and foreign competitors
3.1 Comprehensive financial analysis and valuation methods
As of the fiscal year ending March 31, 2022, SoftBank Group's financial situation is as follows:
Main indicator
(1) Investment loss was 3.434.7 billion yen: It is mainly due to a variety of factors that caused the stock prices of most listed portfolio companies to fall, including pending concerns, regulatory tightening and expected interest rates, which generally avoided high growth technology stocks . For the same reason, fair value growth for unlisted portfolio companies is also slow.
(2) Loss before income tax is 869.6 billion yen: the recorded financial cost is 382.5 billion yen, and the derivative income (excluding investment income (loss)) is 1.234.7 billion yen, mainly related to the use of prepaid forward contracts for Alibaba shares. SoftBank Group was founded in Japan by Masayoshi Son in 1981 and listed in Japan in 1994. It is a comprehensive venture capital company that is mainly committed to investment in the IT industry, including the Internet and telecommunications. 1981-1996 (Personal Computer and Software Business Period) SoftBank founder Masayoshi Son studied at the University of California, Berkeley. While studying in the United States, Masayoshi Son saw a striking chip picture on a science magazine , which made him believe that the era of personal computers is coming. After graduation, he decided to return to Japan. In September 1981, he founded a company that sells personal computers and software in various parts of Japan - Japan SoftBank Group, a software bank, which set the foundation for the new information society that Japan is about to establish. As personal computers become more and more popular in Japan, Japan's SoftBank launched the "Oh! PC and oh! MZ》. Targeting manufacturers and engineers, these monthly magazines are in stark contrast to the average PC magazine that dominated the industry at the time, and SoftBank’s unique style attracted widespread public attention. In July 1990, Japan's SoftBank (softbank Corp. Japan was renamed SoftBANK Corp.), aiming to transform into a global company. During this period, SoftBank introduced new services from the United States to Japan. Soon after, SoftBank Holdings Co., Ltd. was established in the United States to identify investment opportunities for promising Internet-related companies. In July 1994, SoftBank registered with the Japan Securities Dealers Association and began to issue shares publicly in the off-market (OTCh) market. The company used the 20 billion yen raised by the issuance to start a large-scale acquisition. From 1994 to 1996, SoftBank acquired a computer trading exhibition operator and a publisher in the United States. Son described the acquisition as a way to “get maps and compass” to get to the center of information technology. The acquisition of Ziff Davis Publishing Co., a publishing division owned by Ziff Communications Company, also helped the company discover Yahoo Inc., which is still in its immature stage. 1996-2006 (Internet business period) In order to carry out comprehensive Internet business in Japan, SoftBank and Yahoo Co., Ltd. jointly invested and established Yahoo Japan Company. 1996 was an extraordinary year for SoftBank as the company launched more and more Internet-related businesses. In January 1998, the company split its department into multiple independent companies and became an pure holding company , creating a new business structure and increasing business liquidity. In 2000, the current two companies, Alibaba Group Holding Limited, and SoftBank Group Corp., established close relationships through business partnerships, joint investments and other cooperations. In September 2001, in order to provide cheaper and faster Internet access in Japan, SoftBank launched Yahoo! BB, an integrated broadband commercial service using ADSL. The service is twice as fast as its competitors and costs about half the price. In July 2004, in addition to its rapidly growing broadband services, SoftBank also developed into a telecommunications organization operating fixed-line telecommunications networks and data communication services by acquiring 100% ownership of JAPAN TELECOM CO., LTD. In January 2005, after completing the acquisition of Fukuoka Daiiei HAWKS, Fukuoka SoftBank HAWKS was born, and the company's reputation and brand awareness were also improved. 2006-2014 (Mobile Business Period) With the advent of the mobile Internet era, SoftBank plans to establish mobile communications services from scratch. In April 2006, SoftBank entered the mobile communications field by acquiring shares of Vodafone K.K., and in October 2006 it was renamed SoftBank Mobile Corp.SoftBank Mobile has expanded its customer base with reasonable priced and revolutionary mobile plans, further strengthening its network and multiple device options. As the exclusive supplier of iPhone 3G in Japan, the company launched the device on July 11, 2008, with people from all over Japan queuing in front of SoftBank stores. In June 2010, SoftBank Group announced its vision for the next 30 years, reaffirming its goal: to become the company that people around the world need the most. On March 11, 2011, after experiencing the East Japan Earthquake, Masayoshi Son began to realize the importance of safe and sustainable new energy. In October 2011, SoftBank Group established SB Energy Company to promote more adoption of renewable energy and expand its business at home and abroad. In July 2013, SoftBank acquired an American company, Sprinttml6, as a subsidiary, and SoftBank became a telecom operator with one of the largest customer bases in the United States and Japan. 2014 to the present ( Artificial Intelligence , Internet of Things and Intelligent Robotics Business) In June 2014, SoftBank Mobile and ALDEBARAN Robotics SAS (currently SoftBank Robotics Europe SAS) announced Pepper - the world's first release robot that can recognize faces and emotions. In September 2014, Alibaba Group Holdings Co., Ltd. was listed in the United States. In September 2016, before the advent of the Internet of Things era, SoftBank Group acquired Arm, the leader in semiconductor technology, as a subsidiary. In May 2017, SoftBank Vision Fund was established, aiming to vigorously promote the next stage of the information revolution by investing in innovative technologies and entrepreneurs that are expected to shape the future. In December 2017, SoftBank Group completed the acquisition of Fortress, a world-leading and highly diversified investment company. In October 2019, SoftBank Vision Fund 2 was established, which aims to promote the continuous acceleration of the artificial intelligence revolution by investing in market-leading and technically supported growth companies. Figure SoftBank Group's development history SoftBank Group follows the corporate philosophy of "Information Revolution - Everyone is happy", and its goal is to become a company that can maximize the value of the enterprise and provide the necessary technology and services to people around the world. SoftBank always believes that companies must continue to evolve to reflect changes in society, rather than focusing on specific technologies or business models. Therefore, the company proposed the "Cluster of No.1 Strategy". The goal of the "First Cluster Strategy" is to form a diversified group with outstanding technology and business models in specific fields. This strategy encourages companies to form synergies on the basis of capital ties and common vision while making independent decisions, and develop and grow together. This unique organizational strategy has the potential to help the Group achieve growth over the next 300 years through flexible transformation and expansion of its business line. "First Cluster Strategy" has two distinctive features. First, build a cluster of leading enterprises in various fields to significantly enhance the overall competitiveness of the cluster. Second, the strategy allows SoftBank Group to maintain an extremely flexible management style. As a strategic holding company, UBS will seek to provide guidance on decisions for companies within the cluster, rather than being fully controlled by investment company as a wholly owned subsidiary of . The group will not be committed to acquiring majority stakes or integrating brands to a large extent, because it places more emphasis on protecting the diversity and autonomy of the company. Furthermore, not holding a majority stake means that the group can more easily exit stake in companies that have matured or not grown as expected, thereby facilitating the smooth progress of other investments. At present, the group has incorporated artificial intelligence into a series of business models in order to reshape value creation and fundamentally redefine all industries.The utilization of artificial intelligence has brought huge opportunities in expanding the market and creating new industries. To seize the opportunity, the group is investing in building a cluster of leading AI companies that are building innovative services and business models around the emerging capabilities of artificial intelligence technology that will maintain the group's future growth. SoftBank Vision Fund plays a leading role in implementing this strategy, providing financial support for the realization of long-term large-scale investment activities. Investment business Investment business is led by SoftBank Group, which, as a strategic investment holding company, conducts investment activities directly or through subsidiaries such as SoftBank Group Capital Co., Ltd. and SoftBank Group Japanese companies. Latin America Fund SoftBank Latin America Fund was established in 2019 and specializes in investing in the technology sectors of the rapidly growing Latin American market. Information Technology Industry SoftBank Corp. provides products and services that have completely changed the lifestyle of customers by leveraging the latest technologies, including artificial intelligence, the Internet of Things and robotics. The company's goal is to adopt a flexible approach to expanding its business to a wide range of areas while seeking synergies with domestic and foreign group companies. Company has developed three brands to meet the various needs of customers: the main brand "SoftBank", which provides mobile communication services; the sub-brands "Y!mobile" and "LINEMOBILE". Looking ahead to the Internet of Things era, the company launched the 5G service as the next generation of mobile communication services, including commercial LTB standard NB IoT services specialized in IoT devices characterized by low prices and energy savings. In addition to mobile communication services, the company has also established contact points with a wide range of customers by providing power services "SoftBank Power" and fixed broadband service "SoftBank Hikari" to further expand its customer base. semiconductor (chip) technology processor design enterprise Arm's technology is used in the main chips of almost all smartphones and tablets. In the era of IoT, as the leader in semiconductor technology, Arm is expected to leverage its differentiated technologies in high security and energy efficiency to play a central role in SoftBank Group's strategy. Other businesses Major mergers and acquisitions SoftBank Group has always focused its investment on growth opportunities brought by the information revolution, and seeking growth of net asset value by supporting the development of companies within the portfolio and by fully leveraging the group's expertise in the technical field to increase the equity value of holdings . The group has always adhered to the " paradigm transfer " of investment, and has achieved further growth in net asset value based on market expansion and the use of artificial intelligence. Figure The Group's major acquisition and acquisition of (1) In 2004, the acquisition of japan Telecom SoftBank Group successfully transformed from its growing broadband and Internet business through the acquisition of japan Telecom, thus officially entering the traditional telecom business field, greatly expanding its business scale, providing consumers and corporate customers with comprehensive communication services including voice, data transmission and Internet connection, becoming a leading company in the Japanese telecom market. Figure Acquisition details (2) In 2006, acquiring Vodafone Japanese subsidiary Vodafone Japan subsidiary is the third largest mobile service operator in Japan. Vodafone is the world's largest mobile operator with more than 510 million customers worldwide. By acquiring Vodafone's Japanese subsidiary, SoftBank has become an integrated telecommunications service provider, providing more than 26 million fixed and mobile communication service lines. acquisition details The company after the acquisition formed a mobile communications business alliance with Yahoo! JAPAN, providing various high-quality innovative mobile services to the customer base through its portal website. (3) The acquisition of Sprinttml6 Sprint in 2013 allows SoftBank to establish an operating base as one of the world's largest mobile Internet companies. The merger has made SoftBank mobile telecom services ranked third among global operators and able to leverage its deep expertise in smartphones and next-generation mobile networks, as well as success in established markets competing with large incumbent companies, to enhance Sprint's competitiveness in the United States. Provide Sprint with $8 billion in new capital for its mobile networks, strategic investments and balance sheet as part of its continued efforts to consolidate its operating base for future growth. acquisition method: SoftBank established a new US holding company Starburst I, Inc. (HoldCo), and two other subsidiaries Starburst II, Inc. (New Sprint), directly owned by HoldCo, Starburst III, Inc. (Merger Sub), directly owned by New Sprint and indirectly owned by HoldCo. Through New Sprint, SoftBank invested US$3.1 billion in Sprint in the form of a newly issued convertible bond . The bond has a face-to-face interest rate of , with a maturity date of seven years, and the merger will be converted to 16.4% of Sprint's issued common stock at a price of $5.25 per share. SoftBank injects approximately $17 billion into New Sprint through HoldCo. Approximately $12.1 billion will be allocated to Sprint shareholders for the merger consideration. Merger Sub merged with Sprint to become a wholly-owned subsidiary of New Sprint. Figure SoftBank’s acquisition of Sprint (4) Acquisition of ARM in 2016 in 2016, SoftBank Group believes that ARM is one of the world’s leading technology companies and has strong capabilities in global semiconductor intellectual property rights and the “Internet of Things”. This acquisition can strengthen ARM's global leadership in semiconductor intellectual property licensing and R&D outsourcing and promote new technological innovation. Under the terms of the acquisition, UBS Group purchased all issued and pending shares of ARM in cash, with a total acquisition price of approximately £24 billion (about US$31 billion or ¥3.3 trillion). (5) Founded in 2017, SoftBank Vision Fund 1 As of March 31, 2021, SoftBank Vision Fund 1 had a cumulative investment cost of US$74.9 billion in one financial year, and the total investment fair value was US$120.7 billion. There are nine major fields and 81 investment projects, including 11 listed companies. Figure SoftBank Vision Fund Investment Field (6) Acquisition of Line in 2018 in 2018, after allocating new shares, SoftBank held 51% of Line Mobile's shares. On October 22, 2021, SoftBank completed the 100% ownership acquisition and absorption merger of LINE MOBILE Corporation. (7) Founded in 2019, SoftBank Vision Fund 2 As of March 31, 2021, the cumulative investment cost of SoftBank Vision Fund 2 in one financial year was US$6.7 billion, and the total fair value of the investment was US$11.2 billion. There are nine major areas and 44 investment projects, including 3 listed companies. Selling assets On March 23, 2020, SoftBank Group announced a plan to sell (monetize) 4.5 trillion yen assets held, provide funds for share repurchase, and improve the company's financial status through debt reduction and other measures. The funds obtained from the sale (monetization) are used to repurchase up to 2 trillion yen of company common shares. The balance will be used for debt redemption, bond repurchase and increased cash reserves. In the six months from April to September 2020, the total sale or amount of assets was 5.6 trillion yen. As of May 12, 2021, the company completed a 2 trillion yen share repurchase. In terms of debt reduction, the company reduced its debt by repurchasing domestic corporate bonds and foreign currencies to pay off priority loans and borrowings before the end of the fiscal year. To further improve financial conditions, the remaining earnings have been invested in highly liquid listed stocks through the company's asset management subsidiary SB Northstar, preparing for future investment opportunities. Table 2020 Total assets sold Chapter 1 Company Development Overview
1.1 Founder and Development History
1.2 Enterprise development strategy and transformation
Chapter 2 Business model and revenue model
2.1 Group industry and listed companies
2.2 Major mergers and acquisitions and sales of assets
(1) Partially sold T-Mobile shares and borrowed
using T-Mobile shares
On April 1, 2020, the group's US subsidiary Sprint and the US T-Mobile Co., Ltd. completed the merger. As the merger consideration, the company received 304,606,049 shares of T-Mobile. Since then, Sprint is no longer a subsidiary of the group. After the merger, the group holds 24.7% of the new company T-Mobile. Subsequently, the group sold 198,314,426 shares of T-Mobile. On July 30, 2020, SoftBank Group's wholly-owned subsidiary borrowed US$4.38 billion with its T-Mobile shares as collateral.
(2) Partial monetization of Alibaba shares through prepayment of forward contract
From April to August 2020, SoftBank Group's wholly-owned subsidiary signed a number of prepayment of forward contracts with financial institutions with Alibaba shares, with a total amount of US$15.4 billion. The transaction includes a collar contract and call spread, which is expected to be settled between May 2024 and June 2024.
(3) Partially sold SoftBank shares
In May and September 2020, the group sold a total of 1,268,061,400 common shares of its subsidiary SoftBank Corp., with a total amount of 1.5 trillion yen.
(4) signed an agreement to sell all shares of Arm
On September 13, 2020 (US time), the group's wholly-owned subsidiary SoftBank Group Capital Co., Ltd. ("SBGC") and SoftBank Vision Fund 1 ("SVF1") signed a share purchase agreement with US semiconductor manufacturer NVIDIA Corporation ("NVIDIA"), under which the Group will sell all shares of its wholly-owned subsidiary Arm held by SBGC and SVF1 to NVIDIA in a transaction worth up to US$40 billion. After signing the purchase agreement, the transaction is expected to take about 18 months to complete. The Group decided to transfer the Internet of Things Services Group (ISG) business (not included in the share purchase transaction) and manage it separately from Arm's remaining business.
Chapter 3 Valuation and major domestic and foreign competitors
3.1 Comprehensive financial analysis and valuation methods
As of the fiscal year ending March 31, 2022, SoftBank Group's financial situation is as follows:
Main indicator
(1) Investment loss was 3.434.7 billion yen: It is mainly due to a variety of factors that caused the stock prices of most listed portfolio companies to fall, including pending concerns, regulatory tightening and expected interest rates, which generally avoided high growth technology stocks . For the same reason, fair value growth for unlisted portfolio companies is also slow.
(2) Loss before income tax is 869.6 billion yen: the recorded financial cost is 382.5 billion yen, and the derivative income (excluding investment income (loss)) is 1.234.7 billion yen, mainly related to the use of prepaid forward contracts for Alibaba shares.
(3) The net loss attributable to the parent company's owners was RMB 1708 billion
utilizing the income generated by SoftBank Vision Fund and its flexible financing to conduct new investments and stock repurchases
(1) SoftBank Vision Fund 1 (SVF1) and 2 (SVF2) obtained certain returns through the sale (or monetization) of part of the investment, of which US$6.79 billion came from the fund 18.43 billion came from the fund 2.
(2) raised US$131.17 by using the advance forward contract of Alibaba shares; borrowed US$8 billion by using asset-backed financing (using Arm shares).
(3) As of the end of the fiscal year (March 31, 2022), SVF1's total investment in this fiscal year was US$3.33 billion, SVF2 made a total of US$40.82 billion in new investments and subsequent investments in this fiscal year, and SoftBank's Latin American Fund's total investment in this fiscal year was US$4.3 billion. The group invests and holds a total of 101 investments.
(4) The board of directors decided to propose an annual dividend of 22 yen per share at the annual general meeting, which will bring the total dividend expenditure for the current fiscal year to 73.9 billion yen.
utilizes a low interest rate environment to refinance 1.2 trillion yen by issuing direct bonds denominated in foreign currencies.
Chart Financial data (million yen)
Asset status
(1) Investment in SVF1 and SVF2 book value totaled 13766.4 billion yen, an increase of 119.6 billion yen from the end of the previous fiscal year. Among them, SVF1 decreased by 4038 billion yuan, because the fair value of the investment held at the end of the fiscal year decreased and the sale of some investments. SVF2 increased by 4157.6 billion yen, mainly due to new investments and subsequent investments.
(2) The book value of the investment securities is 4208.6 billion yen, an increase of 501.8 billion yen from the end of the previous fiscal year.
(3) The book value of stocks and other financial instruments held by the asset management subsidiary is from 2182.5 billion yen at the end of the previous fiscal year 315.9 billion yen, mainly due to the sales of stocks and financial assets.
Liability Status
(1) Interest-bearing debt increased by 1283.9 billion yen compared with the end of the previous fiscal year, mainly due to the issuance of bonds.
(2) The interest-bearing debt of the wholly-owned subsidiary that raised funds increased by 2433.8 billion yen compared with the end of the previous fiscal year, mainly due to advance forward contracts and asset-backed financing.
Equity Situation
(1) The total equity decreased by 247.8 billion yen compared with the end of the previous fiscal year, mainly because the net loss attributable to the parent company's owners reduced retained income; the exchange difference generated by the weakening of the yen foreign currency business increased by 2176.9 billion yen.
3.2 Risk reminder
(1) Business model risk
SoftBank Group's investment portfolio includes direct investment through group companies such as SoftBank, Arm and Alibaba (including investments through subsidiaries), as well as investments through investment funds , such as SoftBank Vision Fund 1 and SoftBank Vision Fund 2.
Since the group's investment is mainly concentrated in investment in the information technology sector, the investment portfolio is significantly affected by the market trends of this sector. In addition, the Group is significantly exposed to the market environment surrounding initial public offerings (IPOs). In addition, due to market volatility or various other factors, the investment value of portfolio companies centered on large high-tech companies may decline, and the value of equity held by the group may decline, resulting in a decrease in net asset value. At the same time, valuation losses of assets such as equity may lead to the deterioration of the Group's comprehensive operating performance and financial status, thereby adversely affecting the Group's ability to make new investments and its strategy success.
(2) Fund raising risks
SoftBank Group mainly raises funds to continuously meet the capital needs of new investments through measures such as selling equity assets, obtaining dividends from portfolio companies, obtaining profits from investment funds , and through asset-backed financing. However, if the group is unable to dispose of equity assets to obtain funds when new investments require funds, it may miss investment opportunities and its ability to increase net asset value may be affected.
In addition, for certain asset-backed financings using equity, if the value of the shares is reduced due to deterioration of the stock market or other factors, the group may need to provide additional cash collateral or assume the obligation to repay in advance. When the group raises funds through channels such as financial institution loans and bond issuance to meet the funding needs of its investment activities, if interest rates rise due to changes in monetary policy , or in the financial market, the group's credibility declines due to the decline in the value of the group's own assets, the financing costs may increase, which will have an adverse impact on operating performance.
(3) Large environmental risks in various regions of the world
SoftBank Group's business covers many regions of the world, including Japan, the United States, China, India, Europe and Latin America. Therefore, if the economic situation or financial markets in these countries and regions change due to changes in international conditions such as political and social situations, monetary and fiscal policies, changes in trade disputes or conflicts, climate change and other factors, investment activities and the business activities of the invested company may not develop as expected, such as: the implementation of investment may be delayed, the terms of investment implementation may become unfavorable, or the business of the invested company may be adversely affected by the reduction in demand for their services and products or the stagnation of supply.
In addition, for investments in non-listed companies with low liquidity, if market conditions deteriorate drastically, the Group may not be able to sell its interests in such companies at the most favorable time, scale or price.
In addition, SBG's foreign currency investment in overseas companies may cause losses due to changes in foreign exchange rates.
(4) Intellectual Property Risk
SoftBank Group mainly invests in the information technology industry and is easily involved in intellectual property protection and attribution issues. A third party infringement of SoftBank brand may damage the corporate image or business activities of SoftBank Group and its subsidiaries using SoftBank brand. On the other hand, if a company in the portfolio inadvertently infringes on intellectual property rights held by a third party, the company may be blocked from using intellectual property rights and making damages.
3.3 Competition Analysis
Figure SWOT Competition Analysis
Source: Asset Information Network Qianji Investment Bank
Chapter 4 Future Outlook
Today, integrating artificial intelligence (AI) into various business models is reshaping the way value creation is created, and many industries are beginning to fundamentally redefine it. In this case, in order to seize the huge opportunity of market expansion and leveraging artificial intelligence to create new industries, SoftBank Group is expanding its investment under the "first cluster strategy", and the companies invested in the group are expected to help promote the information revolution based on the theme of artificial intelligence investment.
In In the industrial revolution , inventors and capital providers have visions to create the future. In the information revolution, especially the information revolution promoted by artificial intelligence, SoftBank Group will work with artificial intelligence entrepreneurs to shape the future. For example, autonomous driving using artificial intelligence has the potential to create a world without traffic accidents; the significant development of medical science through artificial intelligence analysis can make a world without fatal diseases possible; online education using artificial intelligence can enable all children to receive education equally... Artificial intelligence will bring us a whole new way of life.
From 1994 to 2021, the real estate industry has grown by 5 times, the retail industry has grown by 8 times, the financial industry has grown by 12 times, and the manufacturing industry has grown by 13 times. Investors closely monitor the daily changes in indicators that affect stock prices in these industries (such as interest rates, exchange rate and employment statistics), as well as the authorities' monetary policy and make decisions based on these indicators. By contrast, most Internet companies generate less profits. According to the management review of SoftBank Group's annual report, the information revolution has just begun, and artificial intelligence will continue to expand the market value of the Internet industry.
Cover Photo from group.softbank
In addition, for certain asset-backed financings using equity, if the value of the shares is reduced due to deterioration of the stock market or other factors, the group may need to provide additional cash collateral or assume the obligation to repay in advance. When the group raises funds through channels such as financial institution loans and bond issuance to meet the funding needs of its investment activities, if interest rates rise due to changes in monetary policy , or in the financial market, the group's credibility declines due to the decline in the value of the group's own assets, the financing costs may increase, which will have an adverse impact on operating performance.
(3) Large environmental risks in various regions of the world
SoftBank Group's business covers many regions of the world, including Japan, the United States, China, India, Europe and Latin America. Therefore, if the economic situation or financial markets in these countries and regions change due to changes in international conditions such as political and social situations, monetary and fiscal policies, changes in trade disputes or conflicts, climate change and other factors, investment activities and the business activities of the invested company may not develop as expected, such as: the implementation of investment may be delayed, the terms of investment implementation may become unfavorable, or the business of the invested company may be adversely affected by the reduction in demand for their services and products or the stagnation of supply.
In addition, for investments in non-listed companies with low liquidity, if market conditions deteriorate drastically, the Group may not be able to sell its interests in such companies at the most favorable time, scale or price.
In addition, SBG's foreign currency investment in overseas companies may cause losses due to changes in foreign exchange rates.
(4) Intellectual Property Risk
SoftBank Group mainly invests in the information technology industry and is easily involved in intellectual property protection and attribution issues. A third party infringement of SoftBank brand may damage the corporate image or business activities of SoftBank Group and its subsidiaries using SoftBank brand. On the other hand, if a company in the portfolio inadvertently infringes on intellectual property rights held by a third party, the company may be blocked from using intellectual property rights and making damages.
3.3 Competition Analysis
Figure SWOT Competition Analysis
Source: Asset Information Network Qianji Investment Bank
Chapter 4 Future Outlook
Today, integrating artificial intelligence (AI) into various business models is reshaping the way value creation is created, and many industries are beginning to fundamentally redefine it. In this case, in order to seize the huge opportunity of market expansion and leveraging artificial intelligence to create new industries, SoftBank Group is expanding its investment under the "first cluster strategy", and the companies invested in the group are expected to help promote the information revolution based on the theme of artificial intelligence investment.
In In the industrial revolution , inventors and capital providers have visions to create the future. In the information revolution, especially the information revolution promoted by artificial intelligence, SoftBank Group will work with artificial intelligence entrepreneurs to shape the future. For example, autonomous driving using artificial intelligence has the potential to create a world without traffic accidents; the significant development of medical science through artificial intelligence analysis can make a world without fatal diseases possible; online education using artificial intelligence can enable all children to receive education equally... Artificial intelligence will bring us a whole new way of life.
From 1994 to 2021, the real estate industry has grown by 5 times, the retail industry has grown by 8 times, the financial industry has grown by 12 times, and the manufacturing industry has grown by 13 times. Investors closely monitor the daily changes in indicators that affect stock prices in these industries (such as interest rates, exchange rate and employment statistics), as well as the authorities' monetary policy and make decisions based on these indicators. By contrast, most Internet companies generate less profits. According to the management review of SoftBank Group's annual report, the information revolution has just begun, and artificial intelligence will continue to expand the market value of the Internet industry.
Cover Photo from group.softbank
