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SoftBank (SFTBY, 9984.T) is getting $7.6 billion worth of T-Mobile US (TMUS) shares. It stems from a deal that was made when the SoftBank owned-Sprint was sold to T-Mobile. As part of the agreement, SoftBank would be awarded shares if T-Mobile's stock crossed a specific threshold, which is what triggered this most recent move. Yahoo Finance Live explains what it could mean for T-Mobile in the video above.
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Video Transcript
BRAD SMITH: SoftBank shares, they are rising after receiving a belated Christmas gift. Japanese conglomerate getting over $7.59 billion worth of shares from T-Mobile. The payout thanks to the 2020 deal to sell Sprint to T-Mobile. Back then the corporation agreed to forfeit the shares on the condition that it get them back when the telecom company shares grew to a certain level. So this devil SoftBank stake in T-Mobile from 3.75%, now to 7.64%.
And the entirety of that deal, the regulation that it had to pass through, the role that SoftBank was looking for in having more control of the combined entity, and now, yes, a holiday gift that they receive as well as a result of holding out for some of those shares to come on in a delayed fashion as well.
BRIAN SOZZI: High price point. And I think a lot of US-focused investors are not-- they remain unsure how to invest in a SoftBank. They, of course, see Masayoshi Son make various news. He might be a major-- he might be a player in this Microsoft, Jony Ive type of deal.
I think with something like this, you really have to lock into a company like T-Mobile. And I'm looking at a really good note from the JP Morgan team. And they're saying, quote, "T-Mobile remains one of the best fundamental stories in communications. And it faces fewer legacy drags like pensions, lead cable costs than its closest peers."
T-Mobile is one of the-- been probably been one of the best growth stories over the past few years, in part because they bought a lot of spectrum. They have a great positioning in the 5G marketplace. They've cut a lot of overhead, and now recently, they have enacted a dividend. So T-Mobile seen as pretty good.
Now, I also recently, I also pulled up a chart on Verizon and AT&T. Both companies that are starting to ramp back into gear on their own. Both of those stocks are yielding close to 7% and should theoretically see better earnings next year. They both are heavily indebted, but with rates pulling back. Some of those stocks might be worth another look.