Vodafone’s shares have risen following a speculative Japanese report suggesting that Softbank may now look to merge with the British operator. Tokyo-based Softbank recently shelved plans to consolidate the US mobile market and CEO Masayoshi Son is…
Vodafone’s shares have risen following a speculative Japanese report suggesting that Softbank may now look to merge with the British operator.
Tokyo-based Softbank recently shelved plans to consolidate the US mobile market and CEO Masayoshi Son is thinking about different options for his company.
Japanese business paper Nikkei quoted an anonymous Softbank executive as saying that they “wouldn’t be surprised if our CEO acquired Vodafone, since we are no strangers to each other”.
Son has done business with Vodafone before, when Softbank acquired the telco’s Japanese business in 2006 for US$15bn.
Vodafone’s shares have risen more than 2% since the start of yesterday following the report, giving it a market capitalisation of US$92.5bn.
However, Mitsubishi UFJ analyst Rick Mattila is sceptical about a merger between the two groups.
“We are not convinced that there is either the desire or ability at this point to pursue an acquisition of this size by Softbank,” Matilla said.
“It would require a strategic re-alignment away from internet assets and that would seem to go against recent moves by [Softbank].”
Matilla said he thought it is more likely for Softbank and Vodafone to pursue an operational alliance or equity cross-holding.
“Some form of joint venture in Latin America or even Americas more broadly could make sense, although Vodafone is not currently active in the region,” he suggested.
Son had been looking to combine its US subsidiary Sprint Corp with Deutsche Telekom’s T-Mobile US but abandoned that strategy in August due to regulatory concerns. However, a number of analysts have predicted that Softbank will wait for a different administration and then try to do the deal again.
Much hinges on what Softbank chooses to do with its 34% stake in Chinese e-commerce group Alibaba. The Hangzhou-based internet giant is set to launch an IPO later this month and analysts have suggested it could value it at anything between US$150bn to US$200bn. Son has previously said that he wants to keep a stake of at least 30% in the business.
