• Softbank wants to raise nearly $42 billion through asset sales to fund stock buybacks and reduce its debt.
  • T-Mobile merged with Sprint in April 2020 in a deal valued at $26 billion
  • Softbank posted a record annual loss of $13 billion in May

Japanese tech conglomerate SoftBank Group is preparing to sell two-thirds of its stake in U.S. mobile carrier T-Mobile (TMUS) for about $20 billion.

Softbank – which has been badly hurt by huge investments in some unprofitable startups – wants to raise nearly $42 billion through asset sales in order to fund stock buybacks and reduce its debt.

SoftBank owns about 300 million T-Mobile shares, or 25% of its shares outstanding, with a total market value of about $31 billion.

T-Mobile merged with Sprint in April 2020 in a deal valued at $26 billion.

Masayoshi Son, SoftBank’s chairman and CEO, has in the past referred to U.S. telecommunications as "indispensable infrastructure," but given that the group’s $100 billion Vision Fund has suffered severe losses, T-Mobile is no longer is considered a core holding.

Indeed, Softbank posted a record annual loss of $13 billion in May.

However, Softbank will have to negotiate with Deutsche Telekom, T-Mobile's top shareholder with a 40% stake, to lift a lock-up agreement that prohibits SoftBank from selling T-Mobile shares for one year.

Softbank noted the sale of T-Mobile shares may be conducted through public offerings or private transactions.

T-Mobile said in a regulatory filing that Softbank could sell its shares to Deutsche Telekom along with “third parties” and other existing stockholders.

Meanwhile, Softbank has come under pressure to raise cash to compensate for recent losses and bad bets.

Softbank’s most high-profile investment debacle involved U.S.-based workspace firm WeWork, which has seen its valuation plunge from $47 billion to well under $10 billion after it failed to go public.

Separately, on Monday, T-Mobile's network suffered such a severe outage across the U.S. that it has led to an investigation by the Federal Communications Commission.

FCC Chairman Ajit Pai tweeted: "The T-Mobile network outage is unacceptable" and "FCC is launching an investigation. We're demanding answers -- and so are American consumers."

T-Mobile CEO Mike Sievert confirmed the outage in a blog, writing: "Starting just after 12 p.m. ET and continuing throughout the day, T-Mobile has been experiencing a voice and text issue that has intermittently impacted customers in markets across the U.S.”

The problems were resolved about 13 hours later.

The outage might have been caused by T-Mobile itself while it was conducting some network configuration changes.

Cloudflare CEO Matthew Prince tweeted on Monday night that T-Mobile was "making some changes to their network configurations today. Unfortunately, it went badly. The result has been… a series of cascading failures for their users, impacting both their voice and data networks."

However, despite Pai’s anger, it is unlikely the FCC will punish T-Mobile.

"This is, once again, where pretending that broadband is not an essential telecommunications service completely undermines the FCC's ability to act," said telecom attorney and consumer advocate Harold Feld, the senior vice president at advocacy group Public Knowledge. "We're not talking about an assumption that T-Mobile necessarily did anything wrong. But when we have something this critical to the economy, and where it is literally life and death for people to have the service work reliably, it's not about 'trusting the market' or expecting companies to be on their best behavior. We as a country need to know what is the reality of our broadband networks, the reality of their resilience and reliability, and the reality of what happens when things go wrong. That takes a regulator with real authority to go in, ask hard questions, seize documents if necessary, and compel testimony under oath."