SoftBank gets $7.6B of T-Mobile stock thanks to 2020 Sprint sale

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.

BRAD SMITH: Well, here's one of the other overhangs as well, and I'll take the counter on this because now you have to think about the risk of SoftBank holding on to that side stake. And if they start to unwind some of that stake, in order to do what? Throw more capital at the vision funds that they've been able to put together and invest in some of the more cutting-edge technology.

And then in some cases, invest in large kind of either commodity plays or large companies. And try to take some type of almost soft activist position, if you will. And so at the end of the day, that is perhaps one of the overhangs or the thoughts that investors still have to think about because of this position that they've been able to amass as well.

BRIAN SOZZI: I just want my phone to work, Brad.

BRAD SMITH: Look, we just want connectivity. We're carrying it around everywhere. We're sleeping next to these things.

BRIAN SOZZI: That's very true.