Softbank Group Corp. · TSE:9984
Softbank — Q3 FY2018 Earnings Presentation
124 slides from Softbank's earnings presentation, Feb 7, 2019
Slide 1: Earnings Results for the Nine-month Period Ended December 31, 2018
v.3.3 Earnings Results for the Nine-month Period Ended December 31, 2018 Investor Briefing February 7, 2019 SoftBank Group Corp.
Slide 2: Legal Disclaimer for SoftBank Presentation
LEGAL DISCLAIMER for SoftBank Presentation This presentation (this “Presentation”) is furnished to you for informational due diligence purposes and is not, and may not be relied on in any manner as, legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an off
Slide 3: Disclaimer
Disclaimer This material was prepared based on information available and views held at the time it was made. Statements in this material that are not historical facts, including, without limitation, plans, forecasts and strategies are “forward-looking statements”. Forward-looking statements are by t
Slide 4: Index - 1
Index - 1 Accounting P 7 SoftBank Segment P 28 Segments and Core Companies P 8 SoftBank Segment: Analysis on YoY Change P 29 Consolidated P/L Summary (IFRSs) P 9 Results for the Nine Months Ended December 31, 2019 P 30 Consolidated B/S Summary (IFRSs) - 1 P 10 Revenue P 31 Consolidated B/S Summary (
Slide 5: Index - 2
Index - 2 Finance (Continue) SoftBank Vision Fund / Delta Fund Segment P 85 Equity Value of Holdings P 58 Progress & Highlights P 89 Equity value of holdings P 59 Our Investing Thesis P 90 SVF: Capital Commitment P 60 SVF & DF Closing P 92 SVF: Fair Value for Investment Asset P 61 Performance & Impa
Slide 6: Memo
Memo SoftBank
Slide 7: Accounting
Accounting 7
Slide 8: Segments and Core Companies
Segments and Core Companies FY17 FY18 Reportable segments Core companies Reportable segments Core companies SoftBank Domestic SoftBank Wireless City Planning SoftBank Wireless City Planning Telecommunications SB C&S *1 Sprint Sprint Sprint Sprint Yahoo Japan Yahoo Japan Yahoo Japan Yahoo Japan ASKUL
Slide 9: Consolidated P/L Summary (IFRSs)
Consolidated P/L Summary (IFRSs) 1. Operating income of JPY 1.9 tn Operating income from SoftBank Vision Fund and Delta Fund of JPY 808.8 bn: Fair values of Uber, OYO, WeWork and others increased; a fall in NVIDIA share price reduced valuation gain by JPY299.5 bn 2. Derivative gain of JPY 544.6 bn:
Slide 10: Consolidated B/S Summary (IFRSs) - 1
Consolidated B/S Summary (IFRSs) - 1 1. Received proceeds of JPY 2.3 tn from the disposal of 33.50% of SoftBank shares. 2. Balance of investments from SoftBank Vision Fund of 6.0 tn, increased JPY 3.7 tn from FY17-end. 11 investments totaling USD 11.3 bn, including Uber and Grab, were transferred fr
Slide 11: Consolidated B/S Summary (IFRSs) - 2
Consolidated B/S Summary (IFRSs) - 2 (JPY bn) B/S As of As of Main items Change Primary changes item Mar 2018 Dec 2018 6,728.8 8,547.2 +1,818.4 Short-term borrowings 957.6 468.3 -489.3 SBG 771.3 395.9 -375.4 Current portion of long-term borrowings 1,093.7 1,582.6 +488.9 Current liabilities SBG 214.7
Slide 12: Consolidated B/S Summary (IFRSs) - 3
Consolidated B/S Summary (IFRSs) - 3 1. Capital surplus: Recorded gain on disposal of SoftBank shares; Shareholders’ equity increased JPY 1.2 tn 2. Ratio of equity attributable to owners of parent rose to 21.7% (+5.1 pp) following the increase in capital surplus (JPY bn) B/S As of As of Items Change
Slide 13: Consolidated C/F Summary (IFRSs)
Consolidated C/F Summary (IFRSs) 1. Investing activities of SoftBank Vision Fund and Delta Fund: Acquisition of investments of JPY 1.1 tn, proceeds from sale of Flipkart shares of JPY 421.9 bn, distribution/repayment to third-party investors of JPY 455.3 bn 2. Received proceeds of JPY 2.3 tn on the
Slide 14: Income and Loss Arising from SoftBank Vision Fund and Delta Fund included in P/L
Income and Loss Arising from SoftBank Vision Fund and Delta Fund included in P/L Income and loss arising from the SoftBank Vision Fund and Delta Fund included in income before income tax in P/L are calculated by aggregating income and loss arising from SoftBank Vision Fund and Delta Fund, income and
Slide 15: SVF - Gain/Loss on Investments Transferred (Bridge and Other Investments)
SoftBank Vision Fund - Gain/Loss on Investments Transferred from the Company in P/L (Bridge Investments and Other Investments) Bridge Investments that were acquired by the Company on the premise of offering to SoftBank Vision Fund and that were in accordance with the investment eligibility criteria
Slide 16: SVF - Gain/Loss on Investments Transferred (Uber)
SoftBank Vision Fund - Gain/Loss on Investments Transferred from the Company in P/L (Other Investments: Uber) Uber Fair value held FY18 Q2 at the Company Valuation Gain/loss from financial Acquisition cost gain at the instruments at FVTPL for the Company (Non-operating income) Company The The Compan
Slide 17: Income on Equity Method Investments Related to Alibaba
Income on Equity Method Investments Related to Alibaba Alibaba SoftBank Group US GAAP IFRSs (CNY mil) (JPY bn) Net income Income on equity Reconciliation Income on equity attributable to Net income Ownership method Exchange rate method investments Alibaba to IFRSs investments FY17Q1 10,647 -8,568 *1
Slide 18: Derivative Gain and Loss Relating to Variable Prepaid Forward Contract for Alibaba Shares
Derivative Gain and Loss Relating to Variable Prepaid Forward Contract for Alibaba Shares (if settled by Alibaba shares) $184 $172 $168 $137 Total gain to be Alibaba share $108 recorded at time of price $77 settlement in June 2019 (+ USD 8.1 bn) Cumulative increase USD Derivative assets USD 5.7 bn +
Slide 19: Accounting Treatment for SoftBank IPO and After-tax Cash Proceeds
Accounting Treatment for SoftBank IPO and After-tax Cash Proceeds Disposal : 33.50% After the listing, SoftBank Corp. remains a subsidiary of the Company (ownership ratio: 66.49%) (JPY bn) 5 Accrued cash 345.2 tax (estimate) 4 6 Taxes Recognized through P/L 1 345.2 (positive impact on net income) -
Slide 20: Differences in Figures of SoftBank Segment and SoftBank
Differences in Figures of Financial Results of the Company’s SoftBank Segment and SoftBank ①Application of new standards ②Brand royalty payment Paid to SBG by SoftBank for use of SoftBank Application of IFRS 9 and 15 brand FY17 Q1-Q3 FY18 Q1-Q3 FY17 Q1-Q3 FY18 Q1-Q3 The Company’s The Company’s Not r
Slide 21: Appendix
Appendix 21
Slide 22: Investments of SoftBank Vision Fund and Delta Fund
Investments of SoftBank Vision Fund and Delta Fund (USD bn) Acquisition As of December 31, 2018 Fair value cost SoftBank Vision Fund 45.5 55.3 Investments acquired Delta Fund 5.0 5.0 Investments agreed to be transferred 6.0 6.6 from the Company Total 56.5 66.9 Excluding consolidated subsidiaries -8.
Slide 23: Third-party interests in SoftBank Vision Fund and Delta Fund
Third-party interests in SoftBank Vision Fund and Delta Fund (JPY bn) (Reference) Links with the consolidated F/S Third-Party Interests in SoftBank Vision Fund and Delta Fund P/L C/F (Total of current liability and non- current liabilities) As of April 1, 2018 1,844.7 Contributions from third-party
Slide 24: SVF - Gain/Loss on Investments Transferred (Coupang, OYO)
SoftBank Vision Fund - Gain/Loss on Investments Transferred from the Company in P/L (Other Investments: Coupang, OYO) (Transferred in FY18Q2) 1. Coupang Fair value Acquisition cost for held at SVF the Company Operating income from Acquisition cost for SVF Valuation SoftBank Vision Fund gain at SVF a
Slide 25: Breakdown of Goodwill / Intangible Assets
Breakdown of Goodwill / Intangible Assets (JPY bn) B/S As of As of Change Main items Changes in Outline item Mar 2018 Dec 2018 Amortization Others exchange rate 4,302.6 4,232.3 Goodwill Arm 2,851.4 2,690.9 - -160.5 - SoftBank 907.5 907.5 - - - Sprint 312.8 326.9 - +14.1 - FCC licenses 3,960.6 4,153.
Slide 26: Adoption of IFRS 9 and IFRS 15 -1
Adoption of IFRS 9 and IFRS 15 -1 IFRS 9 (Financial Instruments) IFRS 15 (Revenue from Contracts with Customers) Primary changes in accounting treatment: Primary changes in accounting treatment: Recognition of changes in fair values of investment securities (1) Customer acquisition costs (SB/Sprint)
Slide 27: Adoption of IFRS 9 and IFRS 15 -2
Adoption of IFRS 9 and IFRS 15 -2 Impact of adopting new standards on P/L: Net sales: + JPY 52.2 bn, operating income: + JPY 218.5 bn Net sales Operating Income Impact of (JPY bn) (JPY bn) adopting Impact of new standards adopting 7,116.3 7,168.5 new standards 1,859.0 6,811.3 +52.2 1,640.5 +218.5 1,
Slide 28: SoftBank Segment
SoftBank Segment 28
Slide 29: SoftBank Segment: Analysis on YoY Change
SoftBank Segment: Analysis on YoY Change Revenue Revenue by Segment [JPY bn] [JPY bn] SBG SoftBank Segment SBG SoftBank Segment 32,000 +103.4 2,777.5 8,000 +29.1 30,000 2,674.2 610.9 640.0 28,000 26,000 -27.3 +129.7 24,000 Influence of 6,000 22,000 accounting -75.3 +99.3 standards, etc. 20,000 Brand
Slide 30: Results for the Nine Months Ended December 31, 2018
Results for the Nine Months Ended December 31, 2018 All indexes progressed steadily toward full-year forecast Revenue Operating Income Net Income* [JPY bn] [JPY bn] [JPY bn] Progress 75% 80% 100% 600 100% 4,200 Progress 91% 4,000 3,700.0 Progress 94% 3,800 3,582.6 70% 800 90% 90% +99.3 700.0 3,600
Slide 31: Revenue
Revenue Revenue grew in all segments: up JPY +129.7 bn YoY (+4.9%) Consumer segment: up JPY +67.0 bn YoY due to an increase in Broadband (JPY +34.6 bn) and Mobile (JPY +26.4 bn) By Segment Consumer 3,200 [JPY bn] 3,200 2,776.7 [JPY bn] 2,646.9 +129.7 3,000 3,000 2,800 +4.9% 64.3 +8.7 +15.7% 2,80
Slide 32: Operating Income/Adjusted EBITDA
Operating Income/Adjusted EBITDA Adjusted EBITDA increased by JPY +75.4 bn YoY (+8.3%) Operating income grew in all segments by JPY +99.3 bn YoY (+18.5%), with Consumer contributing by JPY +54.3 bn (+11.0%) Operating Income / Adjusted EBITDA Segment Income [JPY bn] [JPY bn] 1,200 1,200 +75.4 983
Slide 33: Net Income (YoY Comparison)
Net Income (YoY Comparison) Net income increased by JPY+62.3 bn YoY due to strong growth in operating income of +99.3 bn Financing costs: Interest paid increased due to an increase in borrowings (a) Share of losses of associates accounted for using the equity method: losses increased mainly du
Slide 34: CAPEX/Adjusted Free Cash Flow
CAPEX/Adjusted Free Cash Flow No changes in full-year CAPEX forecast. CAPEX for FY18Q3 cumulative was JPY 244.5 bn, after our efforts to expand LTE service areas and improve network quality Adjusted FCF grew steadily towards full-year forecast of JPY 500.0 bn or more (not including acquisition o
Slide 35: Financial Strategy
Financial Strategy [JPY bn] Includes effect of Illustrative purpose securitization of installment sales to show our concept receivables based on FY2018 Cash flows from ■Main investments operating ・PayPay Corporation activities CAPEX ・WeWork Japan GK ・hi Japan Co., Ltd.* ・J.score CO., LTD ・DiDi Mobil
Slide 36: For Sustainable Growth
For Sustainable Growth SoftBank Smartphone Strategy Aiming for Further Growth New Businesses in collaboration with SoftBank group's portfolio companies Beyond Carrier sry Telecom Business Expansion of customer base ‘Smartphone subscriber growth Broadbandsubseriber grovah Focus on Enhance ways penetr
Slide 37: Achieving Both Growth and Shareholder Returns
Achieving Both Growth and Shareholder Returns 37
Slide 38: Finance
Finance Definitions for the Finance section - SBKK: SoftBank Corp. - Net Debt : Net interest-bearing debt 38
Slide 39: Enterprise Value of SoftBank Group
Enterprise Value of SoftBank Group （8.0） （8.0） 39
Slide 40: Cluster of No. 1 Strategy
Cluster of No. 1 Strategy SBG = Strategic Investment Holding Company No.1 No.1 No.1 No.1 No.1 （8.0） （8.0） No.1 No.1 No.1 No.1 40
Slide 41: Financial Evaluation Metrics: Operating Company
SBG = Strategic Investment Holding Company Financial Evaluation Metrics Operating Company - Consolidated financial indicators - Net debt leverage - EBITDA and FCF - DCF and Multiples 41
Slide 42: Investment Holding Company: SBG Standalone Indicators
SBG = Strategic Investment Holding Company Shift to enterprise valuation based on SBG standalone financial indicators and equity value of holdings Investment Holding Operating Company (SBG) Company - Consolidated financial - SBG standalone indicators financial indicators - Net debt leverage - LTV -
Slide 43: SBG Net Debt
SBG Net Debt SBG Net Debt = JPY 4 tn 17 6 (JPY tn) 11 7 SBKK 3.0 Sprint 3.7 SVF 0.2 Other 0.7*1 etc. 4 Cash Non-recourse Net debt at SBG*3 Gross debt*2 Position*3 Net debt*3 net debt to Consolidated SBG*3 *1 Financial debt relating to variable repaid forward contract for the sale of Alibaba shares *
Slide 44: Equity Value of Holdings
Equity Value of Holdings (JPY) Net debt JPY 4tn Equity value of SVF Others holdings 12.1tn*2 4.3tn 2.7tn*3 2.7tn*4 2.7tn 0.6tn 0.3tn JPY 25tn *1 Share prices: (Japan) closing price as of February 5, 2019, and (US) closing price of February 4, 2019 (US). Forex rate: USD 1 = 109.88 *2 Alibaba: calcula
Slide 45: Debt Coverage Ratio by Equity Value of Holdings (LTV)
Debt Coverage Ratio by Equity Value of Holdings (LTV) JPY 25 tn LTV 14% （8.0） （8.0） (Debt coverage: 7x) JPY 4 tn Equity value of SBG Net debt holdings (As of Feb. 5, 2019) 45
Slide 46: Shareholder Value
Shareholder Value (JPY) Net debt JPY 4tn Equity value of holdings SVF 12.1tn*2 4.3tn 2.7tn*3 2.7tn*4 2.7tn 0.6tn Others 0.3tn JPY 25tn Shareholder value JPY 21tn *1 Share prices: (Japan) closing price as of February 5, 2019, and (US) closing price of February 4, 2019 (US). Forex rate: USD 1 = 109.88
Slide 47: Sum of the Parts Valuation
Sum of the Parts Valuation JPY 21tn （8.0） （8.0） JPY 9tn Shareholder value Market cap. (As of Feb. 5, 2019) 47
Slide 48: Methodology Change by Rating Agencies
Methodology Change by Rating Agencies Credit assessment methodology now focused on LTV as a result of SBKK IPO S&P Adjusted Consolidated Net Debt / LTV (Standalone) EBITDA Ratio Moody’s Adjusted Consolidated LTV (Standalone) Gross Debt / Interest coverage EBITDA Ratio * JCR has applied various valua
Slide 49: Finance Strategy
（8.0） （8.0） Finance Strategy 49
Slide 50: Finance Strategy
Finance Strategy Manage LTV below 35% Maintain cash position covering bond redemptions for at least next 2 years Secure sustainable dividend income from SVF and other subsidiaries 50
Slide 51: Goals of Financial Management
Goals of Financial Management (illustrative) Maximize enterprise value by maintaining optimal leverage through LTV management LTV to improve in the long-run as investment assets appreciate in value Balance elevated leverage with improvement in financial Divestment during bull- position during asset
Slide 52: Maintaining Abundant Cash Position
Maintaining Abundant Cash Position Maintain a liquidity level that covers bond redemptions for at least next 2 years (JPY bn) Undrawn portion of JPY 4tn commitment line 178.5 Cash receipt from transfer of investment to SVF / 1,581.1 Expected tax payment for proceeds from SBKK IPO Redemption for the
Slide 53: Interest Expense
Interest Expense Manage interest expense on standalone basis Consolidated Standalone (JPY bn) 599.4 Average interest rate on standalone basis 215.8 2.48% Funded in JPY : 1.83% Funded in foreign currency : 3.76% FY18 (LTM) *1 Interest payment from January 2018 to December 2018. (Cash flow basis. Cons
Slide 54: Sources of Interest Payment
Sources of Interest Payment Interest payment • Asset • Dividend • Abundant disposition income from • Distribution cash position • Asset-back subsidiaries from SVF finance JPY 255bn *1 JPY 220bn *2 JPY 121bn JPY 99bn *1 SBKK’s dividend calculated based on SBKK’s earnings forecast and dividend payout
Slide 55: Use of Proceeds from SBKK IPO
Use of Proceeds from SBKK IPO Balanced allocation between returns to our stakeholders and growth investment Proceeds from SBKK IPO: JPY 2.0tn* Improving Growth Shareholder financial position investment return (Debt repayment) (Expected amount (Share repurchase) for investment) JPY 700bn JPY 700bn JP
Slide 56: Improve Financial Position (Debt Repayment)
Improve Financial Position (Debt Repayment) Repaid approx. JPY 700bn of debt USD-denominated senior notes Borrowings repayment Secondary spread 5.375% Jul 2022 6% Jul 2025 Approx. JPY 600bn 4.75% Sep 2024 6.25% Apr 2028 5.125% Sep 2027 6.125% Apr 2025 5.5% Apr 2023 (Z-sprd; bps) 400 Buyback of USD/E
Slide 57: Shareholder Return (Share Repurchase)
Shareholder Return (Share Repurchase) Shareholder return from SBKK IPO proceeds Total JPY 600 billion (maximum) Repurchase (6.5%* of the total number of shares issued (excluding treasury stock)) Amount Repurchase February 7, 2019 to January 31, 2020 Period * Calculated based on the closing SBG share
Slide 58: Equity Value of Holdings
（8.0） （8.0） Equity Value of Holdings 58
Slide 59: Equity value of holdings
Equity value of holdings Market value of shareholdings amounted to JPY 25tn 30.0 (JPY tn) 25.4 25.0 21.4 21.9 4.3 1.1 1.0 20.1 0.6 20.0 0.6 0.7 0.8 0.3 1.5 1.9 0.7 2.7 2.4 2.2 2.1 2.7 15.0 2.7 2.4 3.0 SBKK 2.7 2.8 Yahoo Japan Others 10.0 SVF (equity value for SBG) 12.8 13.4 12.1 Sprint 5.0 11.3 Arm
Slide 60: SVF: Capital Commitment
SVF: Capital Commitment <Capital Commitment (as of end of Dec. 2018)> Numbers in brackets represent amounts contributed Closed on October 19, 2018 and November 29, 2018. (Amounted to USD 97.0bn after accepting USD 5.3bn) 97.0 *1 (USD bn) (47.7)*3 SBG 63.9 *1 33.1 *2 （8.0） （16.2）*3 （31.5）*3 Third-par
Slide 61: SVF: Fair Value for Investment Asset
SVF: Fair Value for Investment Asset (USD bn) ＋19％ 60.3 50.5 ＋11% 33.0 Cumulative Acquisition Cost 29.7 Fair Value Total Mar 2018 Dec 2018 * Excluding exited investments. Including Delta Fund. * SoftBank Vision Fund made some investments through investment holding entities that are subsidiaries, but
Slide 62: SVF: Investment Portfolio
SVF: Investment Portfolio （8.0） （8.0） As of Feb.6, 2019 62
Slide 63: SBKK Shares
SBKK Shares As of February 1, 2019 Market Cap. Turnover (JPY tn) (JPY bn) Market cap. JPY 6.3tn 8.0 450 Ownership by SBG Group 66.5% 400 Market cap. of SBG Group-owned shares JPY 4.2tn 7.0 Consolidated 350 Consolidation status subsidiary 6.0 300 PER（FY18 company earnings forecast-basis) 15.1x 5.0 25
Slide 64: Alibaba Shares
Alibaba Shares As of February 1, 2019 Market Cap. Turnover (USD bn) (USD bn) Market cap. JPY 48.3tn $435.4bn 600 16 Ownership by SBG Group 25.5%*2 Market cap. of SBG Group-owned shares JPY 12.3tn 14 $111.0bn 500 Equity method 12 Consolidation status associate 400 PER（Last 12 months) 36.7x 10 PER（FY1
Slide 65: Sprint Shares
Sprint Shares As of February 1, 2019 Market Cap. Turnover (USD bn) (USD mn) Market cap. JPY 2.8tn $25.4bn 40 700 Ownership by SBG Group 84.5% 35 Market cap. of SBG Group-owned JPY 2.4tn 600 shares $21.4bn 30 Consolidated Consolidation status subsidiary 500 25 PER（Last 12 months) 15.1x 400 20 300 15
Slide 66: Yahoo Japan Shares
Yahoo Japan Shares As of February 1, 2019 Market Cap. Turnover (JPY tn) (JPY bn) Market cap. JPY 1.5tn Ownership by SBG Group 35.6%*2 3.5 70 Market cap. of SBG Group-owned JPY 0.5tn 3.0 60 shares Consolidated Consolidation status subsidiary 2.5 50 PER（Last 12 months) 16.3x 2.0 40 PER（FY18 market con
Slide 67: Diversified Portfolio
Diversified Portfolio Further diversification ahead as investments proceed Geography Business Other Other 3% 3% US JP (March 2015) Telecom (March 2015) 14% US 11% China 62% Telecom Japan 14% 21% E-commerce 72% (December 2018) (December 2018) Real Estate Other Other Asset Mgmt. 1% 5% 5% 1% Rideshare
Slide 68: Track Record of Successful Divestments
Track Record of Successful Divestments JPY 4.4tn of divestment through agile monetization of assets in the last 3 years CY2016-2018 JPY 2.3tn JPY 1.0tn (CY2018) (CY2016) JPY 0.8tn JPY 0.2tn JPY 0.1tn (CY2016) (CY2018) (CY2016) 68
Slide 69: Financial Position
（8.0） （8.0） Financial Position 69
Slide 70: Main Activities in FY2018
Main Activities in FY2018 Event Amount Timing Restructuring of foreign currency-dominated notes Apr Consent solicitation and exchange offer for 2015 USD and EUR-denominated senior notes 2018 May Early redemption of 2013 USD and EUR-denominated senior notes Approx. JPY 350.0 bn*1 2018 Issuance of USD
Slide 71: SBG Standalone Interest-bearing Debt
SBG Standalone Interest-bearing Debt Main variance factors from end of Sep Significant reduction Oct - Dec Short-term borrowing repayment (JPY 450bn) Other borrowings repayment (JPY 200bn) Reference (JPY bn) Jan Partial margin loan repayment ($4.37bn) 9,252.6 9,265.1 Buyback of foreign currency-deno
Slide 72: SBG Standalone Cash Position
SBG Standalone Cash Position Secured abundant cash from SBKK IPO. Executed loan repayments and saw progress in transfer of investments to SVF After consideration of (JPY bn) • Transfer of investments to SVF 3,739.9 (+ JPY 1,926.3bn) • Expected tax on IPO proceeds (- JPY 345.2bn） Main variance factor
Slide 73: SBG Standalone Net Interest-bearing Debt
SBG Standalone Net Interest-bearing Debt Significant improvement due to SBKK IPO (JPY bn) 8,226.4 7,860.3 6,834.8 5,253.1 -1,581.1 3,672.0 *1 After consideration of • Transfer of investments to SVF (+ JPY 1,926.3bn) • Expected tax on IPO proceeds (- JPY 345.2bn ） Mar'18 Jun'18 Sep'18 Dec'18 *1 The d
Slide 74: LTV Trend
LTV Trend Significant improvement due to SBKK IPO 50% 30 Investment Asset Value Net interest-bearing debt LTV 25 (JPY tn) (JPY tn) 25 40% 21 22 20 20 30% 24% 25% 26% 15 14% *1 20% 10 10% 5 5 5 4 5 0% 0 FY17Q4 FY18Q1 FY18Q2 FY18Q3 *1 For calculation of FY18Q3 LTV, refer to p.79 *2 FY17Q4 – FY18Q2 net
Slide 75: SBG Notes Redemption Schedule
SBG Notes Redemption Schedule (JPY bn) Domestic straight notes 1,305.6 Domestic subordinated notes Domestic hybrid notes*2 Foreign currency-denominated senior notes*3 455.6 Foreign currency-denominated 955.4 hybrid notes*2 *3 305.3 700.0 583.1 501.0 164.8 15.4 133.1 424.1 424.7 850.0 131.0 700.0 194
Slide 76: SBG Credit Rating Trend
SBG Credit Rating Trend No change since 2013 Acquisition of Acquisition of Sprint Arm SBKK 14 Japan Telecom Vodafone KK Acquisition Acquisition Listing 13 A/A2 JCR (A－) 12 A－/A3 11 BBB+/Baa1 S&P (BB＋) 10 BBB/Baa2 Outlook:Stable *Revised up from 9 BBB－/Baa3 negative (Jan. 10 ‘19) 8 BB+/Ba1 7 BB/Ba2 M
Slide 77: FY2018 Finance Strategy
FY2018 Finance Strategy • Pursue optimal leverage as a strategic holding company Our Aim • Well-protected financial management to be invulnerable for any environmental change - Leverage index: Manage LTV lower than around 35% Safety design - Cash position: Maintain a liquidity level that covers rede
Slide 78: Appendix
Appendix 78
Slide 79: LTV Calculation
LTV Calculation (L) SBG Net Interest-bearing debt JPY 3.63 tn = 14.3% (V) SBG Equity Value of Holdings JPY 25.38 tn (JPY tn) (a) Adjusted consolidated interest-bearing debt*1*2 17.03 (e) Major listed shares*5 19.72 Breakdown Breakdown Consolidated interest-bearing debt*1*2 17.05 Alibaba*6 12.11 Adju
Slide 80: Consolidated Interest-bearing Debt
Consolidated Interest-bearing Debt Major changes SBG 7,411.9 from Sep 2018 SBG borrowings (JPY bn) Bank loan 1,177.2 -450.0 (repaid) 17,987.8 Others 198.9 -200.0 (repaid) 17,042.2 17,349.0 17,053.8 Bonds JPY senior bonds 2,249.1 SBG JPY subordinated and 1,306.4 8,116.5 hybrid bonds 7,411.9 Others (A
Slide 81: Consolidated Cash Position
Consolidated Cash Position Maintain high level of cash position by SBKK IPO. Repaid some loans. Transfer of investments to SVF made progress. (JPY bn) 5,864.6 5,125.8 2,158.8 3,739.9 3,424.9 3,338.8 2,978.2 1,392.3 1,281.7 547.9 1,038.6 SBG 617.9 1,285.6 547.9 816.4 795.5 Others (Arm, YJ etc.) 115.9
Slide 82: Consolidated Net Interest-bearing Debt
Consolidated Net Interest-bearing Debt Improved significantly by SBKK IPO (JPY bn) 14,370.8 14,649.0 13,617.3 11,927.9 11,189.2 6,834.8 8,226.4 7,860.3 5,253.1 SBG 3,672.0 741.7 Others (Arm, YJ etc.) 727.8 727.8 719.0 520.0 186.1 688.3 Variable repaid forward 278.5 537.5 3,065.1 3,012.4 3,012.4 cont
Slide 83: SBG: Price and Spread of JPY Notes
SBG: Price and Spread of JPY Notes Price Spread Z-spread, bps 107 400 Subordinated 2022 #2 2026 #50 Subordinated 2022 #2 2026 #50 Hybrid 2021 #1 Hybrid 2023 #2 Hybrid 2021 #1 Hybrid 2023 #2 106 350 105 300 104 250 103 200 102 150 101 100 100 17/10 18/1 18/4 18/7 18/10 19/1 17/10 18/1 18/4 18/7 18/10
Slide 84: SBG: Price and Spread of Foreign Currency Notes
SBG: Price and Spread of Foreign Currency Notes Price (USD denominated notes) Spread (USD denominated notes) Z-spread, bps 110 850 2022 USD 2025 USD Hybrid 2027 USD 2027 USD 750 2025 USD 105 650 100 550 95 450 90 350 85 250 80 2022 USD 2025 USD 150 Hybrid 2027 USD 2027 USD 2025 USD 75 50 17/10 18/1
Slide 85: SoftBank Vision Fund / Delta Fund Segment
SoftBank Vision Fund / Delta Fund Segment 85
Slide 86: SoftBank Vision Fund & Delta Fund Update
SoftBank Vision Fund & Delta Fund Update Navneet Govil Managing Partner & Chief Financial Officer, SoftBank Investment Advisers 7th February 2019 86
Slide 87: Important Information
IMPORTANT INFORMATION This presentation (this “Presentation”) is furnished to you on a confidential basis for informational purposes in connection with your limited partnership interests in SoftBank Vision Fund L.P. and SB Delta Fund (Jersey) L.P. (together with, as the context may require, any para
Slide 88: Topics
Topics 1. Progress & Highlights 2. Performance & Impact on SoftBank Group 3. In Focus: Valuation Governance and Process Throughout this presentation, a commitment of $5.0B made by the incentive scheme for SoftBank Vision Fund and its associated paid-in capital and NAV in the Vision Fund have been ex
Slide 89: Progress & Highlights
Progress & Highlights 89
Slide 90: Our Investing Thesis
Our Investing Thesis We evaluate investment opportunities by examining them from three angles: The Market Opportunity The Business The Founder(s) A global market and the Next generation Ambitious founders with opportunity for a new technology platforms a clear vision and a deep leader to emerge leve
Slide 91: Our Investing Thesis
Our Investing Thesis Our investments are concentrated in global categories poised for disruption or net new markets that have the potential to transform the way we live. Our category focus evolves as new trends emerge. Consumer Enterprise Fintech Frontier Tech Transportation + Health Tech Media Real
Slide 92: SVF & Delta Fund Closings
SVF & Delta Fund Closings As of December 31, 2018 $103B Total Commitments $91.7B $5B $0.3B $97.0B $ 6.0B Initial Close Close 2 Close 3 SVF Delta May 20, 2017 October 18, 2018 November 29, 2018 Total Commitments Total Commitments Fund Inception There can be no assurance that historical trends will co
Slide 93: Performance & Impact
Performance & Impact 93
Slide 94: SoftBank Vision Fund & Delta Fund: Snapshot
SoftBank Vision Fund & Delta Fund: Snapshot As of December 31, 2018 Total Commitments Acquisition Cost1 Investment Gains1 SVF & Delta $103B $51.7B +$12.9B SBG Commitments SBG Paid-In Capital SBG Total Value2 $32.5B $17.6B $22.6B SBG Footnotes: Information herein is presented on an aggregated basis a
Slide 95: Growth of Our Portfolio
Growth of Our Portfolio $60.0 Cumulative Acquisition Cost1 Number of $50.0 Investments2 Delta $5.0 $40.0 25 March 31, 2018 $30.0 Delta $5.0 SVF $20.0 SVF $46.7 51 December 31, 2018 $10.0 $23.5 $0.0 Mar 31, 2018 Dec 31, 2018 Footnotes: 1. Acquisition Cost and Number of Investments are cumulative from
Slide 96: Portfolio Composition By Sector
Portfolio Composition By Sector As of December 31, 2018 34% 12% Information herein is presented Cost $16.4B Cost $5.8B on an aggregated basis across Fair Value $19.9B Fair Value $7.2B the SoftBank Vision Fund and Delta Fund and does not include Flipkart which was exited in August 2018. For informati
Slide 97: Portfolio Composition By Geography
Portfolio Composition By Geography As of December 31, 2018 EMEA: 16.2% Americas: 50.7% Asia: 33.1% Information herein is presented on an aggregated basis across the SoftBank Vision Fund and Delta Fund and does not includes Flipkart which was exited in August 2018. For information pertaining to the V
Slide 98: Distribution Waterfall
Distribution Waterfall Three categories of return of net proceeds Return of Provide Preferred Allocation of Contributions Return Remaining Gains Net proceeds from investments A required hurdle return on Pay Performance Fee to are first used to return investors’ investors’ capital is distributed Inve
Slide 99: Distribution Waterfall
Distribution Waterfall Net Proceeds from investments and the Funds’ Net Asset Value (NAV) are allocated to Limited Partners and General Partner/Manager in the following order, also called the Fund’s “waterfall” Retain proceeds to pay expenses or re- invest in foreseeable Payment of investments Prefe
Slide 100: Management and Performance Fees
Management and Performance Fees In its capacity as the Investment Manager of the Funds, SBIA UK, a wholly owned subsidiary of SBG is compensated for its service through Management Fee and Performance Fee Management Fees Ongoing quarterly fee for managing the Funds’ investments Percentage of Invest
Slide 101: Contribution to SBG, Profit Net of Third Party Interests
Contribution to SBG, Profit Net of Third Party Interests Amounts in USD Billions Eleven-month Period from Nine-month Period Ended Fund Inception to March 31, December 31, 2018 2018 3 Contribution to SBG, Net of 3rd Party Interests2 SVF & Delta SVF & Delta Fund Net Profit1 $2.08 $6.43 Less: change in
Slide 102: Contribution to SBG, Realized and Unrealized Value
Contribution to SBG, Realized and Unrealized Value As of December 31, 2018 $25 $22.6 $1.6 LP Distributions – Realized Value $20 GP/Manager Accrued Performance Fee – $2… Unrealized Value $15 $10 LP NAV – Unrealized $17.6 $19.0 Value $5 $0 Paid-In Total Value Capital Footnotes: 1. Net Asset Value incl
Slide 103: In Focus: Valuation Governance and Process
In Focus: Valuation Governance and Process 103
Slide 104: Valuation Framework & Governance
Valuation Framework & Governance Framework Reporting International Private Equity & Venture Capital Compliance Regulatory Valuers/Auditor Leading International Renowned Valuation SVF Auditor Accounting Firms Specialist All investments, except Arm Holdings , were independently valued at December 31,
Slide 105: SBIA Valuations Process
SBIA Valuations Process • Quarterly valuations in line with the • Independent Valuers appointed by Valuation Policy, IFRS, and International the Investor Advisory Board Private Equity and Venture Capital (“IPEV”) (“IAB”) Valuation Guidelines • Performs valuations • Supported by third party valuers i
Slide 106: Reconciliations to SBG Consolidated Financial Statements
Reconciliations to SBG Consolidated Financial Statements Amounts in USD Billions unless otherwise indicated SoftBank Vision Fund and Delta Fund (as in page 101) Nine‐month Period Ended December 31, 2018 Contribution to SBG, Net of 3rd Party Interests2 SVF & Delta Fund Net Profit1 $6.43 Less: change
Slide 107: Notes to Reconciliations to SBG Consolidated Financial Statements
Notes to Reconciliations to SBG Consolidated Financial Statements Footnotes: 1. Fund Net Profit includes net changes in fair value of financial assets at fair value through profit or loss (FVTPL) and investment Information herein is presented on an aggregated basis gains/losses recorded as deemed ca
Slide 108: Appendix
Appendix 108
Slide 109: SoftBank Vision Fund: Snapshot
SoftBank Vision Fund: Snapshot As of December 31, 2018 Total Commitments Acquisition Cost1 Investment Gains1 $97.0B $46.7B +$12.9B SVF SBG Commitments SBG Paid-In Capital SBG Total Value2 $28.1B $13.9B $19.0B SBG Footnotes: 1. Including investment in Flipkart which was exited in August 2018. Fund hi
Slide 110: Delta Fund: Snapshot
Delta Fund: Snapshot As of December 31, 2018 Total Commitments Acquisition Cost1 Investment Gains1 $6.0B $5.0B +$0.0B Delta SBG Commitments SBG Paid-In Capital SBG Total Value2 $4.4B $3.7B $3.6B SBG Footnotes: 1. Investment gains are before tax and expenses and include unrealized Fund highlights are
Slide 111: SoftBank Vision Fund – Portfolio Composition by Sector
SoftBank Vision Fund – Portfolio Composition by Sector As of December 31, 2018 28% 13% Cost $11.4B Cost $5.8B Fair Value $14.9B Fair Value $7.2B 25% 5% Information is provided solely for Cost $12.3B Cost $2.3B illustrative purposes and there can be no assurance that future Fair Value $13.5B Fair Val
Slide 112: SoftBank Vision Fund – Portfolio Composition by Geography
SoftBank Vision Fund– Portfolio Composition by Geography As of December 31, 2018 EMEA: 17.7% Americas: 55.4% Asia: 26.9% Geographic concentration is calculated as a percentage of total portfolio Fair Value as of December 31, 2018. Fair Value is based on valuations that reflect unrealized estimated a
Slide 113: Contribution to SBG, Profit Net of Third Party Interests
Contribution to SBG, Profit Net of Third Party Interests Amounts in USD Billions Eleven-month Period from Nine-month Period Fund Inception to March 31, ended December 31, 20183 2018 Contribution to SBG, Net of 3rd Party Interests2 SVF Delta Total SVF Delta Total Fund Net Profit1 $2.13 -$0.05 $2.08 $
Slide 114: SoftBank Vision Fund: Contribution to SBG, Realized & Unrealized Value
SoftBank Vision Fund: Contribution to SBG, Realized & Unrealized Value As of December 31, 2018 USD Billions $20 $19.0 $18 $1.6 LP Distributions – Realized Value $16 $2.0 GP/Manager Accrued Performance Fee – Unrealized Value $14 $12 $10 LP NAV – Unrealized Value $8 $15.4 $13.9 $6 $4 $2 $0 Paid-In Cap
Slide 115: Delta Fund: Contribution to SBG, Realized & Unrealized Value
Delta Fund: Contribution to SBG, Realized & Unrealized Value As of December 31, 2018 USD Billions $4 $3 $2 $3.7 $3.6 LP NAV – Unrealized Value $1 $0 Paid-In Capital Total Value Footnotes: 1. Net Asset Value includes net changes in fair value of financial assets at fair value through profit or loss (
Slide 116: Sprint Segment (excerpts)
Sprint Segment (excerpts) The whole presentation of Sprint FY18Q3 earnings is available at: https://s21.q4cdn.com/487940486/files/doc_financials/quarterly/2018/Q3/02_3QFY18-Slides-Final.pdf 116
Slide 117: FY3Q 2018 Highlights
FY3Q 2018 Highlights Wireless Service Adjusted Operating [1] Revenue EBITDA* Income Year-over-year growth for the Highest for a fiscal 3Q in 12 Delivered for the 12th second consecutive quarter years consecutive quarter Postpaid Digital Next-Gen Net Additions Transformation Network Delivered for the
Slide 118: Postpaid Net Adds Growth
Unlimited for All Postpaid Net Adds Tablets Watches Results in Thousands Unlimited 16 17 18 Plus Q3 Q3 Q3 6 GROWTH consecutive quarters of ©2019 Sprint. This information is subject to Sprint policies regarding use and is the property of Sprint and/or its relevant affiliates and may contain restricte
Slide 119: Service Revenue & ARPU
Service Revenue & ARPU Wireless Service Revenue Postpaid Average Revenue per User Dollars in Billions (ARPU) Q316 Q317 Q318 Q316 Q317 Q318 New revenue standard New revenue standard INCREASED year-over-year for the second SMALLEST year-over-year decline consecutive quarter [1] in nearly 5 years [1] [
Slide 120: Cost Reductions & Adjusted EBITDA
Cost Reductions & Adjusted EBITDA* Cost of Services + SG&A Expenses Adjusted EBITDA* Dollars in Billions Dollars in Billions YTD17 YTD18 Q316 Q317 Q318 New revenue standard New revenue standard approximately $300M year-over-year net reductions [1] HIGHEST fiscal third quarter in 12 years [1] excludi
Slide 121: Profitability
Profitability Operating Income Net Income (Loss) Dollars in Billions Dollars in Millions Q316 Q317 Q318 Q316 Q317 Q318 New revenue standard Tax reform impact New revenue standard 12 RELATIVELY STABLE CONSECUTIVE excluding tax reform and the settlement quarters of of patent infringement lawsuit in 3Q
Slide 122: Capex & Adjusted Free Cash Flow
Capex & Adjusted Free Cash Flow Cash Capex[1] Adjusted Free Cash Flow* Dollars in Billions Dollars in Millions Q316 Q317 Q318 Q316 Q317 Q318 Settlement of patent infringement lawsuit more than Higher network investments DOUBLED year-over-year and working capital timing impact 3Q18 [1] excludes capit
Slide 123: Guidance
FISCAL YEAR 2018 Guidance No change from previous quarter Adjusted Cash EBITDA* Capex $12.4 billion to $5.0 billion to $12.7 billion $5.5 billion As Reported excluding leased devices $11.7B-$12.0B excluding the impact of the new revenue standard ©2019 Sprint. This information is subject to Sprint po
Slide 124: SoftBank
SoftBank