Softbank Group Corp. · TSE:9984

Softbank — Merger or Acquisition (April 2013)

49 slides from Softbank's merger presentation, Apr 30, 2013

  1. Slide 1: Transaction with Sprint

    Transaction with Sprint April 30, 2013 SoftBank Corp.

  2. Slide 2: Cautionary Statement Regarding Forward Looking Statements

    Cautionary Statement Regarding Forward Looking Statements This document includes “forward-looking statements” within the meaning of the securities laws. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan,” “providing gu

  3. Slide 3: SoftBank Delivers Superior Value to Sprint Shareholders

    SoftBank Delivers Superior Value to Sprint Shareholders 2

  4. Slide 4: DISH Proposal is Incomplete and Illusory

    DISH Proposal is Incomplete and Illusory $ 7.00 $ 6.22 Transaction Value per Proposal Value per DISH Presentation DISH Presentation *Created by SoftBank based on respective company’s publicly available information. 3

  5. Slide 5: SoftBank Transaction Provides 21% Premium

    SoftBank Transaction Provides 21% Premium $ 7.65 +21% $ 6.31 SoftBank Transaction Value DISH Proposal Value *Created by SoftBank based on respective company’s publicly available information. 4

  6. Slide 6: SoftBank Transaction is Superior

    SoftBank Transaction is Superior $ 7.65 (+21%) Value $6.31 July 2013 Timing Mid 2014 3.0x Leverage 5.9x Straightforward Structure Separate Silos (7.6x Telco Leverage) Fully Financed Financing Uncommitted Financing Mobile Technology / Mobile Operational Leader Expertise None 5

  7. Slide 7: SoftBank Transaction is Superior

    SoftBank Transaction is Superior Global Scale / Expertise Synergies Unfounded / Unrealistic Proven Track Record Partnering Litigation History Shareholder Protections Governance Ergen-dominated Efficient Tax Inefficient Well-positioned Spectrum Significant Costs 6

  8. Slide 8: Value per Share (Pre Synergies)

    Value per Share (Pre Synergies) 7

  9. Slide 9: SoftBank $8bn Primary Investment

    SoftBank $8bn Primary Investment $3.1bn Convertible debt at $5.25 per share in October 2012 $4.9bn Primary investment at $5.25 per share in July 2013 8

  10. Slide 10: Value per Share: $6.38 Transaction value

    Value per Share (Pre Synergies) $ 6.38 Transaction value *1 Equity $ 2.35 *2 Cash $ 4.03 Cash+New Sprint Equity *Assumed pro rata subscription to cash and equity; shareholders will have the option to elect between cash and equity *1 $5.25 per share and 0.448 exchange ratio *2 $12.1bn to purchase 1,6

  11. Slide 11: DISH's Proposal Value

    DISH’s Proposal Value (Pre Synergies) $ 7.00 Equity $ 2.24 Cash $ 4.76 Proposal Value per DISH Presentation *1 *Created by SoftBank based on respective companies’ publicly available information. *1 Based on proposed 0.05953 proposed exchange ratio and DISH share price as of 4/12/2013. 10

  12. Slide 12: Financing Dilution

    Financing Dilution $ 7.00 Adjusted for: $ (0.25) New DISH share dilution $9.3bn incremental debt $7.9bn cash outlay Proposal Value per Financing Dilution*2 DISH Presentation *1 *Created by SoftBank based on respective company’s publicly available information. *1 Based on proposed 0.05953 proposed ex

  13. Slide 13: Adjusted Proposal Value

    Adjusted Proposal Value (Pre Synergies) $ 7.00 $ 6.75 $ (0.25) Proposal Value per *2 Adjusted Proposal *1 Financing Dilution DISH Presentation Value *Created by SoftBank based on respective company’s publicly available information. *1 Based on proposed 0.05953 proposed exchange ratio and DISH share

  14. Slide 14: Transaction Fees and Expenses

    Transaction Fees and Expenses $ 6.75 $600mm break-up fee ($0.09) $400mm transaction expense Adjusted Proposal Transaction Fees Value and Expenses*1 *Created by SoftBank based on respective company’s publicly available information. *1 Includes $600mm breakup fee paid to SoftBank by Sprint and $400mm

  15. Slide 15: Time Value Discount

    Time Value Discount $ 6.75 ($0.09) ($0.61) 1 year delay in closing Adjusted Proposal Transaction Fees Time Value Value and Expenses*1 Discount *2 *Created by SoftBank based on respective company’s publicly available information. *1 Includes $600mm breakup fee paid to SoftBank by Sprint and $400mm of

  16. Slide 16: Delay in NW Vision, Lose Competitiveness

    Timing July 1, 2013 Expected Close Delay in NW Vision Today Lose Competitiveness 2012 2013 2014 15

  17. Slide 17: Present Value per Share

    Present Value per Share (Pre Synergies) $ 6.75 $ 6.05 ($0.09) ($0.61) Adjusted Proposal Transaction Fees Time Value Present Value Value and Expenses*1 Discount *2 Pre Synergies *Created by SoftBank based on respective company’s publicly available information. *1 Includes $600mm breakup fee paid to S

  18. Slide 18: SoftBank Transaction is Superior (Present Value, Pre Synergies)

    SoftBank Transaction is Superior (Present Value, Pre Synergies) $ 6.38 $ 6.05 +5% 17

  19. Slide 19: Value per Share (Post Synergies)

    Value per Share (Post Synergies) 18

  20. Slide 20: Synergies

    Synergies $ 6.05 $11.0bn NPV of cost synergies $ 0.75 Less $2.6bn NPV of integration expenses Limitations / 2 separate companies *1 Present Value Synergies *Created by SoftBank based on respective company’s publicly available information. *1 Assumes DISH cost synergy NPV of $11.0bn per DISH presenta

  21. Slide 21: Spectrum Deployment Cost

    Spectrum Deployment Cost $ 6.05 $ 0.75 ($ 0.47) $6.0bn CAPEX to deploy 2GHz Non-standard; no ecosystem No compatible handsets No revenue prospects *1 Spectrum Present Value Synergies *2 Deployment Costs *Created by SoftBank based on respective company’s publicly available information. *1 Assumes DIS

  22. Slide 22: Present Value per Share (Post Synergies)

    Present Value per Share (Post Synergies) $ 6.05 $ 6.31 $ 0.75 ($ 0.47) ($ 0.03) *1 Spectrum Time Value DISH Proposal Present Value Synergies *2 Deployment Costs Discount *3 Value *Created by SoftBank based on respective company’s publicly available information. *1 Assumes DISH cost synergy NPV of $1

  23. Slide 23: $2.0bn Annual Cost Synergies

    $2.0bn Annual Cost Synergies $ 6.38 $ 1.27 Handset / Equipment / Network / IT / OPEX No material redundancies Cash+New Sprint Equity *1 Synergies *2 *Created by SoftBank based on respective company’s publicly available information. *1 Transaction Value delivered to Sprint Shareholders based on SoftB

  24. Slide 24: $2.0bn Annual Cost Synergies

    $2.0bn Annual Cost Synergies Economies of Scale Operational Expertise Smartphone Network Mobile EBITDA $7.8bn 2004/3 ’13/3 (FY) *Assumes $2.0bn run-rate cost savings and efficiencies under SoftBank management. 23

  25. Slide 25: Competitive Economies of Scale

    (m) Global Procurement Scale Number of Smartphones Sold 28.8 26.9 26.5 Competitive Economies of Scale 13.3 5.6 Verizon AT&T Sprint / NTT KDDI *Others: FY2012 results *KDDI: FY2011 results SoftBank DOCOMO 24

  26. Slide 26: Economies of Scale Global No. 2

    Global Procurement Scale ($ bn) Mobile CAPEX 20.4 Economies of Scale Global No. 2 11.9 10.8 9.9 8.9 7.5 3.0 China Mobile Sprint / AT&T Vodafone Verizon NTT KDDI *Vodafone, KDDI: FY2012/3 actual results SoftBank (Consolidated) DOCOMO Others: FY2012 actual results *Created by SoftBank based on respect

  27. Slide 27: Planning meetings

    Planning meetings 26

  28. Slide 28: Present Value per Share (Post Synergies)

    Present Value per Share (Post Synergies) $ 7.65 $ 6.38 $ 1.27 Cash+New Sprint Equity *1 Synergies*2 SoftBank Transaction Value *1 Transaction Value delivered to Sprint Shareholders based on SoftBank transaction. *2 Assumes $2.0bn run-rate cost savings and efficiencies under SoftBank management, tax-

  29. Slide 29: SoftBank Transaction Provides 21% Premium

    SoftBank Transaction Provides 21% Premium $ 7.65 +21% $ 6.31 SoftBank Transaction Value DISH Proposal Value *Created by SoftBank based on respective companies’ publicly available information. 28

  30. Slide 30: Value per Share

    Value per Share DISH $ 6.22 Presentation $ 7.00 $ 6.38 Pre Synergies $ 6.05 (+5%) $ (+21%) 7.65 Post $ 6.31 Synergies 29

  31. Slide 31: Capital Structure & Governance

    Capital Structure & Governance 30

  32. Slide 32: Superior Capital Structure with SoftBank

    Superior Capital Structure with SoftBank *1 *2 Net Leverage Net Leverage 3.0x 5.9x Gross Leverage Gross Leverage 7.6x 6.0x $ 35.3bn $ 22.6bn $ 14.2bn Sprint Silo DISH Silo Pro Forma Gross Debt Pro Forma Gross Debt Pro Forma Gross Debt *Created by SoftBank based on respective companies’ publicly avai

  33. Slide 33: Superior Capital Structure with SoftBank

    Superior Capital Structure with SoftBank *1 *2 Net Leverage Net Leverage 3.0x 5.9x Gross Leverage Gross Leverage 7.6x 6.0x $ 50bn $ 22.6bn Pro Forma Gross Debt Pro Forma Gross Debt *Created by SoftBank based on respective companies’ publicly available information. Excludes SoftBank financial results

  34. Slide 34: Highest Telco Leverage Ratio in the World

    Increased Financial Risk Net Debt / EBITDA Multiple (DISH/Sprint) 5.9x T-Mobile 3.4x Metro PCS (Sprint) 3.0x Highest AT&T 1.8x Telco Leverage Ratio Verizon 1.2x in the World 33

  35. Slide 35: Poor Governance

    Poor Governance Economic Interest Voting Control DISH Sprint Shareholders Shareholders 7.5% 7.5% 32% 32% DISH Sprint Shareholders Shareholders 36% 85% Ergen Ergen *Created by SoftBank based on respective company’s publicly available information. *Ergen includes Ergen Trust. 34

  36. Slide 36: SoftBank Will Propel Sprint's Growth

    SoftBank Will Propel Sprint’s Growth 35

  37. Slide 37: Our track record of innovation and operational excellence will drive Sprint shareholder value

    “Our track record of innovation and operational excellence will drive Sprint shareholder value.” - Masayoshi Son (October 15, 2012) 36

  38. Slide 38: I'm not an expert on their Network Vision

    “ I’m not an expert on their Network Vision... They certainly have more expertise in that than we do. ” - Charles Ergen (April 15, 2013) 37

  39. Slide 39: DISH Losing US TV Battle

    DISH Losing US TV Battle US 14.1mm Subscribers 20.1mm Total $14.3bn Revenue *1 $23.2bn EBITDA 17% Margin *1 24% *Created by SoftBank based on respective companies’ publicly available information. *1 FY2012 reported revenue and EBITDA margin. 38

  40. Slide 40: Smartphone is the Key to Success

    Smartphone is the Key to Success 39

  41. Slide 41: No.1 in Smartphone Sales

    No.1 in Smartphone Sales SoftBank None NTT DOCOMO au (CY) (CY) ’09 ’10 ’11 ’12 ’13 ’09 ’10 ’11 ’12 ’13 *Third party electronics retail stores survey, new subscribers sales only 40

  42. Slide 42: Global No.1 Mobile EBITDA Growth Rate

    Mobile EBITDA Growth Rate (FY2012) SoftBank +14% Verizon +12% AT&T +7% China Mobile +1% NTT DOCOMO (1%) Vodafone (8%) *1 Global No.1 *2 DISH (39%) *Created by SoftBank based on respective companies’ publicly available information *1 Consolidated EBITDA *2 Consolidated EBITDA for total operation Net

  43. Slide 43: Global No.1 Mobile EBITDA Margin

    Mobile EBITDA Margin (FY2012) SoftBank 50% China Mobile 48% Verizon 47% NTT DOCOMO 42% AT&T 39% Vodafone 33% *1 Global DISH 17% *1 No.1 *Created by SoftBank based on respective companies’ publicly available information. Mobile EBITDA margin = Mobile EBITDA/ Mobile Telecom Service Revenue *1 Consolid

  44. Slide 44: Rapid Growth vs No Growth Subscribers

    Subscribers (m) (m) 45 41.9m 45 Rapid Growth 30 30 No Growth 15.0m 15 15 14.1m 9.4m 0 0 2004/3’05/3 ’06/3 ’07/3 ’08/3 ’09/3 ’10/3 ’11/3 ’12/3 ’13/3 (FY) ’03/12’04/12’05/12’06/12’07/12’08/12’09/12’10/12’11/12’12/12 (FY) *SoftBank Mobile: Sum of SoftBank Mobile, Willcom, and EMOBILE’s accumulated subs

  45. Slide 45: Peaked EBITDA

    EBITDA ($ bn) ($ bn) 7.8bn 8.0 (margin 50%) 8.0 Turnaround 6.0 6.0 Peaked 4.0 4.0 2.4bn (margin 17%) 2.0 2.0 2004/3’05/3 ’06/3 ’07/3 ’08/3 ’09/3 ’10/3 ’11/3 ’12/3 ’13/3 (FY) 2003/12’04/12 ’05/12 ’06/12 ’07/12 ’08/12 ’09/12 ’10/12 ’11/12 ’12/12 (FY) * EBITDA of mobile communications segment *Consolid

  46. Slide 46: SoftBank Transaction is Superior

    SoftBank Transaction is Superior $ 7.65 (+21%) Value $6.31 July 2013 Timing Mid 2014 3.0x Leverage 5.9x Straightforward Structure Separate Silos (7.6x Telco Leverage) Fully Financed Financing Uncommitted Financing Mobile Technology / Mobile Operational Leader Expertise None 45

  47. Slide 47: SoftBank Transaction is Superior

    SoftBank Transaction is Superior Global Scale / Expertise Synergies Unfounded / Unrealistic Proven Track Record Partnering Litigation History Shareholder Protections Governance Ergen-dominated Efficient Tax Inefficient Well-positioned Spectrum Significant Costs 46

  48. Slide 48: SoftBank Transaction Provides 21% Premium

    SoftBank Transaction Provides 21% Premium $ 7.65 +21% $ 6.31 SoftBank Transaction Value DISH Proposal Value *Created by SoftBank based on respective company’s publicly available information. 47

  49. Slide 49: Positioned for Growth

    Positioned for Growth Copyright (C) 2013 SoftBank Corp., All rights reserved. 48

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