SoftBank Group’s decision to lift its stake in Sprint Corp. has helped boost shares in the unprofitable U.S. wireless operator by almost 50 percent over the last seven trading days, adding more than $6 billion to its market value.
The Japanese carrier disclosed Tuesday that it had increased its stake in Sprint for a second time this month, acquiring 16.8 million shares for $73 million, according to Bloomberg calculations based on a SoftBank filing with the U.S. Securities & Exchange Commission. The latest purchase follows an earlier $87 million investment in Sprint that the Tokyo-based company announced Aug. 13.
SoftBank’s billionaire founder Masayoshi Son has reiterated his commitment to Sprint as it shows signs of recovery after recording its third consecutive gain in subscribers. Son has said he already sees ‘‘light at the end of the tunnel’’ for the carrier, which booked losses in six out of the past seven quarters, but the turnaround may take two years.
“If they believe Sprint stock is highly undervalued, they will continue to invest in Sprint,” Marcelo Claure, the U.S. carrier’s CEO, said in an interview Tuesday on Bloomberg Television.
As part of his turnaround plan, Claure has focused on network improvements, half-price offers and tablet promotions to lure customers. He’s also cut operating costs, helping boost earnings before interest, taxes, depreciation and amortization to $2.08 billion in the fiscal first quarter that ended June 30. That topped the $1.8 billion average of estimates compiled by Bloomberg.
At the same time, the company has been burning through cash. Sprint’s cash and equivalents fell about $2 billion during the fiscal first quarter, which was 2.5 times the decrease in the period a year earlier. And even with the recent subscriber additions, the carrier fell behind T-Mobile US Inc. as the fourth-largest U.S. wireless carrier.
80 Percent Stake
The acquisition raises SoftBank’s stake to slightly more than 80 percent, said Hiroe Kotera, a spokeswoman for SoftBank in Tokyo. The company has said it will limit its holding to no more than 85 percent, which would make Sprint a target for delisting.
“We are on the verge of a massive Sprint turnaround, and we feel very good about our prospects,” Claure said. “And that’s why SoftBank continues to invest in Sprint.”
Shares of SoftBank gained 2 percent to 7,592 yen as of 9:28 a.m. in Tokyo. Sprint rose 5.7 percent to $4.86 at the close in New York, the highest price since May 5. The shares are up 44 percent this month.