Recording of Gains Associated with Sale of T-Mobile US, Inc. Shares
SoftBank Group Corp. (“SBG”) is conducting transactions to transfer up to 198,314,426 shares of T-Mobile US, Inc. (“T-Mobile”) common stock, including shares delivered through transactions that are expected to be completed in or after July 2020, as announced in “Transfer of Shares of Equity Method Associate (T-Mobile US, Inc.)” dated June 23, 2020 and “Number of Shares to be Transferred and Purchase Price for the Transfer of Shares of Equity Method Associate (T Mobile US, Inc.)” dated June 24, 2020. On June 26, 2020 (Eastern Time), each of the transactions was completed by T-Mobile for the public offering and private placement through the trust regarding T-Mobile shares in the U.S., resulting in the exclusion of T-Mobile from SBG’s equity method associates. As a result of the completion of these transactions and the consequent removal of T-Mobile from SBG’s equity method associates, SBG expects to record a gain of approximately JPY 600 billion (estimated amount) associated with the sale of T-Mobile shares in its consolidated statement of income for three-month period ending June 30, 2020.
This gain consists of a gain on the sale of shares and a gain on the revaluation of shares continued to be held by SBG. The former is calculated by multiplying the difference between the sale price per share and the consolidated carrying amount per share as of the completion of transactions on June 26, 2020 (Eastern Time), by the number of shares sold, less expenses related to the sale. The latter is calculated by multiplying the difference between the fair value per share and the consolidated carrying amount per share as of the completion of transactions on June 26, 2020 (Eastern Time) by the number of shares continued to be held by SBG. In addition, for the call options received by Deutsche Telekom AG over 101,491,623 T-Mobile shares held by SBG (the “Call Options”)*, SBG expects to record a derivative financial liability at their fair value at the time of execution of the contract in its consolidated statement of financial position, and the equivalent amount will be recorded as a derivative loss in the consolidated statement of income. The amount has not yet been determined and is not included in the abovementioned gain of approx. JPY 600 billion.
The T-Mobile shares continued to be held by SBG will be recorded as investment securities in SBG’s consolidated statement of financial position and the quarterly changes in the fair value of those securities will be recorded as a gain or loss from financial instruments at FVTPL in the consolidated statement of income. For the Call Options, their fair value will be remeasured at the end of each quarter thereafter, with its changes recorded as a derivative gain or loss in the consolidated statement of income.
For details, see “4. Outline of the Transfer of Shares upon Exercise of Call Options by Deutsche Telekom” in “Transfer of Shares of Equity Method Associate (T-Mobile US, Inc.)” dated June 23, 2020.
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