SoftBank's Son & Trump: Marriage of Expedience

In many respects, SoftBank's Masayoshi Son and Donald Trump make unlikely buddies. One is indisputably international (Japanese but educated in the US and with roots in South Korea), regarded by his admirers as something of a technology visionary and said to be a stickler for factual detail. The other is an America-first brand whose own commercial interests are, literally, of the bricks-and-mortar rather than hi-tech variety. Facts, especially where they contradict policy statements, are to be ignored or twisted, as Trump has recently demonstrated with his attacks on the media for "underreporting" terrorist atrocities and in other sickening ways, as this link shows.

Both, however, have a reputation for braggadocio, and a relationship between them is blossoming as each man asks what the other can do for him. Son has promised to return to the US about 5,000 overseas positions at Sprint Corp. (NYSE: S), a US mobile operator that SoftBank Corp. bought for $20 billion in 2012. That move will obviously delight Trump supporters worried that jobs have been lost to low-cost Asian markets. Trump, meanwhile, appears to have given assurances that he will "ease various regulations … that make it easier to do business."

Happy Days
Masayoshi Son, the CEO of Japan's SoftBank, is full of smiles about the Trump administration.
Masayoshi Son, the CEO of Japan's SoftBank, is full of smiles about the Trump administration.

At least, that is what Son told reporters in Japan earlier today, when revealing SoftBank's financial results for the last three months of 2016. As reported by Reuters, it is not entirely clear what regulations Son was referring to. But Trump has already buoyed the spirits of formerly downbeat telco executives with rhetoric about tax breaks and light-touch regulation on net neutrality. His political appointees also appear less opposed to the idea of takeover activity in the telecom sector. Son may well expect regulatory changes in these areas.

SoftBank could have more to gain than many others from a loosening of restrictions. During the Obama years, the grand plan was to merge Sprint with T-Mobile US Inc. -- then the US's number-four mobile operator but now its third-largest -- to create a much stronger rival to market leaders AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). Regulators torpedoed that scheme, worried it would leave consumers worse off, but SoftBank and Germany's Deutsche Telekom AG (NYSE: DT), the owner of T-Mobile, may be keen to resurrect it if Trump's minions prove willing. (See Could Trump Give a Boost to German Broadband?.)

Given the chumminess between Trump and Son, all of this makes it highly unlikely the Japanese businessman will join other technology companies in condemning some of the president's other proposals. Among them is a controversial ban on travel to the US by the citizens of seven Muslim-majority countries that has been roundly criticized by the likes of Apple Inc. (Nasdaq: AAPL), Facebook , Google (Nasdaq: GOOG) and Microsoft Corp. (Nasdaq: MSFT). Indeed, nearly 130 technology companies, including those four household names, have signed a legal brief arguing that a ban would hinder innovation and competitiveness. But the only network operator whose name appears on the list is the rather small Internet of Things specialist Aeris Communications Inc. (See Telco Suppliers Join Trump Opposition, but Network Operators Remain Silent and Telcos Tight-Lipped on Trump Travel Ban as Tech Titans Take Fire.)

Like Son, telcos are probably worried that opposing Trump could meet with a backlash. While they are unlikely to approve of the ban, there is simply not enough at stake to risk incurring the president's wrath. Telcos have certainly not attached as much importance as US software companies to overseas talent, and appear to have relied far less than Silicon Valley firms on easy access to foreign software expertise. Asked for its take on the travel ban, Sprint declined to comment, as did cable giant Comcast Corp. (Nasdaq: CMCSA, CMCSK), another potential suitor for the mobile operator. While numerous other technology players, including some that have not signed the legal brief, have expressed concern to Light Reading, AT&T, Verizon, T-Mobile and SoftBank itself have not responded to our queries.

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danielcawrey 2/9/2017 | 3:36:35 PM
Re: Nailed it SoftBank wants to invest in the US, and that's the trend these days. I don't see anything wrong with that. 

As for the immigration issue, I think what we're going to see is a number of leaders still work with Trump despite some controversey. That's just the new political reality. 
PaulERainford 2/8/2017 | 9:51:00 AM
Nailed it Great piece, Iain, well argued and beautifully written. It seems, as far as telcos are concerned, pragmatism will trump transformation.
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