---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 171107
conversation_id: a103d101-e2a7-4fca-a37d-3102e7147ca5
citations: 4
created: 2026-05-31 20:15:11Z
---

# What is Softbank Group’s core business franchise and the key components of its operating model?

## SoftBank Group (9984 JP) — Core Business Franchise and Operating Model

### 1. Core Business Franchise — An Investment Holding Company, Not an Operating Conglomerate

SoftBank Group Corp ("SBG") is **not** a traditional operating company; it is a **strategic investment holding company** whose core franchise is acting as a **"capital provider for the Information / AI Revolution."** Masayoshi Son has explicitly repositioned the firm with this self-definition: *"We would like to be a capital provider for the Information Revolution. That is our new definition, or new positioning... to describe SoftBank Group"* [8]. SoftBank's own NAV slides use the formal label **"investment holding company"** for the parent entity [10].

The franchise rests on three pillars:

1. **Vehicle of choice for late-stage / pre-IPO AI capital deployment** — Through the SoftBank Vision Funds (SVF1, SVF2) and Latin America Funds ("Combined Funds"), SBG aggregates capital to back disruptors with large addressable markets. As of 31 March 2025 the Combined Funds held **504 investments at $156.6B total fair value** (SVF1 $113.5B / 94 investments; SVF2 $36.6B / 303 investments; LATAM $6.5B / 107 investments) [3].
2. **Strategic chip / IP control** — ~90% ownership of **Arm Holdings**, which now has ~50% market share in cloud-CPU IP, is being augmented by the acquisitions of **Graphcore and Ampere**, framed by Son as "the second half" of SoftBank's chip platform build-out [2].
3. **Anchor stakes in mature listed assets** — SoftBank Corp (domestic telecom), T-Mobile US, Deutsche Telekom, and a now-largely-monetized Alibaba position. These provide the cash-generative ballast and collateral for the holding-company financing engine.

The firm explicitly self-identifies its **forward franchise** as becoming the **"leading platform for Artificial Super Intelligence (ASI) by 2030,"** as articulated by Masayoshi Son at the June 2025 AGM [7]. Son's framing: SoftBank has been driving the information revolution for **"45 years — from software distribution to promoting broadband, mobile internet, internet services and then getting into chip design"** [2].

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### 2. Operating Model — How the Holding Company Actually Runs

#### 2.1 The Primary KPI is NAV, Not Earnings

Unlike an operating company, SBG explicitly does **not** view net income as the most important metric. Son: *"Out of the total asset we have, less debt gives you net asset value. Also known as NAV, this is the most important indicator for us"* [9]. The company's official formula on its IR slides:

> **NAV = Equity value of holdings – Net interest-bearing debt** (SBG stand-alone basis) [10]

NAV is structurally composed of four "phases" of dominant value drivers over 25 years: Yahoo! → SoftBank Mobile → Alibaba → Vision Fund [9]. As of FY23 reporting, NAV was **¥27.8tn (+¥13.7tn YoY)** driven by Arm's IPO and stronger listed holdings, with **LTV of 8.4%** [10].

#### 2.2 LTV (Loan-to-Value) — The Risk Discipline

Because SBG operates as an investment company, it manages balance sheet risk via **LTV = Net debt / Equity value of holdings**. Son: *"another important indicator that we have to look at as an investment company is LTV... almost 90% [of holdings] is a listed companies' portfolio"* [11]. Listed-portfolio dominance is deliberate — it makes NAV mark-to-market continuously and supports asset-backed financing.

#### 2.3 Four Operating "Buckets" of the Holding Company

Per CLSA's SOTP framework, the operating model resolves into the following asset lines, each managed as a distinct value pool [6]:

| Asset Line | Role in Operating Model | Status |
|---|---|---|
| **Vision Fund (SVF1+SVF2+LatAm)** | Primary AI investment vehicle; 504 positions, $156.6B FV | Active deployment, gating on selective IPO monetisation [3] |
| **Arm Holdings (~90%)** | Strategic chip IP anchor (CLSA carries at US$131bn) | Listed; staged sell-downs fund preferred-equity repayment [4][6] |
| **SoftBank Corp (9434 JP)** | Domestic Japan telecom, cash-generative subsidiary | Listed; provides margin-loan collateral [6] |
| **T-Mobile US / Deutsche Telekom** | Legacy stakes from the Sprint sale | Listed; collateral / monetisation pool |
| **Alibaba (residual) + Others** | Legacy China internet exposure | Largely monetised via prepaid forwards / collar trades |

Adjusted parent net debt is **¥6.6tn**; CLSA applies a **30% discount to NAV** to derive its ¥10,749 SOTP target [6].

#### 2.4 The Vision Fund AI Strategy — Four Pillars

The Vision Fund's investment doctrine is articulated as four explicit AI verticals [1]:

1. **Foundational infrastructure** — datacentres and compute (e.g., the **Stargate** partnership).
2. **Cognitive models** — LLMs and reasoning (**OpenAI**, Perplexity).
3. **Robotics & hardware** — China-based players (OneX, Skilled AI).
4. **Sector-specific applications** — cybersecurity, data analytics, drug discovery, etc.

"Mega AI" anchor positions: **ByteDance, OpenAI, Databricks**. OpenAI is the marquee bet — total funded $10.4bn as of May 2025, operating under a **capped-profit arrangement** that converts to common stock; post-reorganisation SBG should hold **~12.3% equity** assuming a $30bn total commitment [5].

#### 2.5 The Financing Engine — Asset-Backed Holding-Co Finance

SBG's operating model leans heavily on the financial-engineering layer overlaid on its listed holdings. Key components (drawn from SBG's own NAV calculation methodology slides [10]):

- **Margin loans against Arm and SoftBank Corp shares** — deducted from equity value of holdings.
- **Prepaid forward contracts and collars** on Alibaba and Deutsche Telekom — these allow monetisation without outright sale.
- **Hybrid bonds (50% equity-treated)** — including USD-denominated NC10 undated hybrid notes.
- **Asset-backed Alibaba monetisation** — cumulative ¥9.8tn completed.
- **Refinancing of Arm-collateralised margin loans** — ¥1.2tn ($8.5bn).
- **Commitment line** — ¥749.5B undrawn as of March 2024 [10].

Capital recycling: At the SVF level, **Arm sell-downs** (initial $8.2bn cost basis; 25% of stake sold to SBG for $16.4bn = ~2x return) generate proceeds **staggered across four tranches, with the final $4.1bn tranche set for August 2025**. The proceeds are recycled to pay down the preferred-equity layer (currently $5bn outstanding at a 7% coupon); once repaid, **50% of future SVF gains flow to SBG** rather than servicing preferred [4].

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### 3. Strategic Re-Direction and Recent Posture

At the June 2025 AGM, SBG's strategic update reinforced the direction of travel: *"Masayoshi Son outlined a vision for Artificial Super Intelligence (ASI) and for Softbank to become the leading platform for ASI by 2030. He also noted that OpenAI could become the world's most valuable company"* [7]. CLSA frames the firm's go-forward operating thesis as: **post-Alibaba selldown, valuation is concentrated on Vision Fund + Arm + SoftBank Corp**, with OpenAI as the optionality layer [6].

---

### Summary Box — The Operating Model in One View

| Layer | Function | Key Metric |
|---|---|---|
| **Holding Company (SBG parent)** | Capital allocator / financier | NAV, LTV, parent net debt |
| **Strategic anchor stakes** | Arm, SoftBank Corp, T-Mobile, DT, residual Alibaba | Equity value of holdings |
| **Vision Funds (SVF1/2 + LatAm)** | AI venture capital deployment | Fair value, IRR, distributions |
| **Financing layer** | Margin loans, prepaid forwards, hybrids, commitment lines | Net debt / liquidity buffer |
| **Future franchise** | ASI platform by 2030 (chips + LLMs + robotics + applications) | OpenAI optionality, Arm/Graphcore/Ampere stack |

---

**Sources**

[1] Softbank Group - HC O-PF (AI vision) — CLSA (4 June 2025) — 607961216LinqAlpha.PDF
[2] Softbank Group - HC O-PF (A vision of ASI) — CLSA (27 June 2025) — 607962937LinqAlpha.PDF
[3] Softbank Group - HC O-PF (AI vision) — CLSA (4 June 2025) — 607961216LinqAlpha.PDF (Portfolio Overview as of March 31, 2025)
[4] Softbank Group - HC O-PF (AI vision) — CLSA (4 June 2025) — 607961216LinqAlpha.PDF (Arm sell-down to SBG)
[5] Softbank Group - HC O-PF (AI vision) — CLSA (4 June 2025) — 607961216LinqAlpha.PDF (OpenAI investment structure)
[6] Softbank Group - HC O-PF (A vision of ASI) — CLSA (27 June 2025) — 607962937LinqAlpha.PDF (SOTP valuation)
[7] Softbank Group - HC O-PF (A vision of ASI) — CLSA (27 June 2025) — 607962937LinqAlpha.PDF (AGM strategic update)
[8] SoftBank Group Corp. — Shareholder/Analyst Call transcript (capital-provider positioning)
[9] SoftBank Group Corp. — Shareholder/Analyst Call transcript (NAV as primary KPI)
[10] SoftBank Group Corp. — Q4 FY2023 Earnings Slides (NAV/LTV definition and asset-backed finance details)
[11] SoftBank Group Corp. — Q3 FY2022 Earnings Call (LTV discipline as investment company)

## Citations

- [8] **SoftBank Group Corp. - Shareholder/Analyst Call** · external
- [9] **SoftBank Group Corp. - Shareholder/Analyst Call** · external
- [10] **SoftBank Group Corp. Slide 1: Q4 2023 Earnings Call** · external
- [11] **Q3 2022 SoftBank Group Corp.** · external

