Attachment Response to Q 43 SES-T/C-20180214-00120

Attachment Response to Q 43

This document pretains to SES-T/C-20180214-00120 for Transfer of Control on a Satellite Earth Station filing.

IBFS_SESTC2018021400120_1338560

Attachment 2 to IBFS Form 312
Application for Pro Forma Transfer of Control

Response to Question No. 43 – Description of Application

PUBLIC INTEREST STATEMENT AND

DESCRIPTION OF PRO FORMA TRANSFER OF CONTROL

INTRODUCTION

Sprint Corporation (“Sprint”), on behalf of itself and its subsidiaries, seeks the consent of

the Federal Communications Commission (“Commission” or “FCC”) for a contemplated pro

forma transaction that involves licenses and authorizations for which the forbearance procedures

of 47 C.F.R. § 1.948(c)(1) do not apply. As described more fully below, SoftBank Group Corp.

(“SoftBank”), the entity that ultimately holds the majority of Sprint’s equity and voting interests,

wishes to undertake a pro forma internal restructuring. Specifically, with respect to its

intermediate and holding companies, SoftBank wishes to swap a new wholly owned subsidiary

(SoftBank Group Capital Limited) into the vertical ownership chain between it and the holding

companies in which its Sprint shares are currently held. Although this corporate reorganization

will not result in a substantial transfer of control of Sprint and its licensee subsidiaries, the

insertion of this entity into the ownership chain will result in a change in the disclosable indirect

interest holder in Sprint.

Sprint therefore seeks prior approval for those licenses and authorizations for which such

approval is required. Pursuant to the Commission’s rules, Sprint intends to file post-

consummation notifications of this pro forma restructuring for its remaining licenses and

authorizations.

DESCRIPTION OF THE PARTIES

SoftBank

SoftBank Group Corp. (“SoftBank”) is a Japanese kabushiki kaisha (corporation) and

holding company that is publicly traded on the Tokyo Stock Exchange.1 SoftBank’s subsidiaries

and affiliates are engaged in a number of information technology and Internet-related businesses,

including mobile communications, distribution of mobile devices and accessories, sales of PC

software and peripherals, semiconductor engineering for mobile devices, management of

technology investment vehicles, broadband infrastructure, fixed-line telecommunications,

Internet-based advertising and e-commerce, and web portals. In July 2013, following a waiver

by the Commission and approval by other regulatory authorities, SoftBank acquired an

approximately 78% indirect interest in the entity that is now Sprint.2 As of December 21, 2017,

SoftBank held an approximately 84.1% indirect interest in Sprint through SoftBank’s wholly

owned subsidiary SoftBank Group International GK (“GK”). GK, in turn, held a 100% interest

in Starburst I, Inc. (“Starburst”)—which itself held a 77.19% interest in Sprint—and a 100%

interest in Galaxy Investment Holdings, Inc. (“Galaxy”)—which held a 7.01% interest in Sprint.

1
The entity formerly known as Softbank Corp. has changed its name to SoftBank Group Corp.
2
The initial transactions resulting in SoftBank’s acquisition of Sprint are further described in the FCC’s
2013 Order approving the transactions. See generally In re Applications of SoftBank Corp., Starburst II,
Inc., Sprint Nextel Corp., and Clearwire Corporation, Memorandum Opinion and Order, Declaratory
Ruling, and Order on Reconsideration, 28 FCC Rcd 9642 (2013).

Altogether, therefore, SoftBank held an indirect 77.19% interest in Sprint through Starburst and a

7.01% interest through Galaxy.3

SoftBank Group Capital Limited

SoftBank Group Capital Limited (“SBGC”) is a limited company organized in the United

Kingdom. SBGC is a wholly owned direct subsidiary of SoftBank used for the purpose of

managing holdings in the technology, media, and telecommunications space, and employing

financial, operational and management professionals that play roles in SoftBank activities in the

United Kingdom and other countries.

SoftBank Group International GK

SoftBank Group International GK is a Japanese godo kaisha (limited liability company).

It is a wholly owned direct subsidiary of SoftBank. GK is an investment holding company, and

is also authorized to conduct other business, including: information provision services;

information processing services; acquiring, holding, and managing securities; advertising agency

services; and any business related to or incidental to the foregoing. Since April 2017, following

a reorganization approval by regulatory authorities, GK has held 100% of Starburst and 100% of

Galaxy.

Sprint Corporation

Sprint Corporation (“Sprint”) is a publicly traded Delaware corporation and global

communications company that, through its subsidiaries, offers a comprehensive range of wireless

3
These ownership percentages reflect SoftBank’s current ownership holdings as filed with the Securities
and Exchange Commission. See Sprint Corp., Schedule 13D (December 29, 2017),
https://www.sec.gov/Archives/edgar/data/101830/000119312517383511/d515898dsc13da.htm.

and wireline voice and data products and services to residential, business, government, and

reseller consumers throughout the United States and around the world. Sprint offers wireless

and/or wireline voice and data services in all fifty states, the District of Columbia, Puerto Rico,

and the U.S. Virgin Islands. Sprint is primarily a holding company, with most operations

conducted by its subsidiaries, including but not limited to Sprint Communications Company,

L.P., Virgin Mobile, L.P., and Sprint Spectrum, L.P.

DESCRIPTION OF THE PROPOSED TRANSACTION

On December 28, 2017, SoftBank’s Board of Directors resolved to reorganize SoftBank’s

intermediate and holding companies for the Sprint shares it controls. As part of this internal

restructuring, subject to all regulatory approvals, SoftBank intends to swap a wholly owned

subsidiary, SoftBank Group International GK for SoftBank Group Capital Limited, into the

vertical ownership chain between SoftBank and the holding companies (i.e., Starburst I and

Galaxy) in which its Sprint shares are currently held. Specifically, SoftBank intends to complete

the following two steps:

• Step 1: Galaxy Investment Holdings, Inc. (“Galaxy”) and Starburst I, Inc. (“Starburst”)

will be transferred from their current parent—SoftBank Group International GK

(“GK”)—to GK’s parent company, SoftBank, via a distribution.

• Step 2: Galaxy and Starburst will be transferred from SoftBank down to SoftBank’s

wholly owned subsidiary, SoftBank Group Capital Limited (“SBGC”), via a

contribution in kind from SoftBank to SBGC.

Diagrams showing the relevant changes to SoftBank’s corporate structure are attached

hereto.

The purpose of SoftBank’s proposed reorganization is to consolidate SoftBank’s global

investment operations through SoftBank Group Capital Limited, which will enable SoftBank to

further rationalize group management of its business and investment operations. This, in turn,

will serve the public interest by increasing efficiency in corporate operations and improving

SoftBank’s value. There will be no changes to SoftBank’s stock, or to the ultimate ownership of

SoftBank’s voting or equity interests in Sprint, as a result of the proposed transaction. Likewise,

SoftBank’s reorganization will have no impact on Sprint’s operations, ultimate ownership, or

ultimate control, and thus will be seamless for Sprint’s customers, who will receive the same

services over the same facilities following the reorganization. However, as SoftBank’s

subsidiary, Sprint will ultimately benefit from the increased efficiency and improved

management synergies effected by the restructuring. As a result of reorganizing in a way that

improves its value, SoftBank will be better positioned to manage and invest in Sprint’s

operations over the long term. Moreover, because the transaction is pro forma in nature,

involving no change in substantial control over Sprint, it falls presumptively within the public

interest.4

4
See Federal Communications Bar Association’s Petition for Forbearance From Section
310(d) of the Communications Act Regarding Non-Substantial Assignments of Wireless Licenses and
Transfers of Control Involving Telecommunications Carriers and Personal Communications Industry
Association’s Broadband Personal Communications Services Alliance’s Petition for Forbearance for
Broadband Personal Communications Services, Memorandum Opinion and Order, 13 FCC Rcd 6293, ¶¶
8, 18 (1998).

Document Created: 2018-02-14 11:19:13
Document Modified: 2018-02-14 11:19:13

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