Thank you all for holding, ladies and gentlemen. You are currently connected to the SoftBank call, where we are live in the presentation room. You will hear silence until the presentation begins.
Good afternoon. Welcome to our global investor and media call. We will be having a presentation from Masayoshi-san, we'll be opening it up to questions over the line. Thank you very much.
Presentation. I would like to start the presentation. Today, this is one of my most happy day that I was waiting for the last 10 years. I'm very excited. Please bear with me that I'm so teared up. Transaction summary, on the page three, I'm sure you already know that we are acquiring 100% of Arm, GBP 24 billion, and 70% of the money coming from our own cash, and 30% with the bridge loan. Why bridge loan? Because we are getting proceeds from sales of Supercell from next month and GungHo also. That's why we can get the bridge loan. That this is total cash transaction to the Arm shareholders. Page five. They are synchronized on the page? I don't need to read the page, right? Price per share is 1,700 pence and all this, I think you already know.
Page six, this is a timeline, and we make announcement, scheme document will be posted in the next couple weeks. Court shareholder meeting will be done in the next several weeks, a month or two. Scheme becomes effective right after that. Rationale, you understand that Arm has a unique number one position, and it has a big market opportunity for the IoT to come. SoftBank stakeholders' impact is that we would have no equity financing this time and no change in the SoftBank dividend policy. We would maintain and going into the net debt reduction over the EBITDA. To me, this is very much my destiny, I believe, because it has started already since 1976. I was 19 years old, which is 40 years ago. I've met with one photograph, that this is the photo.
I was flipping through the magazine, I saw one page of a picture, which was so foreign. First time I ever encounter with this kind of photo. Next page I flipped, I found out that was the computer on your tips of your finger. First time I encounter with microcomputer chip as my first time in my life. It was just after the invention of the microchip. I said, "Wow, this is going to change the way mankind lives going forward, because this is going to be smarter than us. Mankind finally created something smarter than mankind, going to be." That was the 40 years ago, back in my mind. It was always sitting in my mind. Finally, today, the date has come that we announce to be the owner of the chip design company, outside of the PC, which is the Intel's world.
Pretty much, Arm is absolute number one in chip design. SoftBank has a 44% IRR on our investment. Our success on investment is, of course, Alibaba, Yahoo Inc., Yahoo! Japan. At the right timing, we made investment. We made acquisition of Vodafone Japan, so on. 44% IRR compounded over the last 18 years. I have never heard of any other company which has this level of success in terms of IRR of any private equity or any venture capital that I know. People ask me, "How, Masa, did you do that?" People tell me it was lucky incident. To me, if I can answer only one key factor, one thing in common that I always make investment is that I always make investment at the beginning of the paradigm shift. I never chase from the backward.
I always go at the front of the edge of the paradigm shift. In my last 40 years, the PC started, PC internet started, PC broadband started, mobile internet started. To me, everything was internet. The first time I start programming when I was a student at Berkeley, the computer was already connected throughout the campus. All the computer, all the terminals were already connected. We were already sending emails. We were already sharing programs between the students and the professors. To me, computer was already connected from the first time I start programming. When PC got started, PCs were not interconnected. I said, "Oh, this is just a beginning of all the computer age to come." To me, internet was so natural. Internet become broadband was so natural, broadband internet, PC internet become mobile internet was so natural.
It was all getting connected, I invest at every beginning of paradigm shift. Going forward, what will happen in the next decade? Every 10 years, the big paradigm shift come, what is the next 10 years? Next 20 years and so on. I say biggest paradigm shift that's coming is that internet is going to get connected, not just PC, not just mobile, but everything else. Everything else will be interconnected. That is Internet of Things in today's terminology. That paradigm shift is really happening from here on next 10 years big time. It's going to explode, in 20 years, 30 years, it's even going to more and more accelerate. Today, 10 device per population are having Internet of Things. That is smartphone and tablets or PCs. In 30 years from now, 1,000 devices per population is going to get all connected.
That's my view. That's a view I kept on saying the last few years. It's not just the things that people carry around. It's including the infrastructure like a streetlight or industrial goods or infrastructure and so on. Everything will be connected. I would say this will be the biggest paradigm shift. Who is the key player, core of core for that paradigm? I would say one company, that is Arm. This is why I decide to invest and acquire Arm. How many Arm-based design chips were shipped last year? It is amazing number. It is 15 billion chips around the world. As you know, the world population is only 7 billion. So 2 chips per mankind population is shipped per year last year. It is amazing number. Still, as I said, 2 chips per person.
30 years from now, I say 1,000 chips per mankind population. Everything will be connected. Cows would be connected, chickens will be connected, the sheeps will be connected, everything will be connected. It will be much more than mankind population. What is the total revenue of Arm? It's still small, very small in my view. It's just $1.5 billion, and profit is only $660 million. I say this is just the beginning of the paradigm shift. I'm not investing for the past. I'm investing for the future. This is the decision I'm making. I'm not interested in knowing or comparing what is the net income multiple am I paying. Well, when I make investment into the internet companies, I never look at the profit because most of them are not making any profit. What is the net income multiple?
It's infinite because none of them that I made investment in Alibaba or Yahoo or many other companies, even my broadband, they were all start losing money, but I invest. Arm already make money, but to me, it's still a small chunk of money because this is just the beginning of the paradigm shift that's about to come. Arm is already, though, a dominant success in mobile phone design. They have, I know, something like 95%, 97% market share of all of the smartphone out there, being shipped, have Arm-based design chips. Not just 1 chip, multiple chips. Even CPU, multiple core per chip. Arm is getting all over smartphone. Arm is being shipped to all over many, many chips inside the car. Okay. Arm will be everywhere, on every home, every offices, on the street, everywhere. What becomes more important? It's the security.
Imagine if the IoT comes, really comes to the mankind's lifestyle. Imagine every automobile become connected, and imagine all those brakes have the microcontroller in the car, and the brake is controlled with chips in the car. Imagine if 1 bad guy hack into the system and disable all of the automobiles' braking system on 1 day at the same time, globally. Every car would lose the control of the brakes. Highway will be a crisis. Every society will be in crisis. Okay. All of the airplane flying out there in the sky will be dropping down to the ground, same day, same time at 1 moment. Every plane drop down into the ground. It will be a panic all over the world. When the IoT time comes, society comes, lifestyle comes to the people, and bad guy hacking every day into all kinds of system.
Mission critical system, when that security system is broken, we have a panic. Security system becomes so important, and one of the reason why I got so excited about Arm is that they have a technology called TrustZone. TrustZone is the technology that protects the security on every IoT chips that is going to be shipped by Arm. I would say that Arm will have not just a technology, but security service as example. That's where I think SoftBank Group and Arm would have probably a lot of synergy, maybe in the future. Arm is also exponentially growing the royalty revenue because Arm keep on introducing a new technology, value-added technology, and multi-core in single chip. Per-chip royalty is growing exponential, and that will be the case going forward also, more and more. On this page 21, there are all kinds of facts.
In this one page, it has so many facts. I want you to read this, digest it, over the next few days. I'm sure you will be amazed. You will be amazed by the position of Arm. Arm has its own forecast for next five years, how big will be the shipment of Arm. Arm-based chips will be expanding from 15 billion to 71 billion. Okay? That is almost five times in five years. Okay? What other industry can you tell with confidence that is most likely to grow 5X in five years? Arm is one of the very, very few company that you can say almost with confidence that it will grow 5X in five years, but it's exponentially growing. Next five years after that, next five years after that, it will continue to grow exponentially. That's my view.
Arm has already over 85% market share in mobile computing, 15% enterprise, 25% embedded. When I say mobile computing, they include notebook PCs and so on. Total available market is so huge, okay? Mobile computing and automobile and enterprise and so on. Arm business model is unique and different from Intel. Intel's model is that they design, they make system on chip, and they make manufacturing by themselves. They are vertically integrated, one-stop for everything. That has its own merit and strength. Arm has a totally different business model and different kinds of strengths. Arm does not manufacture by themselves. They just provide the core.
The system on chip vendors, they receive the design from Arm as a core, and they can add value, like Qualcomm, like Apple, like Samsung, like Huawei, or Renesas, Freescale, NXP, Microchip, all those guys add their value-added, like a modem portion of the chip, enhanced memory, and enhanced graphic, and so on. They create one chip as if it is one big motherboard. They design system on chip, used to be one motherboard of the PC. They don't compete with Arm. Arm is not competing with system on chip vendors. The Arm gives flexibility for them to add a bunch of additional components into the chip. They finish the total design. It's like a topping, right? Arm provides vanilla chocolate, and they put the vanilla ice cream.
They put the chocolate and nuts and whipped cream and so on, and create one beautiful ice cream. They design that, and then fabrication companies, fabs, like TSMC, will do the manufacturing of them. The strength of Intel is that they can create robust, one solution, big, profitable, big scale, and so on, be dominant in PC. For IoT, there are so many different designs, so many variations. Having allowance for flexibility for System on Chip vendors to design for the automobile, design for whatever else, makes sense. Business model-wise, Arm model is more fitted to the era of IoT, that partners can add many other functionality into the chip. Arm does not need to compete and provide to the neutral position to everybody else. For the era of IoT, I think the champion will be Arm.
I totally have a shared vision with Arm management. We maintain the neutrality. We keep the global relationship, I would only support them enhance their aggressive view for the strategy. I say, "Go, go. Make more investment." Engineers are the most important part of the investment. I say, "Go hire more engineers." They don't have the factory. Engineers are the biggest foundation of the company. I say, "Go, go. Make more investment into the engineers." Anyway, I would like to make next big success for the sake of Arm, for the sake of SoftBank. Together, we create a big impact. The summary is, Arm is the mobile industry standard, Arm is the key company for the IoT, I would call today as the most historical day of SoftBank business history in the past and going forward.
Thank you very much. I would answer any questions. Please ask.
Please press star one to ask a question on the phones.
Okay. Go ahead.
The first question comes from Sachin Shah from Albert Fried. Sachin, please go ahead.
Hi. Good morning, good afternoon. Congratulations on the deal. Just want to understand, because of your growth that you see, why wouldn't this acquisition make more sense on a strategic buyer rather than yourself? I know you're premium, but just want to understand why the company is going down rather than a strategic acquirer direction.
I couldn't hear the question well. Did you hear?
I think he's asking about strategic.
Hello?
Sorry. Why don't you go ahead and repeat the question, please?
Yes. I want to understand the difference between SoftBank acquiring the company and a strategic buyer acquiring the company. Were there other potential interested parties? Why wouldn't Arm make more sense in a strategic acquirer's hands, based on your future growth rate that you were outlining? Also, just wanted to understand, the deal doesn't seem to have any antitrust. Are you expecting the deal to close maybe in the August, September timeframe? Thank you.
Sorry, there's a lot of questions there. We can't comment on strategic rationales for others, obviously. I think Masay talked about his rationale, his investment rationale at length. On your question on antitrust, we don't expect any antitrust issues. There isn't a business overlap. We're not on the same market. We don't believe this deal presents any antitrust issues. There will be information requirements in certain jurisdictions, but none that we're concerned about. There's no conditionality associated with the deal.
Okay. In regards to other parties, it was just SoftBank that you had conversations with?
Well, you're asking that question of SoftBank?
Yes. Did Arm just have conversations with SoftBank or other parties?
Well, again, that's a question for Arm, but we've obviously only had discussions with Arm.
Okay. All right. Thank you.
Okay.
The next question comes from Walt Piecyk from BTIG. Please go ahead.
Thank you. Hey, Masa. The acquisition obviously is going to cost, I think, north of $30 billion, and you've obviously sourced a lot of money from some asset sales. Should we just now rule out the possibility that SoftBank would put any incremental capital into Sprint, either as a secure lender on an equity basis? Thanks.
Well, Sprint, I have much more confidence in Sprint right now. As I said, the 1st time I decide to make investment in Sprint, my desire was to acquire T-Mobile and combine Sprint and T-Mobile and make into one company to go against AT&T or Verizon. The U.S. government did not like that idea, and we end up with only Sprint. To me, that was my mistake that I could not think that U.S. government would reject it. As a standalone company for Sprint, I lost confidence that it was going to be very tough challenge, and I even once considered selling it. Nobody wanted to buy it. Now, I am glad that I did not sell it because I think Sprint has very good future. SoftBank Mobile became the most profitable company in the world in term of EBITDA margin.
We have 54% EBITDA margin over the revenue, and we are number one in the world as a percentage of the profitability. Not only the EBITDA, but also free cash flow, we became clear number one in the world in terms of the free cash flow over the revenue. Sprint, I see the same direction. It is improving $4 billion in EBITDA in 2 years since last year and this year. It is very quickly turning around. It start making already EBIT profitable, first time in the last 10 years. I am very confident now it is going into the great position. It is also almost becoming free cash flow neutral or positive by the end of this year or beginning next year. It is turning around, and we are also helping them for the lease financing and spectrum financing and so on.
I think Sprint is becoming self-sufficient now. That's why it gives me a room to consider next big move. If it was last year, I wouldn't consider this because I had to focus turning around Sprint. Now Marcelo is running the job beautifully. I continue to design the network for Sprint, and I'm Chief Network Officer, and I will continue to do so. Sprint is becoming self-sufficient in free cash flow.
Thank you, Masa. As you know, that EBITDA growth is largely based on non-cash EBITDA from recognizing revenue from phone payment plans. I understand your confidence in the company returning to free cash flow positive, but in that journey back to positive free cash flow, can you assure SoftBank shareholders that you won't need to put additional capital into Sprint? If you do, is that capital going to come in as equity or as more unsecured debt? Excuse me, more secured debt?
Well, as I said, it is becoming free cash flow positive by the end of this year or next year. It does not even need SoftBank-
Exactly
additional funding. It is self-sufficient, why do you need to even discuss that?
Great. Thank you very much, Masa.
Most of the improvement in free cash flow is coming from cost reduction, and it's going beautifully. Marcelo is doing beautiful in terms of customer acquisition, which is going to be announced every quarter. I'm getting more and more confident about it.
Great. Thanks, and good luck.
Okay.
The next question comes from Kirk Boodry from New Street Research. Please go ahead.
Hi, Masa. I have a couple questions about synergies, whether there are any putting together SoftBank and Arm. Second, how this deal changes the relationship with some of your handset vendors like Samsung and Apple, and whether you think that would lower procurement prices for handsets.
The synergies, we would have direct and indirect synergies all around our group. Even Jack Ma called me this morning by himself and saying, "Masa, congratulations for the announcement, and I would really like to discuss about the partnership in China." Arm provides many chip design for handsets and many other products shipped in China. Alibaba has the new operating system for the smartphone. It recently surpassed the number of iPhone in terms of the shipment of Alibaba-based operating system into the smartphones. Many people did not believe that was going to come, and it actually came in very quick time frame. Also Alibaba has AliCloud. Alibaba has Alipay. When many things get Internet of Things and get connected, the payment become all automatic with Internet of Things, and Alipay would be definitely interested in partnering with that.
When everything gets connected, they are going to provide so much data into the cloud. AliCloud is one of the largest clouds in China and growing so quickly that Jack is very much excited and interested in partnering with Arm for China businesses. That is one example. SoftBank, when Internet of Things get connected to the internet, how do they get connected? The automobile, the streetlights, the cows and sheeps, they're not going to get connected through the fixed line internet. They're not going to get connected through Wi-Fi because the sheeps are running around beyond the reach of Wi-Fi. How do they get connected so that the sheep don't get lost from your truck? They are going to get connected through the mobile internet infrastructure. Who provide mobile internet infrastructure in Japan and U.S.? Well, SoftBank and Sprint.
We would, of course, have a lot of synergies with our infrastructure of the Internet networking to interconnect Internet of Things. I would say that all kinds of direct synergies and indirect synergies come throughout our groups, but this year, how much? The amount is very small. Next year, how much? Still very small. The third year, a little bit, but 10th year, it's so gigantic that you cannot even count. We become so rich, so successful, and 10 years from now, 20 years from now, 30 years from now, people will be jealous. I say the number, you talk about synergy today with the specific dollar amount, it will be very small. That's my view, but that's always how I make investment.
When I first make investment into Yahoo U.S. back 20 years ago or Alibaba 15 years ago, in those days, they were not making any money for SoftBank Group. The consolidated net income contribution was 0.01%, but I still make a significant investment with a full of passion, and this is the kind of investment I do. Okay? That's the synergy. What was the next question?
The question was whether there's any change in the relationship with Apple and Samsung in terms of handset procurement.
No, absolutely.
I mean, are there any synergies to be had?
Yeah, absolutely no change. SoftBank stay neutral to any of the Arm customers. SoftBank do not manufacture any chipset. SoftBank do not buy any chipset. SoftBank is neutral to any of those chipset vendors or final good manufacturer. We are neutral to any of them. Arm's relationship with them, SoftBank relationship with them do not change at all.
Okay. As a quick follow-up, can you tell us how much of the revenue comes from China?
At Arm?
In Arm, I think it's like 15%. I don't know, I forgot the specific number. It's not too small, it's not too large. SoftBank has basically no direct business in China, we have no regulatory hurdles that we should apply for.
Okay. Thank you very much.
Okay.
The next question comes from Simon Cooke from Insight Investment. Please go ahead.
Thanks. Three questions, if I may. Firstly, can you talk us through what the incremental debt will be, given you'll need to pay some tax on the recent disposals? Linked to that, should we expect issuance in dollars, euros or sterling in the debt market sometime soon? Secondly, can you talk us through what you mean by your ongoing commitment to reduce debt, when this deal looks like it's going to increase leverage to north of four times, and you're going to have over GBP 100 billion of debt at the group level? Lastly, can you just help to justify the GBP 24 billion investment? Do you see Arm as something that's going to be worth hundreds of billions of GBP in years to come?
I didn't get the total question, but if you are asking about the scale of the debt and so on, okay?
Yes.
Basically, 70% of this time acquisition is done by cash, internal, and then remaining 30% is a bridge loan. Next month and on, we are receiving the proceeds from the sales of Supercell and GungHo. Basically, our net debt level is not changing that much at all from before the sales of Alibaba and Supercell. If you think of before the sales of Supercell, Alibaba, and post this Arm acquisition, if you did not like the stage of before, like three months ago, two months ago, where we have not sold Alibaba's stake or Supercell's stake, we have not announced any of those, and if you are paranoid at that time already, it is the same situation at that time. If you are okay with that time, we are still okay post-Arm acquisition, because we are the same.
Also, we are adding additional free cash flow from our Japanese operation, roughly $5 billion or so, every year constantly. By that amount, we will be using that free cash flow to reduce the net debt ratio over the EBITDA. Sprint was a big burden in the past, but Sprint had its own debt, which would be supported by Sprint EBITDA. Sprint was a problem for last 10 years, even before our acquisition. They were losing money every year, last 10 years, for even at the EBIT level. This time, as a first time this year, Sprint start making a positive EBIT, and it's growing and improving every quarter. It's become free cash flow positive by the end of this year or sometime next year. Going forward, if you think about net debt over EBITDA, it's continuously improving, and I feel very comfortable.
Sometimes people ask me about, "Aren't you worried about the size of the debt?" Well, I say, "Why should I?" Because SoftBank is effectively net debt zero. Why do I say net debt zero? Because if you look at the size of our net debt, compared with the size of the public stock that we own, it's about the same, right? Our net debt of SoftBank level and the proceed that we can, if we want to. I'm not saying that I want to sell, but the size of the public stock that already we have in hand is about the same size of our net debt. Effectively, we are net debt zero, and we are generating free cash flow, roughly $5 billion level. Why should I worry about? I'm not worried about at all.
People have different point of view, and you are free to have any kind of view yourself. If you ask my view, I'm totally relaxed.
If I may add, I think from a finance perspective, in the medium term, we do want to bring our net debt down.
Yes.
We have many different things we're thinking about, which will become clear over the next few months, in terms of options we have.
Yes.
Again, I would echo Masa's view, that there is no undue concern about our degree of leverage or where we are in terms of our balance sheet flexibility.
Can I just ask two follow-ups on that? Are you saying eventually you want to get to investment grade? Secondly, should we expect any issuance as part of this deal?
I would say, my honest answer, if you want to know my honest answer, in my view, SoftBank is already investment grade, outside people put it not investment grade. That means you have a best opportunity on return of your investment in your debt. If you are a debt investor, this is the best time that you buy the debt. Because it has virtually effectively no net debt, and you have a great coupon. Which other company that you can close your eyes and ask the force, not look at the surface. Yoda said in "Star Wars," "Listen to the force." If you listen to the force, this is the best company to invest in the debt. No other company better than SoftBank or Sprint. That's my view. You are asking me my honest answer, I'm giving you my honest answer.
This is the best opportunity you have.
Sorry, just coming down from "Star Wars" down to Earth. Just to be very specific, from our perspective, the more important rating agency is the Japanese credit rating agencies, which already have us as investment grade. From our perspective, the bond market that we access the most or rely on is the Japanese bond market. There, we borrow at levels which, in a Western context, would be actually very solid investment grade in terms of the terms we achieve. That's another reason just why Masa, I think, has as much confidence as he does in our balance sheet strength.
Thanks. Just to make sure we're clear, are you going to issue any debt for this deal or not?
No immediate plans.
Thanks.
We have a 1 trillion-
Really forward to hear the full-
We have a JPY 1 trillion bridge loan from Mizuho, the rest is cash in terms of how this deal is being financed.
Thanks.
Okay. Next.
The next question comes from Jun Tanabe from JP Morgan. Please go ahead.
Hi, SoftBank. This is Jun from JP Morgan Tokyo office. Thank you. Thanks for taking my questions. I have three questions. One is on the leverage debt level. I think it's been discussed quite briefly, but before actually selling the Alibaba and also the Supercell, you've been mentioning that this funding will be targeted to deleverage the company, now it's being used for acquisition of Arm. You said that there will be no change in the net debt level. Going forward, are you targeting the deleverage on the balance sheet going still?
Your voice is very difficult to hear.
Sorry, we struggled to hear that. Do you mind repeating that a little slowly?
Yes. It's on the-
Slower
deleverage target of the-- Hello.
Your voice is breaking.
Of the balance sheet.
Your voice is breaking up.
Sorry, this is even worse.
Hello?
Yes.
Yes. It's a question regarding leverage level of the company. Are you still trying to deleverage the balance sheet regardless of this Arm deal?
Is the question, are we still trying to deleverage the balance sheet? Is that the question?
Yes.
I think I addressed that. I think in the medium term, we will continue to stay focused on increasing strategic flexibility, and we'll look for opportunities to bring down our debt levels. That's part of an ongoing effort as opposed to any immediate plan to sell assets or do anything radical.
Okay. Second question. I understand it's breaking up. In earlier in the press conference, you mentioned one of the questions was around whether the Supercell sale and Alibaba sale were targeted to fund this Arm deal, or Arm deal happened because of funding the sales that occurred first. I think SoftBank mentioned both. For me, it was a bit hard to understand. Should we think going forward, do we expect these rotational sales of investment assets? Also, do you have some more IoT or AI-related investment targets going forward?
I'm sorry. You sound as if you're on the Millennium Falcon. I'm struggling to hear that.
We cannot hear your question well.
Okay. I'll try next time then. Sorry. I'm sorry for the timing.
Why don't you text your question?
Mr. Tanabe, I'm sorry. We can hardly hear. If you do not mind.
Yes
Due to the limited time of available time, I would like to skip you this time.
Yeah. Please skip me.
Would you mind?
Yes. Thank you.
Sorry for the inconvenience.
Happy to take your questions offline separately.
Yeah, offline separately. Sorry about that.
Thank you.
Okay. Thank you.
The next comes from Maureen Chen from BIA. Please go ahead. Maureen has just disconnected. The next question comes from Brett Simpson from Arete Research. Please go ahead.
Yeah, thanks very much. Can you hear me?
Yes.
Yep.
Okay, great. Masay, in your prepared remarks, you mentioned IoT several times when discussing the strategic rationale for the deal, but you didn't talk about Arm servers, which is one of the bigger market opportunities that Arm's got over the next five or 10 years. Can you maybe give us your perspective on Arm in the server environment, particularly with regards to Intel as a competitor? Is this an area where you will accelerate investment, or is the focus on growing spend really about IoT?
Yeah. I'm sorry I did not focus today's Arm business and immediate Arm's opportunity. It is so clear that immediate Arm opportunity is like enterprise, the servers and so on. In those markets, the value per chip is so big, and Arm cost is so low, and Arm power consumption is so low compared to the competitors, so that SoftBank, we operate the data center and the cloud, and biggest cost of operation is the electricity. Arm's design, the best strength is the low power consumption and also the low-cost chips.
Arm is becoming very powerful in performance, so that the huge opportunity, in terms of profit, immediate profit gain, will come from increasing market share for the servers or enterprise or the network, equipment like Ericsson and Nokia and so on, Huawei, could be using Arm-based design chipset, including Cisco and so on, that a high value margin product. Arm has very small market share today, so big opportunity to grow the profitability, immediate future.
Maybe just a quick follow-up. You talk about IoT being a gigantic market over the next 20 or 30 years. Should we expect SoftBank to make more acquisitions in semiconductor to round off its strategy, or is Arm really the one and only investment you're going to make in this space?
Well, I would have to discuss with the management of Arm, and if the Arm management want to expand its territory, that would be a natural extension of Arm kept on acquiring small companies in the past. Arm management may suggest that they have interesting idea to expand, and I may discuss with them and entertain the opportunity to expand. I may come up with some new ideas that I also want to talk with them. We mutually discuss and decide where to grow going forward.
Okay, thank you.
The next question comes from Lee Simpson from Stifel. Please go ahead.
Great. Thanks so much. Masayoshi, you've suggested that the existing Arm model is on an exponential growth curve, in the Internet of Things, but it sounds as though you're referencing just the CPU-driven component for that IoT business. Do you have any thoughts you can share with us on the eventual value that you'll see from the Arm Mbed OS, and whether or not that informed any of the pricing that you delivered on buying Arm today?
I didn't get it.
The question is on the value of the incremental value of the IoT business and how you thought about that when you decided to pay the price you did for Arm.
Yeah. Internet of Things will provide all kinds of business opportunity, not just the design of the chip, but including the service business around it, including the security and so on. We would have a lot of ecosystem opportunity, which the SoftBank Group, together with Arm, will go after. Today, it is too early to talk about it, and even if I have some ideas, I wouldn't talk about it. I usually don't talk about next move.
Just to be clear on that service opportunity, this is really on the operating system, the Arm Mbed operating system?
Yes. Arm Mbed OS is one of the critical key to the next generation success, and I am a big fan of Arm Mbed OS.
Got you. Just being an OS in the embedded sphere, it doesn't concern you that there may be competitors in that space?
No, I'm not concerned about the competitors. Arm, it has its own challenges for the new technology, but Arm competitive position is pretty strong, and I'm very excited about the position that Arm has.
Great. Maybe just one quick follow-up, if I could Could you also just expand on future developments for IoT security on the Arm platform? Do you currently see the TrustZone technology as sufficient?
Yeah. TrustZone technology is the critical component of the security. This is where I bet a lot of my future for the upcoming value.
Great. Thank you very much.
The final question comes from Vivek Khanna from Deutsche Bank. Please go ahead.
Hello, good afternoon. Can you hear me okay?
Yes, I can hear you so far.
Okay. Thank you very much for the call. I had just a quick question with regards to the bridge financing. I think you mentioned that you still got proceeds coming in from the Supercell divestiture, and that is yet to be received. Is the intention to refinance the bridge loan with proceeds from asset divestitures, or would you consider coming to either the Japanese euro dollar bond market in order to refinance the bridge, please? Thank you very much.
We still haven't finalized those plans. Obviously, this is not a done deal yet, and in the next few months, we expect to be in a position to clarify exactly what the takeout for the bridge might be. For now, we are very comfortable in terms of where we are in terms of overall debt et cetera [inaudible]
Okay. Thank you very much.
Plan for asset sales is to be clear.
There are no further questions.
Great. Thank you very much to everyone on the call for your interest today. If there is any follow-up, please get in touch with the SoftBank IR team. Thank you for joining us.
Okay. Thank you very much.
This concludes the call, ladies and gentlemen. Thank you all for joining, and enjoy the rest of your day.