M&A Announcement

Jul 18, 2016

Ladies and gentlemen, we are now going live to call where you may hear silence or background noise until the speakers begin. Ladies and gentlemen, we are now live in the presentation room for the SoftBank conference call. We will hear silence or background noise until the speakers begin. Ladies and gentlemen, you are currently connected to the SoftBank call where today's presentation will commence shortly. Thank you all for holding. The SoftBank presentation will commence shortly. Thank you all for holding, ladies and gentlemen. You are currently connected to the SoftBank call where we are live in the presentation room, and you will hear silence until the presentation begins. Good afternoon, and welcome our global investor and media call, we will be having a presentation from Masayoshi san, and then we'll be opening it up to questions over the line. Thank you very much. Okay. I would like to start the presentation. Today, I am, this is my one of my most happy day that I was waiting for last 10 years. So I'm, I'm very excited. Please, bear with me that I'm so, clear that So transaction summary, on the page 3, I'm sure you already know that we are acquiring a 100 percent of the Arm, £24,000,000,000, and 70% of the money coming from our own cash and 30% with the bridge loan. And why bridge loan? Because we we are getting proceeds from, sales of supercell from next month and downhole, also. So, that's that's why we can get the bridge loan. And, I've that this is total cash transaction to the ARM shareholder. And, page 5, they are synchronized on the page. I don't need to read the page, right? So price per share is 1700. And all this, I think you've already know. So page 6, this is a timeline, and we make announcement, scheme, document would be posted in the next, couple of weeks and, called shareholder meeting will be, done in the next several weeks, a month or 2. And scheme becomes effective right after that. So, rationale, you understand that the Arm has a unique number 1 position, and it has a big market opportunity for the, And, so SoftBank stakeholder's impact is that we would have no equity, financing this time and no change in the sovereign dividend policy And, we would, we would maintain and going into the net debt reduction over the EBITDA. So to me, this is very my destiny, I believe, because It has started already since 1976. I was nineteen years old, which is 40 years ago. I I've, met with one photograph, that this is the, this is the, photo I flipped I was flipping through the magazine and I saw one page of a picture, which was so falling. First time I ever encountered was 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 micro computer chip as my first time in my life. It was just after the invention of the microchip. And, 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. So that was the 40 years ago, and back in my mind, it was always sitting in my mind. And finally, today, the date has come that we announced to be the owner of the Chip, Design company outside of the PC, which is the intel's world, pretty much is absolute number 1 in, chip design. So SoftBank has 44% IRR on our investment. So our success on investment is, of course, Alibaba, Yahoo, US, Yahoo, Japan, at the right timing, we made investment, we made, acquisition of Boulder from Japan and so on. So 44% IRR compounded over the last 18 years. I 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. So people ask me, how matter did you do that? And people tell me it was lucky incident. But 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 chased the from the back I I always I always go at the front of the edge of the, paradigm shift. So I in my last 40 years, okay, the PC started PC internet started, PC Broadwell started, mobile internet started. Okay? So to me, everything was internet. The first time I start programming when I was a student at Barclay, the computer was already connected throughout the campus. All the computer, all the terminal were already connected. We were already sending emails. We were already sharing programs between the student and the professors. So to me, computer was already connected from the first time I start programming. So but when PC got started, PCs were not interconnected, but I said, oh, this is just a beginning of all the computer age to come. So to me, internet was so natural, and internet become broadband was so natural. And then broadband internet, PC internet become mobile internet was so natural. It was all getting connected and I invest at the every beginning of paradigm shift. Now going forward, what will happen in the next decade? Every 10 years, the big paradigm shift comes, then what is the next 10 years, okay, next 20 years and so on? I say biggest paradigm shift that's coming is the internet is going to get connected, not just PC, not just mobile, but everything else. Everything else will be interconnected. So that is internal things. In today's terminology. So that paradigm shift is really happening from here on next 10 years, big time It's going to explode. And in the 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. But in for 30 years from now, 1000 devices per population is going to get all connected. That's my view. That's the view I kept on saying that I last a few years. It's not just the things that people carry around. It's including the infrastructure like a street light or industrial goods or infrastructure. And and phone. Everything will be connected. So I would say this will be the biggest paradigm shift. And who is the key player, core of core for that part of that? I'll say one company that is up. So this is why I decide to invest and acquire So how many, chips, arm based design chips were shipped last year? It is amazing number. It is 15,000,000,000, chips around the world. So as you know, the world population is only 7,000,000,000. So 2 chips per mankind population is shipped per year last year. It is an amazing number, but still, as I said, 2 chips per person But, 30 years from now, I'd say 1000 chips per mankind population. It will be everything will be connected. Cows will be connected. Chickens will be connected. The sheets will be connected. Everything will be connected. So it will be much more than mankind's population. What is the total revenue above? It's still small, very small in my view. It's just $1,500,000,000 and, profit is only $660,000,000. But I'd say This is just the beginning of the paradigm shift. So I'm not investing for the past. I'm investing for the future. This is this is the decision I'm making. So I'm not interested in knowing or comparing what is the net income multiple am I paying? Well, when I make investments into the Internet companies, I never look at the profit because most of them, not making any profit. So what is the net income multiple? It's infinite because none of them that I've made an investment in Alibaba or Yahoo or many other companies even broke my broadband. They will all start losing money, but I invest, right? So I'm already make money But to me, it's still a small chunk of money. This is because this is just the beginning of the paradigm shift that's about to come. So ARM is already though, dominant success in mobile phone design. They have, I know something like 95%, 97% market share of all of the smartphone out there has, being shipped, has armed, based design chips not just one chip, multiple chips, even CPU, multiple core per chip, So Arm is getting, all over smartphone. Arm is being shipped to all of our many, many chips inside the car, okay? And Arm will be everywhere on every home, every offices, on the street everywhere. Then what becomes more important? It's a security. Imagine if the IoT comes, really comes to the to the MoneyLion's lifestyle, imagine every automobile become connected and imagine all those breaks has the, microcontroller, on, on, in, in the car, and brake is controlled with, chips in the car. Imagine if bad guy, one bad guy hacked into the system, and disable all of the automobiles, break breaking system on one day at the same time, globally. Every car would lose the control of the brakes. Highway will be a crisis. Every 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 one moment, every plane drop down into the ground. It will be a panic all over the world. So when the IoT time comes, society comes, lifestyle comes to the people. And bad guy, you know, hacking every day into all kinds of system, but mission critical system when when that security system is broken, we have a panic. So security system becomes so important And, one of the reason why I got so excited about Arm is that they have a technology called trustone is the technology that protects the security on every IoT chips that is going to be shipped by ARM. So I would say that the ARM will have not just the technology, but security service as an example. And, 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, in people introducing a new technology, value added technology and multi core in single chip. So, part chip loyalty is a growing explanation. 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 digested over the next, a few days, I think I'm sure you will be amazed. You will be amazed by the position of And Arm has its own, forecast for next 5 years. How big will be the shipment of Arm? Arm based chips will be expanding from $15,000,000,000 to $71,000,000,000, okay? So that is, that is, almost five times in 5 years. Okay? What other industry can you tell with the confidence that is most likely to grow 5x in 5 years. I'm one of the very, very few company that you can say almost with confidence that it will grow 5X in 5 years, but it's exponentially growing. So next 5 years after that, next 5 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 for huge okay, mobile computing and, automobile and, enterprise and so. Our business model is unique and different from Intel. Intel's model is that they design they, make system on chip and may they make manufacturing by themselves. So they are vertically integrated, one stop for everything. That has its own merit and split, but ARM has a totally different business model and different kinds of strength. So armed do not manufacture by themselves. They just provide the core. And then the chip, system on chip vendors, they received the design from Arm as a core, and they they can add value add like a Qualcomm, like Apple, like Samsung, like Huawei or, lunasys, free scale, NXP, Microchip, all those guys add their value added, like more than portion of the chip, enhanced memory, enhanced graphic, and, and 4. So they create one chip as if it is one big motherboard. So they design system on chip. Used to be one motherboard of the PC. So, then they don't, therefore, they don't compete with us. ARM is not competing competing with system on chip vendors. The ARM gives flexibility for them to add a bunch of additional components into the chip. They finished the total design it's like a topping, right? Provides vanilla chocolate and they put the vanilla ice cream. And then they put the chocolate and nuts and whipped cream and so on and create 1, beautiful, you know, ice cream. Then, they they design that and then, fab fabrication company, Pubmas, like, TSMC will do the manufacturing of them. So The strength of Intel is that they can create robust, one solution, big, profitable, big scale and so on, the dominant in PC. But for IoT, there are so many different designs. So many variations for having allowance for flexibility for system on chip vendors to design for the automobile design for whatever else. Make sense. So business model wise, ARM model is more fitted to the LR IoT so that, partners can add many other functionality into the chip. So do not need to compete and provide to the neutral position to everybody else. Therefore, for the era of IoT, I think the champion will be up. So I totally have a shared vision with Arm Management. We maintained a neutrality. We achieved a global relationship and I would only support them and enhance, their aggressive view for the strategy I say go go go. Make more investment. And engineers are the most important part of the investment. So I say go hire more engineers. They don't have the factory. So engineers are the biggest foundation of the company. So I said, go go, go, go, go, go, make more investments into the engineers. So anyway, I would like to make next big success for the sake of, for the sake of SoftBank, together, we create a big impact. So the summary is, ARM is the mobile industry standard, and, ARM is the key company for the IoT, and I would 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 The first question comes from Sachin Shah from Albit Reid. Sachin, please go ahead. Hi. Good morning. Good afternoon. Congratulations on the deal. So 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. So I know your premium, but just understand you know, why why, you know, the company is going down rather than a strategic up higher direction? I couldn't hear the question well. Did you hear? Talking about strategic direct. Sorry. Why don't you go ahead and repeat the question, please? Yes. So I want to understand, the difference between SoftBank acquiring the company and their strategic buyer acquiring the company. Did you were there other potential, you know, interested parties and why, and why, why would an arm make more sense in a strategic acquires hands, based on your future growth rate that you were kind of outlined. And also just wanted to understand, the deal doesn't seem to have any trust. So are you expecting to close maybe in the August, September timeframe? Thank you. Sorry, there's a lot of questions there. We can't comment on strategic rationale others, obviously. I think Masa 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 in the same market, so 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, and there's no conditionality associated with the deal. Okay. And so in regards to other parties, it was just SoftBank you had conversations with? Well, you're asking that question of SoftBank Yes. Did Arm just, have conversations with SoftBank or other parties? Well, we again, that's a question for but we've obviously only had discussions with Okay. The next question comes from Walt Peyc from EGIG. Please go ahead. Thank you. And Masa, the acquisition obviously is going to cost, I think, north of US30 $1,000,000,000 and you've obviously sourced a lot of money from some asset sales. Can you give us an update on, whether you believe Sprint is self funding at this point And should we just now rule out the possibility that SoftBank would put any incremental capital into Sprint either as a secured lender on an equity basis? Thanks. Well, I have much more confidence in Sprint right now. As I've had, the first time I I decide to make in 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 and T or Verizon, but the US government did not like that idea. And we end up with only spring, to me, that was, my mistake. That I could not, think that, US government will reject it. But As a standalone company for Sprint, I lost confidence that it was gonna be very tough challenge and I even once considered selling it, but 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 terms of EBITDA margin we are 44 percent, EBITDA margin over the revenue, and, we are number 1 in the world as a percentage of the profitability. And not only the EBITDA, but also free cash flow, we became, a clear number 1 in the world. In terms of the, free cash flow over the revenue. So sprint, I see the same, direction it is improving $4,000,000,000 in EBITDA in 2 years since, last year and and, this year. So it is very quickly turning around and start making, already EBIT profitable, first time in the last 10 years. So I am I am very, very, confident now, it is going into the, a great position. So it is also almost, becoming, free cash flow, neutral, I mean, neutral or positive, by the end of this year or or beginning next year. So it is panning around, and, we are also helping them for the lease financing and spectrum financing and and, so on. So, I think sprint is, self becoming self sufficient now. That's why it gives me a room to consider next big move. If I 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. But, Sprint is, becoming self sufficient in the free cash flow. Thank you, Mancha. As you know, that EBITDA growth is largely based on non cash EBITDA from recognizing revenue from phone payment plan. So And 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? And if you do, is that capital gonna come in as equity or as more unsecured debt or 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. So, it does not even need SoftBank Exactly. Additional funding. It is self sufficient for why do you need to even discuss that? Great. Thank you very much, Martha. And most of that improvement in free cash flow is coming from, cost reduction, and it's going beautifully. And Marcelo is doing beautiful in terms of, customer acquisition, which, is, going to be announced every quarter. But, I'm getting more and more confident about it. Great. Thanks. And good luck. The next question comes from Kirk Budry from New Street Research. Please go ahead. Hi, Martha. I I have a couple of questions about synergies, whether there are any putting together soft bank and armed And 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 a handset? So the synergies, we would have dialect and indirect synergies all around our group. And, even Jack Mark called me this morning by himself, and saying, Martha, congratulations for the announcement. And I would really like to discuss about the, partnership in China. So Arm provides many, you know, chip designs, 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 smartphone. Many people did not believe that was, gonna come and it actually came. In in very quick, quick time frame. So also, Alibaba has Alibaba. Alibaba has Alipay. So when, many things get internet of things and get connected, the payments become all automatic with the internet of things. And, Aripay would be definitely interested in partnering with that. When everything gets connected, they they are going to provide so much data, into the car. And AriCloud 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. So that is one example. So when when internet of things get connected to the internet, How do they get connected? The automobile, the street lights, the cars, and ships, they're not gonna get connected through the fixed line internet. They're not going to get connected through Wi Fi because the shifts are running around beyond the reach of Wi Fi. So how do they get connected? And 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 US? Well, SoftBank and Sprint. So we would, of course, have a lot of synergies with our infrastructure of the internet networking to interconnect internet of things. So 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 thirtier a little bit, but 10 year, 10th year, it's so gigantic that you cannot even count. We become so rich, so successful, and 10 years from now, 12 years from now, thirty years from, people will be jealous. But, I say the number you talk about synergy, today with a 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, back, you know, 20 years ago or, Alibaba, 15 years ago, In those days, they were not making any money for SoftBank Group. They consolidated net income contribution was 0.01%. But I still make a significant investment with a full obsession and this is the kind of investment I do. Okay? So that's the synergies. Okay. And what was the next question? Well, the question was whether there's any change in the relationship with Apple and Samsung in terms of handset procurement. I mean, are there any synergies to be had? Yeah. Absolutely. No change. So SoftBank say neutral, to any of the armed customers, SoftBank do not manufacture any chipset. SoftBank do not buy any chipset. So SoftBank is neutral. So any of the those, Chipset vendors or, final good manufacturer, we we are neutral to any of them. So armed relationship with them top line relationship with them do not change at all. Okay. And as a quick follow-up, can you tell us how much of the revenue comes from China? Headarm? I think it's it's like 15%. I don't know, specific I forgot the specific number. It's not too small. It's not too large. And, SoftBank has, no basically no dialect business in China So we have no, the regulatory hurdles that we should apply for. Okay. Thank you very much. Okay. The next question comes from Simon Cook from Insight Investment. Please go ahead. 3 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. And 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 it's going to increase leverage to 0 to 4 times and you're going to have over $100,000,000,000 of debt at the group level. And lastly, can you just helped to justify the 24,000,000,000 sterling investment. Do you see Arm is something that's going to be worth 100 of 1,000,000,000 of sterling in years to come? I I didn't get the total question, but if if you are asking about the scale of the debt and so on, Okay? So basically, 70% of this time acquisition is done by cash, internal, And then, remaining 30% is the bridge loan, but next month, and on, we are receiving the proceeds from the sales of, supercell and and downhole. So basically, our net debt weather is is not changing, that much at all, from, before before the sales of, Alibaba and Supasal. So if you think of before the sales of Supercell Alibaba and, post, this, arm acquisition, if you did not like the stage of, before, you know, like, like, 3 months ago, 2 months ago, where where we have not sold Alibaba stake, or a super sale 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 harm acquisition, because we we are the same. But also we are adding additional free cash flow from our Japanese operation, roughly $5,000,000,000 also. So every year constantly so that by that amount, we will be, you know, using that free cash flow to reduce the net debt ratio over the EBITDA. And, 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 before our even before our acquisition. They were losing money, every year, last 10 years for even at the EBIT level. But this time, as the first time this year, Sprint start making, positive EBIT, and it's growing and improving every quarter. So, it's become, free cash flow positive by theendofthisyear or sometime next year. So going forward, if you think about EBITDA, net debt over EBITDA, it's continuously improving, and, I feel very comfortable. And sometimes people ask me about until worried about the size of the debt. Well, I say, why should I? Because SoftBank is effectively net debt 0. Why do I say net debt 0? Because if you look at the size of our net debt, right, compared with the size of the public stuff that we own. It's about the same. Right? Our net debt, of the SoftBank level and, net, the proceeds that we, we can if we want to. That I'm not saying that we I wanna sell, but the size of the public spot that already we have in hand is, you know, about the same size of our net debt. So effectively, we are net debt 0 and we are generating free cash flow. Roughly $5,000,000,000 level. So why should I should I worry about? I'm not worried about it at all. But people have different point of view. And you are free to have any kind of view, yourself. But if you ask my view, I'm I'm totally relaxed. I think if I may add, I think from a finance perspective in the near in the medium term, we do want to bring our net debt down. And we have many, many different things we're thinking about, which will become care over the next few months in terms of options we have. But again, I would echo Masa's view that there's no undue concern about our degree of, of leverage of where we are in terms of our balance sheet flexibility. Can I just ask 2 follow ups on that then? Are you saying eventually you want to get to investment grade? And 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 but outside people put it not investment grade. So that means you have, a best opportunity on return of your, investment in your debt. If you are debt investor, this is the best time value by high sulfur banks. So I mean, the the debt, because it has virtually effectively no no debt, net debt, and you have a great coupon. So which other company that you can close your eyes and act the 4th. Now look at the status. The Yoda said in several asked to, you know, listen to the 4th. If you listen to the phone, 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 my honest answer, but I'm giving you my honest answer. This is the best opportunity you have. Sorry, just from coming down from Star Wars down to earth. I think the 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. And from our perspective, the bond market that we access the most or rely on is the Japanese bond market. And there, we borrow at levels which in a, in a Western context would be actually very solid investment grade in terms of the terms we achieve. So that's another reason just you know, while my side think has as much confidence as he does in our balance sheet spend. Thanks. And just to make sure we're clear, are you going to issue any debt for this deal or not? No. No immediate plan. Thanks. We have a 1,000,000,000 bridge loan from Mizuho and, and the rest is cash in terms of how the steel is being financed. The next question comes from June Tanabe from JP Morgan. Please go ahead. Joon from JP Movement Health Office. Thank you. Thanks for taking my questions. I have 3 questions. One is on the leverage level. I think it's and discuss that quickly. But before, actually selling the, Supercell. You've been mentioning that this funding was being targeted to deleverage the company. And now it's being useful acquisition alarm, you said that there will be no change in the net debt level. But going forward, are you targeting the leverage on the balance sheet going, still? Your voice is very difficult. Sorry. We struggle to hear that. Do you mind repeating that a little slowly? Yes, it's on the deliveries target of the Your voice is breaking up. Sorry. This is even worse. Yes. Yes. It's a question regarding the service level of the company. Are you still, kind of delivered the balance sheet? So 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. But that's part of an ongoing effort as a to any immediate plan to sell assets or do anything radical. Okay. 2nd question I understand. It's on early in the press conference, you mentioned, one of the questions was around whether, the supercell sales in or targeted to fund this armed deal or armed deal has to be caused funding the sales. And I think Samsung mentioned both. For me, it was a bit hard to understand. But we think going forward, do we expect the rotational sales of investment assets? And also, do you have, some more, IoT or AI related investment targets going forward? I'm sorry. How do you sound as if you're on the millennium falcon? I'm struggling to hear that. I can, we cannot hear your question well. Okay. Okay. I'll try next time then. Sorry. Why don't you why don't you fax to, Mr. Mr. Tanabe? I'm sorry to say we cannot we can hardly hear. So if you do not mind, right, to the limited time of available time. So I would like to skip you this time. Did you mind? Sorry for the inconvenience. How can you take your questions offline? Sorry about that. Thank you. Okay. Thank you. It's from Marine Chen from BIA. Please go ahead. Marine has just disconnected. The next question comes from Brett Simpson from Arete Research. Please go ahead. Yes. Thanks very much. Can you hear me? Yes. Yes. Okay, great. Martha, in your prepared remarks, You mentioned IoT several times when discussing the strategic rationale for the deal, but you didn't talk about armed servers, which is one of the bigger market opportunities that arms got over the next 5 or 10 years. Can you maybe give us your perspective on Arm in the server environment, particularly with regards intel as a competitor. And is this an area where you will accelerate investments, or is the focus on growing spend really about IoT? Yeah. I I'm sorry I did not, focus today's on business and immediate armed opportunity, it is so clear that immediate armed opportunity is like enterprise, the servers and, phone, those, 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 competitor so that, you know, SoftBank, we operate the data center and the crowd, and biggest, cost of operation is the electricity. So ARM designed the best splint is the lower power consumption and also the low cost chips. So Arm is becoming very powerful in performance, so that this huge opportunity, in terms of profit, immediate profit gain will come from, increasing market share for the farmers or enterprise or, you know, the network, equipment like, Ericsson and Nokia's 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. And 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 spend its territory, that will be a natural extension of Arm kept on acquiring small companies in the past. And ARM may, suggest ARM management may suggest that they have an interesting idea to expand and I may discuss with them and entertain the opportunity to expand. And I may come up with some new ideas, that I also want to talk with them. So 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 are you've suggested that the existing R 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. Mean, do you have any thoughts you can share with us on the eventual value, that you'll see from the ARM embed OS and whether or not that informed any of the pricing that you delivered on buying arm today. I didn't get you. The question is on the value of the incremental value of the IoT bid and how you thought about that when you decided to pay the price you did for us? Yeah. Internet of things will provide all kinds of business opportunity, not just the design of the SIP, but including the service business, around it. Improving the security and and so on. So we would have, a lot of, ecosystem opportunity which caution group, together with Arm will go after. But, 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. And just to be clear on that service opportunity, this is really on the operating system, the ARM embed operating system. Yes. Embedded operating system is one of the critical key to the next, generation, success. And I am a big fan of, ARM Embedded OS. Got you. And just being on 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 compressor. It has its own challenges for the new technology, but I'm, competitive position is, pretty strong. And I'm very, very excited about the position that I'm at. 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? Or do you currently see the trust, though, and technology as sufficient? Yes. Class 1 technology is the critical component of the, security and, this is this is where I bet a lot of my future, for the, upcoming value. The final question comes from Vivek Carnner from Deutsche Bank. Hello, good afternoon. Can you hear me okay? Yes, I can hear you. So far. Thank you very much for the call. I had 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's yet to be received. Is the intention to refinance the bridge loan with proceeds from affidavit or would you consider coming to either the Japanese euro dollar bond market in order to refinance the bridge 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. But for now, we're very comfortable in terms of where we are in terms of overall debt, etcetera, as most outside. Thank you very much. There are no further questions. Great. Thank you very much to everyone on the call for your interest today. And if there is any follow-up, Please get in touch with the SoftBank IR team. And thank you for joining us. This concludes the call ladies and gentlemen. Thank you all for joining and enjoy the rest of your day.