SoftBank Corp. and Cubic Telecom Ltd. announced they signed a definitive agreement whereby SoftBank will invest approximately 473 million EUR in Cubic Telecom for a 51.0% equity stake in the company, at a valuation of over 900 million EUR. SoftBank and Cubic Telecom will form a strategic global partnership to pioneer the future of software-defined connected vehicles and other high-value Internet-of-Things (IoT) assets by harnessing the power of global connectivity platforms. This partnership is made possible with the investment. Cubic Telecom is a leading global provider of connectivity solutions to automotive, transportation, and agriculture original equipment manufacturers (OEMs). According to McKinsey & Company, 95% of new vehicles sold globally will be connected by 2030. Connected car use cases alone could deliver 250 billion USD to 400 billion USD in annual incremental value for the ecosystem. Cubic Telecom is ready to dominate this rapidly growing market.
After the investment closes, Barry Napier will continue to lead Cubic Telecom as CEO and Board Member, and Daichi Nozaki, SoftBank’s Senior Vice President responsible for its global business, and two other SoftBank appointees will join Cubic Telecom’s Board. Cubic Telecom’s existing shareholders, including CARIAD (Volkswagen Group) and Qualcomm, will continue to hold three Board seats. With the close of the investment, Cubic Telecom will become a consolidated subsidiary of SoftBank.
Cubic Telecom’s Platform for Application & Connectivity Enablement (PACE) is a testament to the shift towards software-defined solutions. It marks a departure from the legacy of hardware. The platform allows OEMs to monitor, manage, and update many aspects of a vehicle or device in real-time, globally, via mobile connectivity. This implies that manufacturers can customize vehicles to meet the requirements of a country or region. They can do so while adhering to various regulatory mandates. Vehicles and devices can receive new features and functionality over-the-air (OTA) throughout their lifetime. This improves performance, safety, comfort, and value to ensure the best user experience.
Cubic Telecom experienced rapid growth after it launched its industry-first connectivity platform in 2016. The company currently connects more than 17 million vehicles in over 190 countries and regions through agreements with more than 90 mobile network operators (MNOs). It increases its vehicle count by 450,000 each month, and experts anticipate a significant exponential growth in this number over the next 5 years.
Junichi Miyakawa, President & CEO of SoftBank Corp., commented, “In line with our ‘Beyond Japan’ strategic growth initiative, we are extremely pleased to be teaming up with Cubic Telecom. This partnership also aims to make a full-fledged entry into the fast-growing market for high-value IoT asset connectivity. Cubic Telecom’s global leadership position convinces us that it is the best partner for this opportunity. Moreover, we look forward to building connectivity platforms for next-generation social infrastructure.”
“Today’s announcement marks a significant milestone for our team and stakeholders. We’re excited to partner with SoftBank to pioneer the future of software-defined connectivity,” said Barry Napier, CEO at Cubic Telecom. “The focus on software rather than hardware means manufacturers can increase the value of a vehicle or device by adding new functionality over-the-air. This improvement will enhance safety, comfort, and performance. This, alongside the opportunity AI presents, will open up new collaborations and business models. The opportunities ahead of us are endless.”
Cubic Telecom enables the world’s major automotive, transportation and agriculture OEMs to accelerate digital transformation and better leverage software-defined technologies. The company is developing cutting-edge services that leverage its platform’s powerful analytics. Furthermore, as cellular vehicle-to-everything (C-V2X) connectivity continues to be transformative, the partnership between SoftBank and Cubic Telecom will play a leading global role in developing new services and accelerating innovation.
SoftBank has been providing global IoT connectivity services, mainly in Asia-Pacific markets. In this new strategic partnership with industry leader Cubic Telecom, SoftBank will be able to make a full-fledged entry into the rapidly growing IoT markets for connected cars and software-defined vehicles. This will also give SoftBank access to new revenue-generating opportunities. By collaborating with SoftBank, which has an extensive customer base in Japan and other Asia-Pacific countries and regions, Cubic Telecom will gain access to new sales channels to further build on its market leadership position. SoftBank and Cubic Telecom will explore ways to generate synergies and develop new services. This includes utilizing satellite and stratospheric-based Non-Terrestrial Network (NTN)-based solutions. These solutions seamlessly connect vehicles and IoT devices in areas that traditional ground-based networks cannot reach.
The investment is subject to regulatory approvals in various jurisdictions and other customary closing conditions. Moreover, it is expected to close in the first half of 2024.
In connection with the transaction, Jefferies (as lead financial adviser) and EY Corporate Finance provided advice to Cubic Telecom. Davis Polk LLP and Arthur Cox LLP acted as legal advisers to Cubic Telecom. PJT Partners acted as lead financial adviser to SoftBank. Herbert Smith Freehills and William Fry acted as legal advisers to SoftBank. PwC acted as Financial, Tax, HR, Cyber, Privacy and PPA advisor to SoftBank. KPMG Ireland and Trasna Corporate Finance also provided advice to Cubic Telecom in connection with the transaction.
