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SoftBank's Son leaves open question of succession

Contenders wait in wings as CEO says he isn't ready to retire

Masayoshi Son speaks during a joint announcement with Toyota Motor Corp. to make new venture to develop mobility services in Tokyo, Japan, October 4, 2018.    © AP

TOKYO -- As SoftBank Group moves closer to becoming the tech investment vehicle that founder and CEO Masayoshi Son envisions, investors face the recurring question of who will steer the company after he finally steps down.

Of the group's 1.85 trillion ($16.8 billion) operating profit for the months through December, more than 40% came from its $100 billion Vision Fund.

At an earnings conference on Wednesday, Son described the group as "no longer a business corporation but a pure holding company." This transformation was accelerated by last year's listing of the group's domestic mobile business, SoftBank Corp., on the Tokyo Stock Exchange.

The 61-year-old chief also told the conference that he wants to lead the company "at least until I'm 69." Son will then decide whether to remain CEO or confine his role to chairman, he said.

Seen as a leading candidate for chief executive is Marcelo Claure, whom Son picked as chief operating officer for his success in founding U.S. mobile phone distributor Brightstar.

 

Marcelo Claure (Photo by Naotaka Owada)

Claure moved his principal residence to Tokyo last year, fueling speculation that he is in line to succeed Son.

Entrusted with leading SoftBank-owned U.S mobile carrier Sprint, Claure has been busy negotiating a merger with rival telecom T-Mobile. At SoftBank, Claure oversees groupwide operations. Former McKinsey & Co. partner Michelle Horn, recruited by Son as chief people officer in January, reports to him.

Another potential contender is Chief Strategy Officer Katsunori Sago, a former senior executive at Goldman Sachs Japan. Sago has recruited veteran Hiroki Kimoto from Goldman Sachs to lead the newly established real asset investment unit. The move is aimed at expanding SoftBank's investment through the Vision Fund from equities to real estate, infrastructure and other targets.

Katsunori Sago

Inside SoftBank, however, some question whether Claure or Sago have what it takes to lead the group. While both Claure and Sago have executive skills, they lack Son's charisma, skeptics say.

Son built the company up from computer parts distributor and publisher into Japan's third-largest mobile phone company through an eye for deals. It was an early investor in Yahoo Japan and Chinese e-commerce leader Alibaba Group Holding.

In recent years, the Saudi-backed Vision Fund has propelled SoftBank's earnings growth, giving it the latest distinction of overtaking Toyota Motor in net profit for the first time. As of the end of December, the fund had invested a total of around $45 billion.

While the fund is led by a committee, Son serves as its very visible front man, including in dealing with Saudi Arabian Crown Prince Mohammad bin Salman.

The question of Son's successor stands as one of the biggest risks for SoftBank. As an option, the group may not be run by a single person but a team of top executives.

For Son, it may be more difficult to find a successor than the fund's next investment target.

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