SoftBank’s Strategic Investment in Cubic Telecom

@SoftBank Corp has announced a substantial investment of approximately 473 million euros ($514 million) to acquire a 51% equity stake in Cubic Telecom, a Dublin-based connected-vehicle technology provider. The move is aimed at providing Cubic Telecom with increased access to the Asian automotive market, setting the stage for a strategic global partnership between the Japanese telecommunications arm of SoftBank Group and Cubic.

The collaboration between SoftBank and Cubic is geared towards pioneering the future of software-defined connected vehicles. As part of the deal, Cubic Telecom’s valuation has soared to over 900 million euros. SoftBank Corp CEO Junichi Miyakawa emphasized the significance of the partnership in line with their ‘Beyond Japan’ strategic growth initiative, expressing excitement about entering the rapidly growing market for connectivity.

Barry Napier will continue to serve as CEO and a board member of Cubic Telecom post the investment’s closure. However, SoftBank will secure three seats on the board, while existing shareholders, including Volkswagen’s software unit Cariad and Qualcomm, will retain three seats.

The automotive industry is witnessing a transformative shift, with an increasing number of vehicles becoming connected. This trend is expected to accelerate with the rise of electric vehicles (EVs), often referred to as “computers on wheels.” McKinsey & Co has projected that 95% of new vehicles globally will be connected by 2030. The advent of EVs has given rise to the term “software-defined vehicle,” enabling automakers to upgrade vehicles wirelessly.

Cubic Telecom’s software plays a crucial role in this ecosystem, acting as a pipeline for in-vehicle services and providing access to mobile networks in 190 countries. This connectivity facilitates features like infotainment and allows automakers to gather data on feature usage, enabling them to tailor future offerings accordingly.

Barry Napier highlighted Cubic’s capability to update vehicles from the production line throughout their lifetime, emphasizing the flexibility to update vehicles at various stages, including during transportation.

The SoftBank-Cubic partnership is seen as a strategic move for Cubic to gain entry into the Asian market, where SoftBank’s influence and network will be instrumental. The deal is SoftBank Corp’s largest overseas investment since its public listing in 2018 and aligns with the company’s goal to explore opportunities in the broader SoftBank group.

The deal is expected to close in the first half of 2024, with Jefferies acting as the lead financial adviser to Cubic and PJT Partners serving as the lead financial adviser to SoftBank. As the automotive industry continues to evolve towards greater connectivity, this strategic investment positions SoftBank Corp and Cubic Telecom at the forefront of shaping the future of connected vehicles.