SoftBank Group rebutted a claim by Elon Musk, chief executive of Tesla and SpaceX, that the company was in default, calling it unfounded.

An IT media outlet reported on the 10th that SoftBank Group said at an earnings briefing that it would push ahead with its artificial intelligence (AI) infrastructure investment plan on its existing schedule.

The controversy began after Musk posted on X, formerly Twitter, on the 6th suggesting SoftBank Group was in default related to turbine orders. Turbines are equipment used in power generation facilities that supply electricity to data centers. Yoshimitsu Goto (고토 요시미쓰), SoftBank Group's chief financial officer, said the claim was "completely unfounded" and that he did not know the intent behind the post. He added, "We are not in default," and stressed that the AI infrastructure plan would proceed as scheduled.

There were also changes in financial indicators. SoftBank Group's net asset value (NAV), a key metric, stood at 59.8 trillion yen at the end of September, but was estimated to fall to 44.7 trillion yen as of Nov. 9 after reflecting the share price and exchange rate. It said its loan-to-value ratio (LTV), the ratio of borrowings to the value of assets held, remained well below the 25 percent ceiling set by the company.

Asked whether it would shift to a more conservative investment stance given the NAV decline and the possibility of an LTV rise, Goto said it was not an environment to aggressively expand investment and that caution was natural. He said SoftBank Group would adjust the pace of investment to keep the LTV within 25 percent while continuing preparations for its AI business over the mid to long term.

Concerns were also raised about a funding circulation structure among AI companies. The structure involves SoftBank Group investing in OpenAI, OpenAI leasing data centers from affiliate SB Energy, and Nvidia supporting OpenAI's credit. Goto said lenders focus on who ultimately repays the funds, and that the key was the credit strength of mega-cap IT companies. He said their credit strength is much higher than SoftBank Group's, leading fund providers to assess the risk as low.

The possibility of delays in U.S. data center projects was also mentioned. Goto acknowledged that changes in U.S. government policy and other factors could mean it takes longer across the industry to push projects forward. He said this was one of several possibilities, and that if delays occur, the company would respond by adjusting the schedule again. He said it was addressing local community concerns about electricity rates and water use through the development of its own power generation facilities and water reuse. He also cited a case in Milam County, Texas, where it developed a 900-megawatt (MW) power generation facility comparable in scale to a data center under construction.

Earnings pressure was heavy. SoftBank Group posted a net loss of 1.1153 trillion yen for its July-September second quarter. A main reason was the reflection of about 600 billion yen in losses after reviewing its plan to procure power generation-related facilities for U.S. data centers.

SoftBank Group forecast that once OpenAI's new fundraising is completed and its valuation is fixed at a higher level, it could have a positive impact on NAV and other indicators for October-December. It said it would maintain its direction of AI infrastructure investment despite near-term earnings pressure and the possibility of business delays.

"@KatieMiller SoftBank is defaulting on their turbine orders"