Softbank linked with JPY1 trillion deal for 70% of Sprint

12 Oct 2012

Japanese mobile operator Softbank Corp is looking to buy a roughly 70% stake in US mobile giant Sprint Nextel, in a deal valued at more than JPY1 trillion (USD12.78 billion). Further, according to Reuters, Softbank’s US ambitions may not end with Sprint; any transaction is likely to also include a buy-out of Sprint’s partner, WiMAX operator Clearwire, which is currently preparing to roll out a new network based on Time Division Long Term Evolution (TD-LTE) in urban areas. In addition, the news agency suggests that the Japanese firm may also aim to use Sprint as a vehicle to make a run at sought-after regional operator MetroPCS Communications. Citing a report by the Nikkei newspaper, it suggests that Softbank is eyeing a ‘two-step transaction’ that could potentially cost more than JPY2 trillion. As previously reported by TeleGeography’s CommsUpdate, last week Sprint admitted that it was in the early stages of evaluating a bid for MetroPCS, with a view to countering a recent USD1.5 billion offer from Deutsche Telekom (DT). One issue that was expected to hinder a rival bid is the breakup fee; MetroPCS is reportedly obliged to pay DT USD150 million if it backs out of the current deal, whereas the reverse breakup fee for T-Mobile is USD250 million.

In light of the takeover speculation, it has been revealed that Softbank is in talks with three major Japanese banks to borrow JPY1.8 trillion to finance its Stateside approach, despite warnings that a deal of this size could leave Softbank with ‘unacceptably high’ levels of debt. Nevertheless, sources with direct knowledge of the matter told Reuters that the carrier has been looking at breaking into the US market for months, eyeing growth beyond its stagnating home market.

For its part, Sprint Nextel has confirmed that it is currently engaged in discussions with Japan’s Softbank regarding a ‘potential substantial investment’ in the company. In a brief press statement Sprint clarified: ‘Although there can be no assurances that these discussions will result in any transaction or on what terms any transaction may occur, such a transaction could involve a change of control of Sprint. Sprint does not intend to comment further unless and until an agreement is reached’.

United States, SoftBank Group Corp, Sprint Corporation (now part of T-Mobile US)