Update 10/15: Via the Sprint Newsroom
Sprint and SoftBank came to a deal regarding Sprint’s buyout. SoftBank will obtain a 70% stake in Sprint though a $20.1 billion purchase. $12.1 billion will go directly to shareholders, who will continue to have a 30% stake in Sprint. The remaining $8 billion will go directly towards capital for Sprint to use for building out their network.
A new wholly-owned subsidiary will created known as New Sprint, from which Sprint as we know it will operate as. Sprint will remain in Overland KS and Dan Hesse will remain CEO of New Sprint. Regarding the acquisition Hesse stated,
“This is a transformative transaction for Sprint that creates immediate value for our stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward. Our management team is excited to work with SoftBank to learn from their successful deployment of LTE in Japan as we build out our advanced LTE network, improve the customer experience and continue the turnaround of our operations.”
The deal does not specify anything regarding Clearwire, who is owned slightly under 50% by Sprint (Sprint lost their majority stake in June) other than to honor prior obligations and continue business as normal. Both the boards of Sprint and SoftBank have approved the deal, it still requires approval from Sprint stockholders and U.S. regulators, specifically the FCC. If all goes as planned though, the deal should become official in the middle of next year (2013).
Originally posted on 10/12:
Wow, I didn’t see this one coming, no joke. Japan’s third biggest carrier, Softbank is in talks with the U.S.’ third largest carrier, Sprint for a buyout. Softbank wants to acquire two-thirds of Sprint Nextel’s stock for a whopping $19.2 billion.
What could a carrier from the other side of the globe see in a U.S. carrier? Well, Softbank sees this buyout as an opportunity to increase its global presence. It’s also a way for Softbank to purchase equipment and devices at a lower per unit cost by utilizing Sprint’s massive size and pre-existing relationship with various manufacturers.
Sprint commented on this news and confirmed that it is in fact true:
Sprint is currently engaged in discussions with Softbank regarding a potential substantial investment by Softbank in Sprint. 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.
As a Sprint customer, I have high hopes. Sprint is notorious for problems such as the Nextel merger failure, quick WiMax adoption then handoff to pre-paid subsidiaries, LightSquared falling out, and betting the farm on the iPhone. If Softbank is at the reigns, maybe they can mitigate future problems that Sprint will surely encounter by making better decisions. I digress, this jolt of cash combined with Sprint’s current $7 billion cash on hand could bring Sprint almost into the black; they’d be just shy of the $21 billion debt they’re currently in. If this goes down and actually happens, Sprint’s LTE rollout could be put on steroids and there could even be a larger-than-normal selection of devices available to customers in the future. Number four carrier, T-Mobile’s adoption of unlimited data solidified Sprint’s need to stay unlimited, so I don’t see Sprint dropping this anytime soon whether they are bought out or not. It’ll be interesting what happens. Let us know your thoughts.