Sprint Reveals Buyout Talks with SoftBank

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Posted 5 years ago

Last week we revealed the intentions of German carrier Deutsche Telekom and their intended deal to merge T-Mobile USA with rivals MetroPCS. A couple of days on from that news, rumors began circulating that rival carrier Sprint was preparing a counteroffer for MetroPCS in an effort to strengthen their own market position. Yesterday, news of a completely new deal came to the fore, putting any possible merger between Sprint and MetroPCS on the back-burner.

Following a tip from an inside source, The Wall Street Journal was first to break the news that Sprint was in talks with Japanese phone and internet company SoftBank – the third largest carrier in Japan – over a possible deal that would see the Japanese buy a “significant stake” in the wireless carrier and, in turn, help the ailing Sprint compete with the likes of AT&T and Verizon by providing the finance needed for future mergers.

Exact details of how much this “significant stake” would be worth are not clear but estimates place the total figure at somewhere in the region of $12.8 billion, which will give SoftBank controlling interest in Sprint.

Other than what was published by the WSJ, not much was known about the deal until late Thursday when Sprint put out a press release confirming that talks were going ahead:

Sprint … today confirmed that it 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.”

SoftBank are currently making big moves in the Japanese carrier market following the buyout of smaller rival eAccess which took place last week for a reported $1.84 million. For Sprint, the deal will help them solidify third place in the market – a position that was put under serious threat by the reported merger of T-Mobile USA and MetroPCS. It could also give Sprint the chance to push ahead with a super merger, acquiring both T-Mobile USA and MetroPCS, although whether regulators would allow such a deal is questionable.

One thing is for sure though; Sprint’s investors are very keen on the idea of a buyout, as the carrier’s share price rose more than 13% following confirmation of the talks.

– Anthony Carter

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