This morning Softbank and Sprint did the deed, announcing a series of definitive agreements in which Softbank will invest $20.1B in Sprint while taking a 70% stake in the company. Current shareholders will own 30% of the new entity, but with some shares being bought in cash for $7.30. The deal will give Sprint’s balance sheet a major boost, giving it a much easier path forward with its current LTE buildout plans and more options when it comes to deciding how to handle Clearwire.
It has been some time since we have seen any foreign telecommunications firm make an aggressive inorganic move on US markets like this. There is still the regulatory process to go through of course, but I suspect that for the most part this will be a welcome stabilizing influence to the FCC and DOJ. Once complete, Softbank will control the #3 mobile operator in the US, but also one of the top international IP backbones.
Many expect that once this deal is closed, Sprint will move to consolidate the Clearwire assets in some form, consolidating those specturm holders under one roof. That does seem to be a likely followup.
As I mentioned last week, however, I think part of the houscleaning may involve a decision on what to do with Sprint Wireline. Do they put real money into the fiber backbone to reverse its steady decline? Or do they use it as currency in an effort to cement infrastructure alliances for future backhaul needs? The wireline business was not mentioned in today’s PR, nor has the press been looking at it either.
Softbank will make today’s deal happen via cash on hand and new debt, with no equity transaction required.
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