Softbank uses Sprint to enter US
Source: Agencies |
October 16, 2012, Tuesday
|
Print Edition
Print Edition
JAPANESE mobile operator Softbank Corp said it will buy about 70 percent of Sprint Nextel Corp, the third-largest US carrier, for US$20.1 billion - the most a Japanese firm has spent on an overseas acquisition.
The deal, announced by Softbank's billionaire founder and chief Masayoshi Son and Sprint CEO Dan Hesse at a packed news conference in Tokyo yesterday, gives Softbank an entry into a US market that still shows growth, while Japan's market is stagnating. It also gives Sprint the firepower to buy peers and build up its 4G network to compete better in a market dominated by AT&T and Verizon Wireless.
Analysts have long said the US telecoms industry needs consolidation, but few looked to Japan as a catalyst. Some investors worry Softbank is biting off more than it can chew.
But Son, 55, a rare risk-taker in Japan's often cautious business circles, is betting US growth can offer relief from cut-throat competition in Japan's saturated mobile market. Combined Softbank and Sprint will have 96 million users.
"It could be safe if you do nothing, and our challenge in the US is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built," he said. "But not taking this challenge will be a bigger risk."
Softbank said that as part of the deal it would buy US$3.1 billion of bonds convertible into Sprint stock at US$5.25 a share, while about 55 percent of existing Sprint shares would be exchanged for US$7.30 per share in cash, with the transactions to be completed by mid-2013.
Hesse, who will stay on as Sprint CEO, said the Softbank investment would give Sprint opportunities it hadn't had since he joined the firm in late 2007, and enable the US firm to play a bigger role in future market consolidation.
"This is pro-competitive and pro-consumer in the US because it creates a stronger No. 3," he said.
The deal, announced by Softbank's billionaire founder and chief Masayoshi Son and Sprint CEO Dan Hesse at a packed news conference in Tokyo yesterday, gives Softbank an entry into a US market that still shows growth, while Japan's market is stagnating. It also gives Sprint the firepower to buy peers and build up its 4G network to compete better in a market dominated by AT&T and Verizon Wireless.
Analysts have long said the US telecoms industry needs consolidation, but few looked to Japan as a catalyst. Some investors worry Softbank is biting off more than it can chew.
But Son, 55, a rare risk-taker in Japan's often cautious business circles, is betting US growth can offer relief from cut-throat competition in Japan's saturated mobile market. Combined Softbank and Sprint will have 96 million users.
"It could be safe if you do nothing, and our challenge in the US is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built," he said. "But not taking this challenge will be a bigger risk."
Softbank said that as part of the deal it would buy US$3.1 billion of bonds convertible into Sprint stock at US$5.25 a share, while about 55 percent of existing Sprint shares would be exchanged for US$7.30 per share in cash, with the transactions to be completed by mid-2013.
Hesse, who will stay on as Sprint CEO, said the Softbank investment would give Sprint opportunities it hadn't had since he joined the firm in late 2007, and enable the US firm to play a bigger role in future market consolidation.
"This is pro-competitive and pro-consumer in the US because it creates a stronger No. 3," he said.
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