(Update: Confirmed) Report: SoftBank To Buy 70 Percent Stake In Sprint Nextel Corp

Update: SoftBank, Sprint held a press conference early this morning to officially announce the acquisition. 

With reports surfacing right before the end of the week that Japan’s third largest wireless provider was interested in purchasing a controlling share in Sprint Nextel Corp, comes reports that a deal has been reached between the two companies. A CNBC report says that a deal is expected to be announced as early as tomorrow morning, and though there are still some details that will remain up in the air, the companies have agreed to terms in principle.

The transaction will call for SoftBank to buy $8 billion shares of Sprint and buy another $12 billion worth of shares from existing holders at a price of $7.30 a share. Given the structure of the deal, it will not require a shareholder vote. The deal also includes a $3 billion convertible bond purchase that is exercisable at $5.25 a share and will be sold before the deal closes to provide Sprint with funds.

The deal itself is a huge undertaking for SoftBank as they make what amounts to a $20 billion gamble, hoping the use of Sprint’s spectrum position and further industry consolidation will boost the company’s margins. The two companies hope to close the deal within six months.

There are some reasons we’re particularly interested in this deal on TmoNews and T-Mobile fans should be paying attention as well. For one, this deal is likely to cut Sprint as a potential bidding competitor for MetroPCS. It also eliminates the chances that had Sprint ultimately decided not to bid or lost a bidding war, that it would oppose the deal with regulators. One of the “outside” reasons we’re keeping a sharp eye on Sprint’s workings with SoftBank is that some speculate SoftBank is gobbling up Sprint with the hopes of picking up more US wireless carriers in the future (even as the FCC says they want four national carriers), which could include a T-Mobile acquisition making a true third competitor to AT&T and Verizon. It may seem like a long-shot, but a number of analysts who say the potential for such a transaction is there, even if it takes years to carry out. Food for thought at least.

CNBC

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  • D Velasquez

    if the new company ends up been called SoftBank then that should be reason enough to switch from T-Mobile at least for me. in the case this takes approval and it consolidates as a company will the new SoftBank/Sprint bring the white plan SoftBank offers in Japan? better , will they bring FeliCa??

    • Anonymous

      they are not merger or changing names. same company same ceo. sprint corporate sat on the majority of their own stocks, over time they bought back a lot of their own stocks, and own will be selling them to Softbank for a burst of cash flow. Softbank will have future stakes in the profit of sprint meaning japan will be gaining. kind of like selling your sole to the devil. i really don’t see what sprint gets out of this except survival mode to not allow T Mobile to surpass them. ” the nos button has been pressed for both companies, DT a bit too early like fast and the furious film”

      this news kind of worries me because the latest news
      Shareholders of MetroPCS have a class action to sue to block the merger, stating some pretty bold facts about a loss for the shareholders and all gain for DT.
      Its all up hill from here, now Softbank and Sprint close their deal to infuse sprint with Billions they didn’t have to spend on a counter offer for MetroPCS and Clearwire. Sprint CEO Daniel R. Hess just dropped his draws, bent his knees and squatted, made a bunch of funny faces and defecated all over John J Legere Brighter future proof plan 2015 T MOBILE INC #3 spot. If you thought Germans and Japanese were allies, times are changing in this cut throat game. hopefully the “M nuke” doesn’t to blow up in our faces.

  • Wasserstein

    This move if anything strengthens Sprint position to bid for metro pcs, not sure why you think it’s less probable because of it.

    • http://tmonews.com David

      I don’t think the government would improve the purchase of Sprint by SoftBank and then another immediate merger of MetroPCS by Sprint.

      • SouthernBlackNerd

        The FCC/DOJ want a more competition for the Big Two, so they do not bully customers. Softbank buying sprint does not change anything, but who owns the company. I doubt they really care, especially since Vodafone owns 45% of verizon wireless and Tmobile is still a german company. They probably see SoftBank buying sprint as a positive, because of their history of trying to shake up the market through innovation of pricing and improved customer service.

        I do think the FCC/DOJ would rather Tmobile get Metro, but I believe they would approve a Metro/Sprint, since sprint would likely sell the AWS spectrum to Tmobile as a concession anyways.

      • archerian

        could be why Sprint’s board declined to make a counter offer to DT’s offer for MetroPCS recently.

    • philyew

      How is that to be sequenced? Unless the emerging reports of MetroPCS shareholder lawsuits against the TM deal are true, and they lead to an extended delay in the TM/MetroPCS decision process, how will Softbank acquire Sprint in time to influence the decision process over MetroPCS’ future?

      I doubt that the process will lend itself to having the acquisition of Sprint going on while Sprint is in turn acquiring MetroPCS.

  • ceegii63

    somehere in DT HQ they are probably grinding their teeth saying “WHY THE HELL DIDN’T THEY JUST BUY TMOBILE FROM US!?!?!”

    • UMA_Fan

      DT isn’t stupid. I’m sure they explored that option along with other buyers. It all comes down to what’s in it for DT… People ALWAYS forget the at&t deal would have given DT 12% of the combined company ALONG with $39 billion. They would have become the most powerful telecom in Europe. Another giant swooping in to take T-Mobile USA off DT’s hands doesn’t do much for DT. I don’t think they would cut their value and worth for cash. Remember T-Mobile USA is 25% of DT. That’s pretty substantial.

      • TayshaunBoba

        Totally agree. I would not be surprised at all if Deutsche Telekom was already approached by SoftBank and ended up declining their offer in favor of merging with MetroPCS. It makes me wonder if perhaps DT really is now actually committed to their U.S. unit.

        • unknown

          No they are not committed to the u.s. the merger with metro pcs is a way for dt to exit the u.s.

        • jay_max

          That’s a possibility, but truly speculation at this point.

        • Whitney

          No not really since the whole point of them selling T-mobile to AT&T was a way for them get out of US market.

        • FactChecker

          Hmm….you should read up on the MetroPCS deal before commenting. DT is still going to hold approx 74% of the shares of the combined company in the end. They are re-committed to their U.S. unit and investing heavily to stabilize the company.

        • TayshaunBoba

          It certainly opens up the possibility of them exiting should things go even further south, but I don’t think it means they are exiting any time soon. T-Mo’s one of their most profitable units and, at least in the short term, they are not going to be looking to get rid of that. If they chose to sometime in the future, they could sell off their stock and exit, but even that would likely be a very gradual process taking years to complete.

      • archerian

        The terms of the merger were TOTAL $39B, that was $25B in cash and 8% of ATT stock. Vodafone would still be number 1.

      • BigMixxx

        12% per year from now on. 12% percent per year from NOW on. That would have been free money in the amount of what they were profiting from T mobile…

    • loueradun

      Exactly what I was thinking.

    • archerian

      Softbank uses LTE-TDD which Sprint will move to in a few years via Clearwire spectrum, T-mo uses LTE-FDD. Clearwire spectrum alone is worth at least $10B

    • jayjaymob

      they WILL buy tmobile, after sprint, and DT knows that.

  • c.cole

    Hey David could something like this happen once T-Mobile goes public perhaps At&t buying majority share of T-Mobile???

  • UMA_Fan

    Hopefully we’ll see the general public see this as ‘bad’ press for Sprint and we’ll see some of those customers jump to T-Mobile similarly as customers left during the pending at&t deal.

    Does anyone know how this deal would affect Sprint when it comes to the amount of money they can throw around? Is it all going to be Softbank now throwing money at their US branch for handset deals and network update. One of the big reasons Sprint lagged in WiMax deployment was money. Sprints lack of funds a net financial losses were always something T-Mobile could point to to look better. Would the new Sprint kill T-Mobile in the market by simply throwing money at it now via Softbank?

    • SouthernBlackNerd

      Wimax lagged, because Clearwire wanted to go retail, instead of being purely a wholesaler, which is what sprint wanted. Sprint had nothing to do with Wimax rollout.

      SoftBank is buying 8 billion shares directly from Sprint, so that could go to speeding up their LTE rollout or even a future merger/acquisition. They are getting 3 Billion( of the 8 billion) to buy Clearwire. I have read that buying clearwire is a requirement of the deal. SoftBank is known for its willingness to look long term, so they could take some losses early to get customers to switch. Maybe lower their prices or New features.

      Sprint could become a contender with the big two. The original Network Vision plan was to have 2.5ghz on every tower instead of used as hotspots. If they go back to that plan, they could beat Tmobile to the punch for 20×20 LTE, and take the claim of Fastest LTE network. Lets not forget that they have their 800mhz, which will greatly improve their in building coverage. I doubt they kill Tmobile, but I do think both will knock ATT and their lte network down a peg or two.

      • http://www.facebook.com/DSwagg09 Dion Mac

        @ChadBroChillz:disqus Somebody responding to this chain mention clearwire is worth about $10B which I kind of agree with. Where did $3 billion come from?

        • SouthernBlackNerd

          Clearwire’s market cap is only 3.38billion, plus Sprint already owns 48% of the company. Giving them 3 Billion would basically be giving the rest of the owners 200% their current market value. SeekingAlpha had the spectrum valued at 11.96 Billion, but the problem is that Sprint has right of first refusal. A buying could not just come in and buy Clearwire without Sprint’s approval, which we known would never happen.

  • 21stNow

    I’m surprised we haven’t heard from Carlos Slim by now. I would think he’d want a larger slice of the (U.S) American pie than what Net10 is giving him.

    • jon

      He’s too busy handing out “Obama phones” and trying to influence our election by donating millions to the Obama campaign.

      • DrScope

        Bingo!

      • jon

        What’s with the thumbs down people? I simply stated a fact. Slim, the world’s richest man, is capitalizing on the plight of the poor. Worse still, is the fact the his company is donating to the Obama campaign so the gravy train continues. All of you need to educate yourselves to see politicians are all the same. Obama is not friend to the poor. The original intent on the “free phone” program; started by President Reagan, was to provide the poor with access to a phone for the purposes of finding job prospects and to use for emergency services. This program is now being perverted into “Obama is hookin’ me up with free stuff so I’m going to vote for him because I want more free stuff.”. All the while Slim is getting his pockets lined. Open your eyes, Obama is not the 99%. He is the 1% just like Slim! End of rant…carry on.

        • Gouv

          Interesting you mention that. There seems to be a belief that wealthy liberals seem to have the best interests of the poor at heart when really they are just like the rich capitalists they pretend to be against. No one seems to want to believe that this guy is raping in profits at the cost and exploitation of someone. Also, Obama is like you say part of the 1%. I started to realize that when i realized he was just a glorified bankers lap dog. I don’t think we’ll ever have a true hero president.

        • jon

          I don’t have beef with authentic FREE MARKET capitalism. The problem is government controlled CRONY capitalism. Obama, like his counterparts with a “R” by their name, use money to buy votes and make their rich friends richer. This is just one simple example of a chronic problem. It hurts the very people he claims he wants to help. And these uneducated dopes are caught… hook, line and sinker.

        • Gouv

          No beef with that. I likely have similar viewpoints on the overall from the looks of it. I was just expressing my thoughts on the exploitation of suckers.

        • Mirad77

          What has Soft bank buying Sprint got to do with Carlos Slim and Obama campaign? There are political blogs out there for whiners like you both. We’re not here discussing the political moves behind the subject matter but how it may affect us Tmo customers ( that is if you both are even part of Tmo).

        • jon

          Lol. My wife has worked for tmob for 12 years. She was a voicestream original. Yes, I’m sorry politics entered the discussion. But if you don’t think Carlos Slim and that portion of your cell phone bill that says “Universal Access Fee” doesn’t affect you and the cell company you love so much, you’re as blind as the rest. Moochers, free loaders, politicians and the one man that could buy T-Mobile at the drop of a hat are all important things to educate yourself on.

        • Gouv

          You are the only Whiney douche that’s actually whining about what you percieve is whining.

  • BigMixxx

    So they announce this tomorrow.

    Sprint will have 70% ownership by a foreign company. How will this affect their Government contracts?

  • http://www.facebook.com/DSwagg09 Dion Mac

    UGH! This proposed deal makes me a lil nervous. I was definitely thinking that T-Mobile was headed to total global domination LOL. But now, Sprint has me a lil on edge.

    Background on me. I use to work for both companies. Sprint first in 04, and Tmo 05 – 11. SPrint laid me off, Tmo fired me a mist the at&t scandal. Despite being fired after 6 and a half long years, I still believe that Tmo is a great company and Im rooting(sp?) for them. Goodluck TMOB!

    • Gouv

      lol you don’t work for them anymore so why the nerves? Competition is healthy!

  • WirelessRefugee

    Well I know you all think I’m stupid for saying so, but as I have been saying since 2010, the U.S. market is shifting to prepaid. The U.S. wireless industry will “morph” into two segments, prepaid and business.

    The smart carriers are grabbing up prepaid while the getting is good. There’s a reason why the world’s richest man controls all of South America’s wireless and he is making big moves into the U.S., Carlos Slim.

    Sprint snagged a number of prepaid companies and hiked up its purchase price.

    Verizon will become the business carrier and tag along its employees with private accounts, such as family plans.

    AT&T, they are going into the dumper and no one will want to do business with them.

    If T-Mobile is smart they will continue with the prepaid advance.

    Over and out and back to my hovel.

    • Gouv

      We only think you’re half stupid because your explanations are reasonable but negatively impacted by your subjective reasoning. So you aren’t dumb and i actually think you’re probably intelligent, just overly insistent and consumed by prepaid for what ever reason lol.

      Also, what’s with you and the larger two carriers in particular at&t? would you hate verizon as much if they were a GSM based carrier as well? You make these trollish predictions about tmo’s larger and more successful and more profitable competitors. This almost seems personal, is it? And lets face it, you don’t have a hovel, it’s really just a fancy chicken coop!

  • Gouv

    Interesting, suddenly 2 dying underdog carriers now have a future all withing the same month.

  • http://twitter.com/YepiimGS_Blanco Jay J. Blanco

    Softbank is making a biggggg mistakeeeeee. But we’ll see what happens in th long run.

    • Whitney

      Why are they making a big mistake? Sprint needs bad and it could help them roll out their LTE faster

  • TMoFan

    Funny that DT is looking for an escape hatch, and SoftBank is looking for a way to get in (and found one). This helps prop up Sprint and puts it in a nice position to grow. This will be interesting to follow.

  • philly8

    A company from Japan is going to bring some crazy phones over here! That’s what i’m thinking, also I think that they are going to run Sprint like a bank which equals lots of fees.

    • bleeew

      They are going to be AT&T #2, crippled network, high price.

    • OnlineRefugee

      Interestingly, I believe that Softbank brought the iPhone to Japan. No small feat considering how protectionist Japan is.

  • umad

    Good and bad news for DT

    Good news for DT: This acquisition by Softbank will not speed up LTE Deployment.
    Source: http://www.lightreading.com/document.asp?doc_id=225940&

    Bad news for DT: Sprint (now evil) may disrupt the T-mo/Metro merger with money from sugar daddy cuz Sprint, just whiny spoiled brat, wants everything even though they don’t care about its network being crippled.

    • bleeew

      They don’t want to be 4TH place, and they don’t want AT&T and Verizon to screw customers.

  • bleeew

    Why don’t T-Mobile and Sprint help each other out? Its a win win, once LTE is rolled out, and they won’t have to pay AT&T and Verizon a penny, if they stick together. But then, there will probably be more money comming from AT&T from roaming.