The deal, which could come as soon as today, is expected to be structured in two parts: Softbank will provide about $8bn of new capital and acquire an additional $12bn shares from Sprint holders, the source said.
Sprint, which is the US’s third-largest carrier behind Verizon Communications and AT&T, has been struggling to keep market share over the years and faces a heavy debt burden between 2013 and 2014.
Sprint’s $2.1bn revolving credit facility expires in October 2013. The investment will help boost Sprint’s capital requirements, the source said.
Softbank’s leader Masayoshi Son, 55, is ranked by Forbes as Japan’s second-richest man. He has built the company from a small packaged software vendor in the early 1980s to a telecoms-centred group worth more than $40bn through a series of risky acquisitions.
Analysts said Son – a Japanese citizen of Korean heritage educated in California – was likely taking advantage of both a strong yen and a shake-up in a US wireless market.
Sprint and Softbank spokespeople were not immediately available for comment.