Softbank seals Sprint buyout in record for Japan

JAPANESE telecoms giant Softbank confirmed yesterday it will buy a majority stake in US mobile operator Sprint Nextel in the biggest ever overseas investment from a Japanese firm.

Softbank will acquire 70 per cent of the US’s third-biggest mobile operator for $20.1bn (£12.5bn), the firm’s billionaire head Masoyashi Son announced in Tokyo yesterday, standing alongside Dan Hesse, Sprint’s chief executive.

Hesse welcomed the deal, saying: “This is pro-competitive and pro-consumer in the US because it creates a stronger number three... it competes with the duopoly of AT&T and Verizon.”

However, Tokyo was less impressed, sending Softbank shares down 5.3 per cent on fears the company may have overpaid for Sprint.

The deal will plough $8bn directly into Sprint in new shares and convertible bonds, with 55 per cent of current shares sold for the remaining $12.1bn. Analysts suggested Sprint’s new cash could now be used for an acquisition of smaller US operator Clearwire, which is 49 per cent owned by Sprint, or to improve its network as operators aim to roll out 4G services nationwide.

“The cash injection significantly bolsters Sprint’s balance sheet, and should help fund future initiatives, including potential acquisitions,” William Power at Baird Equity Research said, pointing out that an acquisition of Clearwire does “remain a future possibility”.

The deal, which is due to complete mid-2013, will also bolster both Sprint’s and Softbank’s negotiating positions with handset manufacturers such as Apple.

Softbank bought Vodafone Japan in 2006 and turned it into one of the country’s biggest mobile networks.