12
Oct
sprint-store1

As we reported yesterday, there are decidedly loud rumblings that Japanese telecom giant Softbank is in talks to acquire a rather large hunk of Sprint. Today, more information regarding the potential deal has been leaked to Reuters by a person close to the matter, and the numbers are staggering.

Softbank is looking to buy 70% of Sprint, and they're asking for $23 billion in financing from Japanese banks to do it. Oddly, Sprint is only worth around $17 billion, so it's unclear why Softbank wants quite so much, unless they're planning on offering an exceptionally large premium over Sprint's current valuation. The issue is that Softbank may not be able to get that financing. Not only is the company they're looking to take control of in significant debt (Sprint is about $15 billion in the hole), Softbank itself is currently saddled with $10 billion in unpaid obligations.

Analysts (sigh) are saying that the entire deal is basically being forced by the man who owns Softbank, Masayoshi Son. Apparently Son believes that Sprint is simply too cheap not to buy, especially with a strong Yen against the dollar, and that it's the best opportunity for Softbank to break into the US wireless market. Son is Japan's second-richest man, so, maybe he's knows what he's doing.

There's also speculation that after buying Sprint, Softbank would make a move on either Clearwire, which Sprint already owns a lot of, or MetroPCS, which Sprint allegedly wants to buy. Compared to the amount needed to take on Sprint and its obligations, either of those firms would cost just a paltry several billion dollars - pocket change.

This is all still in the planning stages, and if a takeover does materialize, it would likely need more than a year to get over regulatory hurdles and the like, so don't get too excited quite yet.

Reuters

David Ruddock
David's phone is an HTC One. He is an avid writer, and enjoys playing devil's advocate in editorials, imparting a legal perspective on tech news, and reviewing the latest phones and gadgets. He also doesn't usually write such boring sentences.

  • ProductFRED

    I don't see why not. I mean, can Sprint get any worse for its customers?

    • http://www.facebook.com/michaelgonzalez2012 Michael Gonzalez

      New ownership means they could potentially ditch the unlimited plan that everyone is currently enjoying... So yes it could get worse... It could get ALOT worse... Also you think customer support is bad now, just wait till it's not only run overseas but owned by a company over there too.

      • John O’Connor

        I don't foresee this occurring unless softbank is going to completely change their direction. Historically speaking they have undercut the competition in the Japanese mobile phone market aggressively and offered unlimited data to their customers just like Sprint currently does.

        There is far too much doom and gloom about Sprint these days, and most people (especially those who are ignorant of the larger picture) do not realize that Sprint has been heading in the right direction under its current leadership. They should be cash positive within 2 years even if they were not in any way seeing some relief through a substantial equity buyout or outright purchase. Softbank will just speed the process along which will greatly benefits Sprint's Customers (of which I have been for 13 years)

      • mechapathy

        Unlimited data at severely limited speeds < Limited data at you-can-actually-connect-to-shit speeds.

  • http://www.facebook.com/ajac09 Anthony Evans Jr

    This is what pisses me off. Sprint is 15 billion in the whole still can get loans yet normal people out there a thousand dollars in the hole and cant even get a credit card. WTF. But back on topic.. sprint needs someone to bail them out Dan hesse isnt doing his job and needs to be FIRED if this goes through.

    • DCMAKER

      because they are company bonds average people and hedge funds buy them. You can get a credit card if you get credit from your neighbor...thats what sprint is doing and most companies do

    • http://twitter.com/Bateluer Robert Boluyt

      Sprint may have 15Bn in debt compared to your 2k, but you make 18K per year where as Sprint had a 2011 revenue of 33.6Bn. Big difference.

    • John O’Connor

      I do wish that you take a free accounting and business class at your local community college to understand how much of that statement is incorrect. I'm not trying to be mean, but that is an Apple and Oranges comparison with no basis in fact or the overall financial picture.

  • http://twitter.com/magiman7 magiman7

    How can MetroPCS even be an option since they agreed to the merger with T-Mobile?

    • Freak4Dell

      The deal hasn't closed, so Sprint or SoftBank can still make a bid. MetroPCS would then have to choose who to go with. Indications are that DT is ready to counteroffer if Sprint does make an offer, so it will likely go to DT in the end anyway.

  • http://www.facebook.com/rob.watkins.7 Rob Watkins

    I'm pretty sure that some pretty amazing things would happen to sprint if this deal goes through.

  • http://www.facebook.com/truthkillszz Michael Berrios

    This might be the best move for sprint

  • http://www.facebook.com/michaelgonzalez2012 Michael Gonzalez

    This county is falling apart because of loans and now Sprint wants to add salt to that wound?

    • Assimilate

      Did you even read the article?

      • http://www.facebook.com/michaelgonzalez2012 Michael Gonzalez

        You clearly don't understand what's happening...

        If Sprint accepts Softbank's offer to buy out their debt they will essentially be put in a situation in which they will owe Softbank. Thus giving power of a US company to another foreign company from Japan. This will also allow Japan to directly effect the US mobile market.

        Do you know who else buys US debt regularly? China. Just last month that amount reached 16 trillion dollars.

        • Assimilate

          Yeah, and? It's not like 2 of the 4 national carriers aren't in the same position.

          I don't think you know what you're talking about.

          • http://www.facebook.com/michaelgonzalez2012 Michael Gonzalez

            Sure so everyone's doing it so it's okay to add to the problem. That's such an ignorant way of looking at it.

          • Assimilate

            What problem is that exactly? Also, I like how you think only U.S. companies are allowed to have multinational presence. Again, you have no idea what you're talking about.

          • invinciblegod

            But what if Japan decides to use this opportunity to change out the hardware in the cell towers and allow them to spy on us! JUST LIKE ZTE! WE CAN'T HAVE THEM IN CONTROL OF OUT INFRASTRUCTURE! Europe is ok though.

          • John O’Connor

            I would venture to say that an alien invasion or assault by Godzilla would be more likely at this point.

          • andddlay

            While I have heard several good things about the zte warp and a few of their flip phones in terms of half-way decent hardware on non-contract carriers, i agree, it's not enough for an investment of my money or trust.

          • John O’Connor

            ZTE also has a long way to go with their hardware, software and reputation. In this instance I would have to say that you get what you pay for and I have seen very little out of ZTE that would make me want to invest in them or their products.

          • Smart

            it was China who influenced zte not Japan, uh oh.

    • Smart

      technically, it wouldn't be a loan & you spelled "Country" wrong, that alone adds salt to the wound.

  • Freak4Dell

    Wow...reports yesterday were ranging from $12 billion to $19.5 billion, and now they're up to $23? 12 is low, but 23 feels a bit high. I was expecting around the 18-19 range for 2/3 of the company.

    Well, whatever happens, I just hope they leave Metro alone. Let T-Mobile have that one without any hassle. T-Mobile will likely end up with Metro regardless of any offer Sprint makes, but it would be sad to see them pay more than they have already agreed to.

  • donr

    Maybe the $23 billion includes the amount to buy MetroPCS?

  • John O’Connor

    This differs from the 12.8 billion (70-75% sprint stock) equity purchase that was spoken of earlier and that would not be subject to regulatory approval at least in the conventional sense of the word in regards to M&A's.

    With that in mind I would make the assumption that the extra capital infusion would be utilized for a full buyout of clearwire, completing the network vision plan sooner and clearing out short term debt with some change left over for an outright purchase(more likely merger) with MetroPCS, T-Mobile or several other regional cdma providers. #mytwocents

  • Matthew Fry

    T-Mobile is owned by Germany, soon Sprint will be owned by the Japanese... . AT&T can go to that Carlos Slim guy from Mexico, and I think it's high time the US Government stepped up and purchased Verizon. It knows how to be big and in the red. *rimshot*

  • http://www.slideshare.net/samirsshah Samir Shah

    It is Deep Blue vs Kasparov. Masayoshi Son may go for more spectrum. Also, somebody said it was a iPhone play, I would rather characterize it as a (future) iPad (plus Google Glasses or their Apple clone) play when wireless is such that wireless internet is faster than wireline Internet and WiFi just gives way to wireless Internet. HEADY, BUT VERY TRUE.