Sprint confirms it is in talks with Japanese carrier Softbank
Deal would give Japanese carrier a majority interest in Sprint; analysts call it a good fit
Computerworld - Sprint confirmed Thursday it is negotiating with Japan's third-largest wireless carrier Softbank regarding a "potential substantial investment by Softbank in Sprint."
Earlier reports from the Japanese business press said the investment could be valued at $30 billion, with Softbank buying up the outstanding shares of Sprint and gaining a majority interest.
In an emailed statement, Sprint said there "can be no assurances that these discussions will result in any transaction," but added, "such a transaction could involve a change of control of Sprint." Sprint also said it would have no further comment unless and until an agreement is reached.
If Japan's third-largest wireless carrier Softbank negotiates successfully to buy a majority interest in Sprint, the two could be a good fit for their technology and attention to customer service, analysts said.
Earlier Thursday, both companies had called the negotiations "speculation."
But the deal makes some sense simply because of consolidation going on in the U.S. cellular industry, and Sprint's need to grow subscribers and revenues to compete with U.S. leaders AT&T and Verizon Wireless.
"Sprint's tremendous focus on customer satisfaction would fit well with Softbank's approach to the market," said Steve Hilton, an analyst at Analysys Mason. "Use of customer satisfaction statistics to drive improvement -- long the hallmark of Sprint under CEO Dan Hesse -- would fit well with Softbank's approach."
Softbank and Sprint also run 3G CDMA networks, although Sprint has launched 4G LTE in more than 20 cities, with more than 100 to be added in coming months. Sprint is also upgrading its CDMA networks, and there could be cost savings from larger volume purchases from network vendors for the two carriers, Hilton added. The voice capability in 3G CDMA will be needed in the early years of LTE as well, since LTE is a data-only network that reverts to CDMA on Sprint for voice.
Hilton admitted that Sprint's potential access to the latest Japanese consumer electronics through a merger "makes the techie in me salivate. ... Miniaturization, unique form factors, odd-ball design -- how great would it be to get a proliferation of Japanese-inspired products into the U.S.?"
Jeff Kagan, an independent analyst, said there's no foregone conclusion that a merged Sprint-Softbank would do well in the U.S., but he added: "The chances it can do well are there if [Softbank] can understand the U.S. marketplace ...The deal would help Softbank expand beyond Japan."
"This is a way for SoftBank to get a foothold into the U.S. market, which it has been trying to do for some time," added Jack Gold, principal analyst with Jack Gold Associates, in an emailed response. "That said, Softbank's investments have not always panned out. Sprint needs a cash infusion. Softbank wants to not only have a carrier platform, but to sell services on top of that platform into the U.S. market (as it does in Japan). The question is, will Softbank be able to get enough of an ROI to make this worthwhile?"
Read more about Wireless Carriers in Computerworld's Wireless Carriers Topic Center.
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