Sprint Nextel confirmed that they have agreed to a deal with Softbank of Japan over a large investment. This would give the carrier the backing it needs to potentially turn around in the U.S. market.
Softbank will take a 70 percent stake in U.S. mobile carrier Sprint for about $20 billion. This marks the biggest-ever overseas acquisition by a Japanese firm.
Softbank is one of Japan’s biggest cellphone service providers and could provide additional resources for Sprint build out a 4G network. The merger could also result in a potential takeover of Clearwire, a wireless services provider in which Sprint owns a significant stake, though that will have to wait until after this deal clears.
Sprint has been in the shadows of Verizon Wireless and AT&T for years and has fought desperately to compete with them. More troublesome to them is the announced plan to merge T-Mobile USA with MetroPCS, creating a competitor in the lower end cellphone market and putting T-Mobile’s subscriber numbers around 42.5 million, close to Sprint’s 56 million customers.
The company has struggled to deploy its L.T.E. network; it’s currently only in 15 markets compared to AT&T’s 50 and Verizon’s 400 markets. Sprint recently said that it is well under way to add L.T.E. in 100 more cities, and in the coming months the network should be ready in cities like New York, Philadelphia, Miami and Washington.
When the deal goes through, it could potentially lead to more advanced services for Sprint, including mobile payments and analytics that look at a customer’s personal data to give them better map directions or recommendations for things to buy. “Things that Google and Apple are trying to do here, operators are doing in those countries,” said Chetan Sharma, an independent telecom analyst.
Source: Dealbook