Softbank Chief Executive Masayoshi Son said U.S. networks are too slow, and his company will pay $20 billion to change things to his liking.
“Everytime I come to the U.S., I say ‘Oh my God, the mobile phone network is so slow,'” Son said during a conference call with analysts.
Now, Softbank is to improve the situation Mr Son and Sprint Nextel officials agreed on a deal in which the Japanese mobile operator would take a 70 percent stake in the U.S. carrier.
The purchase “enables Softbank to establish an operating base as one of the largest mobile Internet companies in the world”, the third-largest Japanese mobile operator said.
“Our track record of innovation, combined with Sprint’s strong brand and local leadership, provides a constructive beginning toward creating a more competitive American mobile market,” Son added.
“It could be safe if you do nothing and our challenge in the US is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built. But not taking this challenge will be a bigger risk.”
Son is betting U.S. growth can offer relief from cut-throat competition in Japan’s saturated mobile market. Combined, Softbank and Sprint will have 96 million users, reports Reuters.
“It could be safe if you do nothing, and our challenge in the U.S. is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built,” Son told the news conference. “But not taking this challenge will be a bigger risk.”
Analysts predict that the agreement would provide Softbank with an opportunity to become third spot globally among mobile firms after China Mobile and Verizon.
Softbank’s first move is to pay $12.1 billion for the 55-percent stake. Following that the Japanese company is buying an additional $8 billion worth of shares from the company, for a total stake of 70 percent.
“This is a transformative transaction for Sprint that creates immediate value for our stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward,” said Sprint CEO Dan Hesse, who remains as chief executive under the terms of the deal.
However, some analysts were more reserved in their judgment, The Washington Post writes.
“While we believe it will take far more than capital for Sprint Nextel to effectively compete with Verizon Wireless and AT&T Mobility, we believe the deal announced today, without question, strengthens Sprint’s position in the long-run,” said Christopher King at Stifel Nicolaus.
Softbank revealed that the upcoming deal would be financed with cash and loans from Japan’s major lenders and Deutsche Bank.
The buyout would allow heavily indebted Sprint with liquidity remain competitive in a US field dominated by AT&T and Verizon Wireless, a joint venture between Verizon Communications Inc. and Vodafone Group.