Japan's Softbank offers $20.1bn to take big gulp of Sprint
CEO: We're coming to America
Japanese operator Softbank wants to buy Sprint, and has confirmed that it is prepared to pay more than £12bn ($20.1bn) for a 70 per cent stake in the US operator, assuming the US regulator will let it.
Rumours of the deal were swirling around last week, leading to a drop in Softbank's own share value as investors balked at the valuation the deal puts in the loss-making Sprint. But Softbank's founder and CEO Masayoshi Son was bullish at the weekend, saying that the company needs to spread from the stagnating Japanese market.
"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," he said in a briefing to investors and the media.
Reuters has been talking to some banks, and reckons four are lined up to lend Softbank the readies, but the deal will stretch the company and there are some suggestions that the debt could become unmanageable.
There is also the question of Clearwire, the network operation which Sprint uses to provide 4G connectivity (originally WiMax ClearWire has been busy deploying LTE), the relationship will need to be cast in stone before any Sprint acquisition can go ahead.
But if it did Softbank could make great use of its TD-LTE experience as that's the LTE variant it has deployed in Japan. Time-Division LTE uses a single frequency for both sending and receiving data, allowing asynchronous, but not simultaneous, communications. Frequency-Division LTE (FDD-LTE) uses separate bands for sending and receiving, and is far more popular around the world.
FDD is how mobile operators are used to working, but TD-LTE is developing fast and has the advantage of not needing pairs of bands – and finding spectrum pairs can be problematic for mobile carriers. If Softbank bought Sprint it would create a considerable market for TD-LTE equipment.
All of which assumes the US regulators would permit Softbank to take over Sprint, which is also open to debate. It could well depend on whether America's decision not to trust Chinese suppliers is specifically anti-China or symptomatic of an increasing xenophobic attitude. ®
Sponsored: Network DDoS protection