Sprint deal could help company and customers
The Kansas City Star
Full regulatory approval of the surprising acquisition of Sprint Nextel Corp. by a Japanese telecom company will take several months, but analysts expect few hitches.
SoftBank, which will buy 70 percent of Sprint for $20.1 billion, is known as an aggressive discounter — a factor that should loom large in the thinking of regulators concerned with market competitiveness and the effect on consumers.
Fortunately, the deal keeps the Sprint headquarters and its local workforce of 7,500 here, although it does come with the loss of another local corporate flag.
More importantly, it’s a new lease on life for a carrier weighed down by debt and still clawing its way out of a hole created by an earlier reputation for poor customer service.
Under chief executive Dan Hesse, the company has gradually changed that impression while rolling the dice in a big way to add the iPhone. The SoftBank deal could eventually allow Sprint to accelerate upgrades to its network.
SoftBank’s boss, Masayoshi Son, is clearly ambitious. “It’s part of my male ego to strive to be No. 1,” he said.
The SoftBank deal would shore up Sprint’s balance sheet with $8 billion in cash but it’s not without risk. SoftBank, like Sprint, is carrying a debt load and it has no experience in the U.S. market, where Son has expressed frustration at the slow download speeds relative to Japan.
Still, Son has a record of risk-taking leading to success. In 2006, he bought the Japanese operations of Vodafone Group PLC, boosted its competitiveness and began grabbing customers from larger carriers. A key element in that success: For a period, SoftBank held exclusive iPhone rights.
That record suggests Sprint, already relatively inexpensive for consumers, could become an even better deal. Backed with SoftBank cash, Sprint also would be in a position to acquire smaller carriers and buy more spectrum.
If approved, Son’s move would mark the largest foreign acquisition from Japan. It promises to solidify the future for a struggling company whose fortunes are critical to the health of the Kansas City-area economy.