Update: The deal is done. Read more here. Backstory below.
A terse announcement from Sprint moments ago, scheduling a conference call at 4am Eastern (a couple of hours from now) could be a sign that Softbank’s acquisition of Sprint may be coming to a close sooner rather than later. It follows yesterday’s news that Japanese carrier and tech investor Softbank will be buying a 70% stake in Sprint for $20 billion. Sprint confirmed last week that it was in strategic discussions with Softbank.
The deal would mean that Softbank would be the third big non-U.S. investor in a major U.S. carrier — the others being Vodafone’s 45% stake of Verizon Wireless and Deutsche Telekom’s full ownership of T-Mobile USA. Softbank, incidentally, built its own wireless operation in Japan on a purchase of Vodafone Japan in 2006, at a time when Vodafone decided to divest from that market.
The statement doesn’t reveal anything about what today’s call will be about. For those interested, you need to visit Sprint’s newsroom five minutes before to get the link to the webcast. “For those unable to view at this time, replays will be available,” the announcement says.
Yesterday’s report on CNBC about the 70% stake — which incidentally said the news would actually be coming out at 3am Eastern time — detailed the terms that deal: Softbank would buy $8 billion in shares from Sprint directly at $5.25 each; it would put out a tender for $12 billion of shares from shareholders at $7.30 a share (Sprint’s last trade on Friday was for $5.73/share). Update: A Sprint spokesperson says it will not be issuing any news until 4am Eastern time.
This investment would put other pieces into play as well. Part of the transaction will include a $3 billion convertible bond, CNBC says, that Sprint can sell before the deal closes, which CNBC says it will so that Sprint can its own debt and that of Clearwire. While Sprint wants to buy Clearwire outright it will not be announcing this today, CNBC says.
It also brings into focus how Softbank may leverage an investment in Sprint (and Clearwire) for LTE services. Sprint, which had originally banked on a WiMax-based solution for 4G broadband through its Clearwire stake, is quickly evolving to an LTE-based system, which is built to work on the same frequency as the one that Softbank uses in Japan. That means that this investment is potentially about Softbank looking for better economies of scale for its own LTE investments — both for purchasing network equipment and handsets.
Both carriers have banked heavily on Apple’s iPhone as a way of driving more users to their networks. In Japan, as a later entrant to the mobile market, Softbank made an investment on exclusivity on the device to attract users until it lost that in 2011. Sprint, meanwhile, became the third carrier to offer the iPhone in the U.S. and found that its subsidy expenses ballooned after that.
Softbank has been on an acquisition and investment spree. It bought eAccess, another carrier in Japan, in October, for $2.3 billion.
OVERLAND PARK, Kan.–(BUSINESS WIRE)–Sprint (NYSE: S) will hold a special webcast at 4:00 a.m. ET on October 15, 2012. Interested investors, analysts and media should monitor the Sprint website at http://newsroom.sprint.com/news/ at approximately 3:55 a.m. for a link to the webcast for this special event. For those unable to view at this time, replays will be available.