Wednesday, July 10, 2013

Softbank Completes Acquisition, Positions Sprint for Accelerated LTE

SoftBank completed its acquisition of Sprint. 

SoftBank paid approximately $16.64 billion to purchase shares from existing Sprint shareholders. It has also agreed to invest an additional $5 billion in Sprint's network, of which $1.9 billion is available at closing .  As a result of the transaction, the ownership of current Sprint equity holders in the new Sprint will be approximately 22 percent, while SoftBank will own approximately 78 percent, both calculated on a fully diluted basis. Sprint Corporation will be listed and traded on the New York Stock Exchange (“NYSE”) under the ticker symbol, “S.”

Earlier on Tuesday, Sprint completed its acquisition of Clearwire. Sprint paid $5.00 per share, valuing Clearwire at approximately $14 billion, or about $0.30 per MHZ-pop.

Softbank expects the acquisitions will bring $2.0 billion in annual cost savings to Sprint by leveraging economies of scale and operational expertise.  In terms of global procurement, Sprint and Softbank combined have a mobile CAPEX budget of US$11.9 billion, second only to China Mobile (US$20.4 billion), and ahead of AT&T, Verizon, DOCOMO and KDDI.

Next steps:

Complete Network Vision - Sprint must continue executing on its plan to rebuild its infrastructure to catch up to LTE coverage of AT&T and Verizon.  Sprint has articulated plans to get to 200 million POP coverage with LTE (VZ already covers 297 million)

Leverage the Clearwire spectrum,  the largest spectrum portfolio in the U.S. but in the upper bands.  Its spectrum is an average 163 MHz in the top 100  U.S. markets.   Clearwire operates a nationwide WiMAX network and has been planning to make the transition to TD-LTE.  Its main wholesale customer  has been Sprint.  The companies had previously planned on extending the WiMAX arrangement through 2015.  The companies have outlined ways of bridging their FD-LTE and TD-LTE networks with dual-mode devices that are under development.

Bring iDEN spectrum to LTE -- Earlier this month, Sprint pulled the plug on its Nextel iDEN network.  This will add nationwide 800 MHz coverage to the Sprint LTE network.

Continue the Prepaid push -- Sprint already has successful brands with Virgin Mobile and Boost

Strengthen M2M -- Sprint is already active in this area.

See also