Japan’s SoftBank has said it expects to complete its takeover of Sprint on July 10 just days after US regulatory authorities cleared the deal as well as Sprint’s related acquisition of Clearwire shares it does not already own.
SoftBank (Tokyo, Japan) is set to pay $21.6 billion for a 78% stake in Sprint (Overland Park, KS, USA), the third-biggest operator in the US, as it looks to capitalize on soaring demand for mobile broadband services.
Sprint, meanwhile, hopes the deal will enable it to compete more effectively against leading operators AT&T (Dallas, TX, USA) and Verizon Wireless (New York City, NY, USA), which are becoming increasingly dominant players.
The deal could also help Sprint to keep ahead of T-Mobile (Bellevue, WA, USA), which recently merged with number-five player MetroPCS (Richardson, TX, USA) to speed up its deployment of superfast mobile broadband services based on LTE technology.
The fact that SoftBank’s acquisition does not entail any in-market consolidation or reduction in competition was largely responsible for persuading the Federal Communications Commission (FCC) to approve the deal.
“After thorough review, the Commission has found that the proposed SoftBank-Sprint-Clearwire transactions would serve the public interest,” said acting FCC chair Mignon Clyburn. “ The increased investment in Sprint’s and Clearwire’s networks is likely to accelerate deployment of mobile broadband services and enhance competition in the mobile marketplace, promoting customer choice, innovation and lower prices.”
Full ownership of Clearwire – also approved by the FCC – will put Sprint in control of valuable spectrum for use with its mobile broadband services, and help the operator achieve its target of launching LTE-Advanced technology – allowing it to provide even faster services – later this year.
“Just two years ago, the wireless industry was at the doorstep of duopoly, but with these transformative transactions, we are one step closer to a stronger Sprint which will better serve consumers, challenge the market share leaders and drive innovation in the American economy,” said Dan Hesse, Sprint’s chief executive.
SoftBank had been forced to raise its initial offer of $20 billion for 70% of Sprint after Dish Networks, a satellite TV company, mounted its own bid for the operator, and was also forced to provide assurances to the FCC that it will stop buying equipment from Huawei, a Chinese manufacturer that authorities see as a potential security risk.
This week, ratings agency Standard & Poor’s said it was downgrading SoftBank on account on the large amount of debt associated with the Sprint takeover, arguing that competition in the US market likely to remain intense over the next two or three years.
“SoftBank’s investment in Sprint will bring innovation and increased customer focus, which will enable us to begin creating a true competitor in a market dominated by two companies,” said Masayoshi Son, SoftBank’s chairman and chief executive, in a statement released after the FCC blessed the deal. “We look forward to leveraging the significant talent and resources of the new Sprint to bring innovation and better service to US consumers.”