There were reports last week that Softbank was interested in making a major investment in Sprint. Well those rumors materialized today, as the Japanese carrier is said to have purchased a 70% stake in the company.
The deal isn’t exactly official yet, but the two parties are expected to make an announcement tomorrow morning. The purchase will give Softbank the controlling interest in the third largest carrier in the US…
“The purchase is a huge one for Softbank, which is essentially making a $20 billion gamble that it success in developing LTE wireless services in its home market of Japan can be translated to the U.S. Sprint, while the third largest wireless provider in the U.S., significantly trails the two market leaders, Verizon and AT&T.
Softbank’s hope, say people familiar with its strategy, is to build on Sprint’s spectrum position, while hoping the company can further consolidate the wireless industry through acquisitions of more spectrum and other operators. The deal is expected to close in roughly six months. “
The deal is interesting for a couple of reasons. For one, it makes AT&T the only one out of the top 4 carriers in the US not controlled by a foreign entity (Verizon-Vodafone, T-Mobile-Deutsche Telekom). And two, it will allow Sprint to purchase the half of Clearwire (wireless broadband company) that it doesn’t already own.
Sprint, for its part, has had a rough couple of years. But between its new iPhone partnership, expanding LTE network, and now this huge Softbank investment, the carrier could certainly turn things around.
What do you think, is this a smart move by both companies?