Softbank to Pay $20B for 70% Sprint Stake

Japanese mobile operator SoftBank Corp. has agreed to invest US$20.1 billion to acquire a 70 percent stake in Sprint Corp. (NYSE: S), the companies announced on Monday. (See Softbank to Buy 70% Stake in Sprint.)

The official word comes three days after Sprint confirmed reports that it was in talks with Softbank about an investment in the U.S.-based carrier. (See Sprint Confirms Softbank Talks.)

Of the total $20.1 billion investment by Softbank, $12.1 billion will be distributed to Sprint shareholders and $8 billion will be new capital that will go toward the strengthening of Sprint's balance sheet.

At a press conference in Tokyo on Monday, Sprint CEO Dan Hesse said: "This financial infusion gives us opportunities … that we haven't had since I've been here. This [deal] is pro-competition and pro-consumer because it makes Sprint a stronger number three to compete with the duopoly of AT&T and Verizion."

The boards of both companies have approved the deal, but now it is subject to shareholder and regulatory approval. Sprint and Softbank expect the transaction to be completed in the middle of 2013.

Following the transaction, Dan Hesse will continue as CEO of the newly created Sprint entity and Sprint's corporate headquarters will remain in Overland Park, Kansas.

However, the transaction does not offer clarity on Sprint's plans for Clearwire LLC (Nasdaq: CLWR), whose future was questioned when news of a potential deal with Softbank first emerged. According to Hesse, Clearwire is not specified in the terms of this deal.

"There are no elements in this agreement that require either party to enter into any new agreements with Clearwire or anyone else," he said.

Why this matters
Following the merger announcement between T-Mobile US Inc. and MetroPCS Inc. (NYSE: PCS), Sprint Nextel has looked vulnerable and disadvantaged in the U.S. market. But this tie-up with Softbank gives the third-largest U.S. operator a new lease on life.

The capital injection will give a boost to Sprint's Network Vision and Long Term Evolution (LTE) rollout. Sprint also stands to gain insight from Softbank's rollout of LTE and its smartphone learnings in the Japanese market.

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— Michelle Donegan, European Editor, Light Reading Mobile