Skip to main content

The Globe and Mail

Sprint confirms talks with Japan's Softbank

A customer enters a Sprint store in Chicago in this file photo.

M. Spencer Green/The Associated Press

Sprint Nextel Corp. says that it is talking with the Japanese cellphone company Softbank about making a potential substantial investment in the U.S. company.

Sprint Nextel Corp. said Thursday that it can't assure that the talks will lead to any transaction, but also confirmed that a deal could involve a "change of control" of the company.

The No. 3 U.S. wireless carrier said it does not plan to give any more details unless it reaches an agreement with Softbank.

Story continues below advertisement

Sprint Nextel's stock hit its highest level in a year on Thursday as reports of the talks spread.

The Wall Street Journal, citing an unnamed person with knowledge of the talks, had reported earlier that the potential deal would help Softbank Corp. expand outside of Japan. It put the value of the transaction at more than $12.8-billion (U.S.).

Sprint had a market capitalization of $15-billion at Wednesday's close, implying that Softbank may not buy the whole company.

Sprint shares rose 85 cents, or 16.9 percent, at $5.89 in morning trading. Earlier, they hit 52-week high of $6.04 per share.

Analysts expressed surprise at the news. There has been frequent talk of Sprint buying other U.S. cellphone companies to help it turn around, but an acquisition by a Japanese company wouldn't do much to help its competitive position in the U.S.

"We would expect to see very little synergies created with such a transaction," said Stifel Nicolaus analyst Christopher King.

Last week, media reports said Sprint's board was considering a bid for MetroPCS Communications Inc., the fifth-largest cellphone company in the U.S., to counter an offer by T-Mobile USA, the No. 4. The T-Mobile-MetroPCS deal could make the competitive situation even more difficult for Sprint, which has been losing contract-signing subscribers for years.

Story continues below advertisement

Tokyo-based Softbank, once the underdog in Japan's telecom industry, has seen its fortunes improve ever since it started selling the iPhone in 2008. It was initially the only Japanese phone company to offer the iPhone. Rival KDDI Corp. started selling the iPhone late last year.

Shares of MetroPCS dropped 58 cents, or 4.7 percent, to $11.46 in morning trading, as investors speculated that Softbank's interest means there's less of a chance for a counterbid from Sprint.

Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Please note that our commenting partner Civil Comments is closing down. As such we will be implementing a new commenting partner in the coming weeks. As of December 20th, 2017 we will be shutting down commenting on all article pages across our site while we do the maintenance and updates. We understand that commenting is important to our audience and hope to have a technical solution in place January 2018.

Discussion loading… ✨