Mike Roberts, principal analyst at Informa Telecoms & Media, comments on Softbank's $20 billion acquisition of Sprint
On the other hand if Softbank and Sprint can pull this off it could transform Sprint into a company that has the scale and financial resources to compete head-to-head with Verizon Wireless and AT&T, which dominate the US mobile market with 33% and 31% market share, respectively, compared to Sprint with 17% and T-Mobile with 10%. While the deal would not directly increase Sprint's market share in the US, it would make it part of a group with some 90 million subscribers in Japan and the US, compared to Sprint's 56 million subscribers in 2Q12. That in turn means Sprint will have the scale and financial firepower to compete more aggressively with Verizon Wireless and AT&T, which had 105 million and 102 million subscribers respectively in 2Q12.
In particular the deal should give Sprint the financial strength to develop a better and more integrated strategy for Clearwire, possibly by moving from majority to full owner of the company. Clearwire has a valuable portfolio of 2.5GHz spectrum which has not been fully exploited due to a lack of investment, which can now change given Softbank will make $8 billion in capital available to Sprint as part of the deal, in addition to $12 billion which will go to Sprint's shareholders. Clearwire also plans to move away from WiMAX and launch TD-LTE network year, a technology which Softbank launched in Japan earlier this year. Similar to Clearwire, Softbank is using 2.5GHz spectrum for TD-LTE which could generate momentum for the technology and economies of scale for equipment and devices.
Sprint could also use its new financial strength to move for MetroPCS, which it wanted to buy earlier this year, and which T-Mobile USA has recently announced plans to acquire. But this may be a step too far given Sprint has already made three huge bets that are all major challenges on their own, so probably can't handle a fourth.
Informa Telecoms & Media
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