Japanese operator SoftBank might spend $12.8 billion to buy 66% of Sprint Nextel

October 11, 2012
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According to a breaking news report from Reuters, Japanese operator SoftBank Mobile is allegedly in talks with Sprint to purchase a 66% stake in the company for roughly $12.8 billion.

Now we know what you’re thinking, how the hell does this deal make sense? Put yourself in SoftBank’s shoes. They have a hair over 30 million subscribers. That means when they call up Apple, HTC, Samsung, or someone else, and make a large order for phones, there’s only so much volume discount they can get. Sprint, they have over 56 million subscribers. Should this deal go through, when SoftBank calls up phone makers they’ll be able to order a larger number of devices since they will be serving a total of 86 million customers.

That translates to better negotiating terms.

Beyond the financial incentives though, what else might SoftBank do? That’s an incredibly difficult question to answer. Sprint is in the middle of retooling their network. Would SoftBank come in with their expertise and change up the plans yet again? Would SoftBank tweak how Sprint deals with MVNOs? We don’t want to speculate here, for two reasons. One, we’re really confused about this deal. Two, it hasn’t been confirmed yet.

Looking one to two years out, it’s painfully obvious that Sprint needs to do something to remain competitive. Their 4G LTE network, as far as we can tell, is a total disaster. It only works in a handful of markets. Small markets too. That means most customers are connected to the legacy EV-DO network that struggles to provide even one solid megabit per second down of internet connectivity.

Like we said earlier, this news is breaking, and there are a ton of unanswered questions that we’re going to wait for others to opine on. Americans should be waking up shortly, so we’ll be waiting to hear what the analysts on the other side of the pond have to say about this news.

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