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Japan's Softbank to reportedly take controlling interest in Sprint

post #1 of 26
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Shortly after rumors surfaced that Japanese telecommunications and internet company Softbank was looking to buy stake in U.S. wireless carrier Sprint, it is now being reported that the two firms have reached a deal.

Softbank


Sources told Business Insider on Sunday that Softbank will pay $20 billion for a 70 percent stake in Sprint, with official word of the deal expected to be released on Monday.

While the details of the transaction are still being hammered out, the boards of both companies reportedly reached an amicable agreement in which Softbank will buy $8 billion of Sprint shares directly from the U.S. telecom and tender another $12 billion worth of shares from shareholders.

According to the report, Softbank will be paying a hefty premium for the tender offer at $7.30 a share, well over the stock's current price of $5.73. The agreement's design does not require a shareholder vote.

There are a few sticking points to the deal, however, as Sprint is in the midst of purchasing Clearwire. As part of the equity slated to be purchased by Softbank, a $3 billion convertible bond exercisable at $5.25 will be sold to provide funds for Sprint's acquisition of the 52 percent of Clearwire it doesn't yet own.

Softbank's Sprint buyout leaves only AT&T as the sole U.S.-owned major wireless operator in America, with number one carrier Verizon being a joint venture with Vodafone, and T-Mobile a holding company for Deutsche Telekom AG.

People close to the matter say Softbank is looking to build its wireless spectrum position with Sprint's existing network, and hopes to "further consolidate the wireless industry" through additional acquisitions.

The publication reports that the deal should be finalized within the next six months.
post #2 of 26
Originally Posted by AppleInsider View Post
"further consolidate the wireless industry"

 

Less of this needs to be happening.

Originally posted by Marvin

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Originally posted by Marvin

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post #3 of 26
Damn Asia's going to own us in 10 years 😔
post #4 of 26
Exactly
post #5 of 26
Quote:
Originally Posted by rgroves View Post

Damn Asia's going to own us in 10 years 😔

Did you write that in 2002?

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post #6 of 26
Next, Huawei is coming too.
post #7 of 26
You keep buying everthing they make. What's expected? I like my products American made by union workers pissed off and striking for being expected to work.
post #8 of 26

Sprint may have Nextel and some nice tech features on their network but in my opinion they suck administratively.  I have heard many a sad story about how sprint lied to customers about service in their area (basically sprint rep lies to get the sale) then find out that the customer had to be on roam mode constantly only to find they get charged major amounts of roaming charges.  Even a customer paid for the extra roam package and then gets dropped because they have to use roam mode all the time at home.  I would like to see Sprint get bought out completely or get broken up and bought out.  They really suck.

An Apple man since 1977
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An Apple man since 1977
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post #9 of 26

iPhone's users are known for their heavy use of data and most likely killed Sprint's network so bad that they needed Softbank to come in and rescue them to help build out their infrastructure. 


Edited by Commodification - 10/15/12 at 11:24am
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post #10 of 26

As a current Sprint customer, I look forward to seeing how this improves service. It seems like Japan always has better cell phone service. 

post #11 of 26
Note to editor: 20-25% does not represent "a hefty premium". This is standard in acquisitions for functioning businesses. It is a premium to entice existing equity-holders to part with their shares...
post #12 of 26

Who owns who? These are all publicly-traded companies. Who owns and controls and influences these companies and their policies and practices is not so simple to label, and who do these companies own? Who are their suppliers, who do they supply? Under Citizen's United, does Sprint still get to "vote" in US elections, or does Softbank now do the "voting"? 

post #13 of 26
Quote:
Originally Posted by Tallest Skil View Post

Less of this needs to be happening.

Why? What's with the knee-jerk reactions?

One could make at least as strong an argument that making cellular service a global business might improve the service that US consumers get rather than degrade it:
1. The US carriers are widely recognized as offering relatively poor service and high prices compared to much of the world.
2. Sprint doesn't have the capital to improve their network as quickly as they'd like. Softbank does.
3. While consolidation into the hands of just a couple of global players would probably be bad, consolidation into perhaps a dozen world-class companies would probably be better than the current level of fragmentation where there are hundreds of carriers around the world duplicating services.
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post #14 of 26
Quote:
Originally Posted by Splash-reverse View Post

Next, Huawei is coming too.

The US government might block that one.

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post #15 of 26

This very good news for Apple.  Sprint has the opportunity to be consumer-first oriented and grab huge market share  (currently at ~ 15%).  Softbank deal helps re-capitalize the company so they can make accelerated investments

 

I'd love to see Sprint grow into a strong, national #3 contender.  With a true, unlimited one price data plan  :-)  

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post #16 of 26
Originally Posted by jragosta View Post
3. While consolidation into the hands of just a couple of global players would probably be bad, consolidation into perhaps a dozen world-class companies would probably be better than the current level of fragmentation where there are hundreds of carriers around the world duplicating services.

 

So you're saying worldwide it would be better to have ~12 carriers than hundreds? 12 carriers that could collude that much more easily? 

 

I dunno, I guess I can see some logic there. It just doesn't sit well.

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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post #17 of 26
Sprint is in trouble so they need to let this happen
post #18 of 26

Not unless they want Sprint to go under
 

post #19 of 26
Quote:
Originally Posted by rgroves View Post

Damn Asia's going to own us in 10 years 😔

 

Um... America is China's bitch...Today.

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"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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post #20 of 26
Originally Posted by Galbi View Post
Um... America is China's bitch...Today.

 

Everyone says this, but it only serves to show their ignorance.

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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post #21 of 26
Quote:
Originally Posted by Tallest Skil View Post

So you're saying worldwide it would be better to have ~12 carriers than hundreds? 12 carriers that could collude that much more easily? 

I dunno, I guess I can see some logic there. It just doesn't sit well.

You are missing most of the realities of business (as opposed to oft-cited fallacies):

1. Size leads to economies of scale - particularly in something as capital intensive as mobile communication.

2. Size leads to uniform standards. Look at how messy it is for Apple to be able to offer new phones. They work in some countries and not others. Or even in just some parts of some countries. Uniform standards are good for everyone.

3. Size leads to innovation. Ten companies of $100 M each may struggle to find the money to invest in R&D. A single $1 B company can set aside that money more easily.

4. Size leads to greater ability to compete. Hundreds of little companies do not have the ability to compete much against the big guys. It's far too easy for the big guys to squash them. Or, even if they avoid that, they only have a very limited market, so can't really impact the market.

5. Size leads to stability. If you're with a tiny supplier, they could go out of business at any time and leave you scrambling to find service. You might even lose your phone number, internet ID, etc.

Collusion? First, if it happens, you locate it and penalize it. Having spent decades in both large and small companies, I can say that it just doesn't happen much any more. But even if it did, it would be just as likely (or even more likely) to happen with the smaller companies. They might think they're too small to get caught. Or, if a big company wants to break the rules, a smaller company is more likely to feel that they have no alternative but to give in to the pressure from a company 10 times their size.

I've seen it many times. A severely fragmented market with hundreds of players doesn't benefit the consumer at all.
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post #22 of 26
Originally Posted by jragosta View Post
Great points

 

Collusion aside, then, how do you prevent the carving up of parts of nations into spheres of influence like the landline ISPs do now? Is there incentive to build out towers where their competitors already have a presence when the company is multinational like that? 

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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post #23 of 26
Quote:
Originally Posted by Tallest Skil View Post

 

Everyone says this, but it only serves to show their ignorance.

 

Care to elaborate?

"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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post #24 of 26

Hope Sprint is okay with its new Korean owner.
 

"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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post #25 of 26
Originally Posted by Galbi View Post
Care to elaborate?

 

They own a virtually meaningless proportion of our debt. We've borrowed against ourselves far more than we have China or any other country.

 

But let's not get into this outside of PO. Or at the very least, AO.

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
Reply

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
Reply
post #26 of 26
Quote:
Originally Posted by Tallest Skil View Post

Collusion aside, then, how do you prevent the carving up of parts of nations into spheres of influence like the landline ISPs do now? Is there incentive to build out towers where their competitors already have a presence when the company is multinational like that? 

You don't prevent that. What part of free market don't you understand?

The companies will go after the maximum profit. As I showed, it is likely that the consumer would be better served if there are a dozen or so behemoths rather than a few hundred little guys (or, even worse, half a dozen giants and a few hundred little guys). The larger companies would have far more resources and interest in expanding globally than the hundreds of little companies you are proposing.

So why is a multibillion dollar company more likely to ignore parts of the world than a little guy? Obviously, they're not. If you're a $10 B company and have a presence in half the world, you'd be foolish to ignore the rest of the world. The only way for the world to get carved up is collusion - which I've already argued doesn't happen and would be less likely to happen with a few big players than with hundreds of little players.
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