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Softbank Boosts Sprint Stake in Wake of Failed Merger

Japan's Softbank has boosted its investment stake in Sprint from 82% to 85% in the wake of the company's failed bid to acquire T-Mobile. Softbank CEO Masayoshi Son has spent much of the week trying to slow Sprint's stock decline in the wake of the news insisting that Sprint has more than enough money to be viable moving forward. Son also confirmed rumors that Sprint walked away from the deal because T-mobile -- eager to keep its competition momentum rolling -- wanted to retain more control of the merged company than Softbank executives were comfortable with.

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“Why did we stop merger negotiations? Basically, we didn’t think we should be agreeing to a deal that would result in our loss of control,” Son said of the scuttled deal. “There was just a line we couldn’t cross. And that’s how we arrived at the conclusion.”

Earlier this week Sprint unveiled an MVNO partnership with Altice in the hopes of lessening some of the impact on Sprint stock. Reports have also surfaced that Sprint is approaching Charter as a possible merger or acquisition partner, since Charter has made it clear it intends to seriously compete in the wireless space in 2018. But even without a Charter deal, Son indicates that Sprint's balance sheet will improve and the company is in solid enough shape to survive competitive headwinds.

“Even if the next 3-4 years will be a tough battle, 5-10 years later it will be clear that this is a strategically invaluable business,” Son said. “With that thinking, we increased our holdings of Sprint. Sprint shares may fall on this news, but that’s a chance to buy.’’

If the Altice MVNO works out, Sprint could potentially expand its relationship with the French-owned company, which now owns both Optimum and Suddenlink here in the States. Altice has repeatedly stated it's interested in offering a wireless service, but has stated it wants to focus on expanding its fixed-line presence in the States before expanding into wireless.

That said, some analysts have suggested that Sprint should take the time and effort it has spent on megamergers, and instead focusing on building and running a better, more competitive network.

“At this point, maybe Masa has to give up on strategic options and simply invest in the U.S. to make Sprint’s network and brand competitive,” said BTIG analyst Walt Piecyk in response to this week's news.

Most recommended from 23 comments




Big ego much?

Sprint has sunk from 3rd to 4th and is bleeding money. Losing control of the company? I think that's already happened, Son.
·Google Fiber



TMO may soon start to target Sprint

If Sprint can survive limping along long term, it should benefit all consumers. But now that TMO is no longer in play, would expect TMO to start targeting Sprint users and that could put final nail in Sprint's coffin if they don't find another partner. TMO has held off with Sprint attacking ads during on/off negotiations and Sprint started to improve. That could soon go away.

Will be interesting to see how long it takes TMO to start a new ad campaign going after Sprint.

How about ..