Sprint, the third-largest wireless carrier in the U.S., might sell all or part of its company to Softbank, the third-biggest mobile operator in Japan. The value of the deal would be approximately $13 billion, the Wall Street Journal said, quoting "a person with knowledge of the negotiations," which are in the advanced stage.
If it comes to fruition, this would be one of the biggest months in the history of telecom mergers. Deutsche Telekom announced last week an agreement to buy MetroPCS – America's fifth-largest carrier – and merge it with its subsidiary, T-Mobile USA – the fourth-largest.
Sprint has struggled financially in recent years due to the lousy acquisition of Nextel, as well as competition from Verizon Wireless and AT&T, which each have more than double Sprint's number of subscribers; yet the Overland Park, Kan.-based carrier has made a nice comeback this year, doubling its stock price and regaining some of those subs it lost, thanks in big part to a multibillion-dollar commitment it made last year to offer Apple's iPhone. It turns out that comeback might be just enough to make it an attractive M&A target.
Softbank's biggest wireless move prior to this rumored play for Sprint was the acquisition of Vodafone's Japanese arm in 2006, which gave the company instant cred in that nation's mobile industry.
The Journal says the purchase would give Sprint the cash to consider buying the rest of Clearwire, the network operator which owns significant spectrum in the U.S. Sprint already owns part of Clearwire. Another option: stepping in front of T-Mobile and making MetroPCS a better offer, something that was reportedly raised at a meeting of Sprint's board of directors last week.
The combo of Sprint and Softbank seems like a good one to at least one analyst.
"Sprint’s tremendous focus on customer satisfaction would fit well with Softbank’s approach to the market," said Analysys Mason's Steve Hilton. "Traditionally Japanese companies have a very results-oriented approach to dealing with customers. Use of customer satisfaction statistics to drive improvement – long the hallmark of Sprint under CEO Dan Hesse – would fit well with Softbank’s approach."
Sprint stock was up more than 17 percent on the news, at $5.91 per share, as of 11:10 a.m. ET.