Archive for the ‘Sprint’ tag

Japanese Company to Acquire 70% of Sprint

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On October 15, Japanese tech titan SoftBank announced that it will acquire 70% of Sprint Nextel. The $20.1 billion deal will allow Sprint to compete with the two largest American wireless companies, Verizon and AT&T, by providing Sprint with $8 billion in new capital. Of the $8 billion, $3.1 billion will come in the form of a bond, to be issued by Sprint shortly after the announcement, convertible at $5.25 per share; this gives Sprint some immediate access to capital that could be used to retire some debt, improve its wireless network, and possibly to buy additional spectrum if airwaves are auctioned in the near future. The closing of the transaction is scheduled for mid 2013 and the advisers to this transaction stand to earn up to $200 million. Of course, it’s hard not to compare this deal to AT&T’s failed attempt to buy T-Mobile for $36 billion. However, the main reason that regulators opposed the AT&T deal was because it would reduce the number of national wireless choices from four to three. SoftBank’s acquisition of Sprint will likely make regulators happy, as it would strengthen one of the four national wireless competitors. Furthermore, both Verizon and T-Mobile are at least partly owned by foreign companies (45% and 100%, respectively). This acquisition could provide some much needed cash and spark innovative ideas in a company that has constantly been lagging behind AT&T and Verizon. The rise of Sprint as a reliable alternative to those companies would increase nationwide competition, which could not only incentivize the development of more advanced wireless network technologies, but also reduce the price of wireless services for consumers.  

Unlikely Competitor Pushing to the Front of the Telecom Wars

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The often-overlooked Sprint made two majors moves this week to take center stage in the "battle of the telecoms."  Sprint began the week by filing a suit on behalf of “consumers and competition” against both AT&T and T-Mobile in response to the potential merger between the two wireless companies and the recent block by the Department of Justice’s civil antitrust lawsuit.. Sprint’s filing is hardly surprising since they petitioned the Federal Communications Commission to block the merger and had no interest in potential deal sweeteners. Sprint likens the potential AT&T and Verizon control of the market to “Twin Bells."  The T-Mobile merger would give AT&T and Verizon “more than 78% of revenue and 88% of profits” and leave Sprint, the third and only remaining national carrier, in the dust. While Sprint’s push to block the merger may initially have seemed like an act of desperation, with the move of the Department of Justice to block the merger already in place, Sprint’s lawsuit can only add another level of concern for AT&T and T-Mobile as they are now forced to defend their proposed merger on multiple fronts. However, AT&T may have more to worry about from Sprint than just a lawsuit. A rumor leaked on Friday that Sprint would not only soon be offering the coveted iPhone 5, but unlike AT&T and Verizon, Sprint would continue offering an unlimited data plan with the phone rather than moving to a tiered data option. Sprint's possible activities concerning its own iPhone release may indicate that the AT&T/T-Mobile merger is actually good for innovation and competition as a few commentators have indicated. However, Sprint's actions this week at least indicate the company is prepared to go down fighting in both the legal and market share arenas.

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September 17th, 2011 at 11:00 pm

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