Early this morning Japan’s Softbank and Sprint announced they had entered into a series of definitive agreements in which Softbank will invest $20.1 billion in Sprint. They will form a new publicly traded entity, New Sprint, which Softbank will own approximately 70% and Sprint equity holders will own approximately 30% of the shares.
“Everytime I come to the U.S., I say ‘Oh my God, the mobile phone network is so slow,’” Softbank CEO Masayoshi Son said during a conference call with analysts today. ”I think we can provide much better competitive technology and services that U.S. citizens have never experienced.”
Softbank is currently the number three wireless carrier in Japan, behind NTT Docomo and KDDI, but they are a global leaderer in LTE network development and deployment. If the proposed deal closes, it would provide Sprint with $8.0 billion of primary capital to enhance its mobile network and strengthen its balance sheet.
Sprint CEO, Dan Hesse, said, “This is a transformative transaction for Sprint that creates immediate value for our stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward. Our management team is excited to work with SoftBank to learn from their successful deployment of LTE in Japan as we build out our advanced LTE network, improve the customer experience and continue the turnaround of our operations.”
The deal is still subject to stockholder and regulatory approval, but the companies said they expect closing of the merger transaction to occur in mid-2013.