Japanese wireless carrier Softbank Corp. is in advanced talks to acquire a significant stake in Sprint Nextel, according to multiple reports. The deal could reportedly approach $13 billion in value, and appears to be for a majority stake in the nation's third-largest wireless carrier. The unexpected news comes on the heels of last week's announcement that Deuthsche Telekom's T-Mobile USA will merge with MetroPCS in a union of the fourth- and fifth-place wireless carriers. Sprint was reportedly considering a counter-offer for MetroPCS, but that now seems unlikely.
Analysts with Stifel Nicolaus noted the deal would substantially improve Sprint's financial position, opening up the possibility of further acquisitions or substantial investments in next-generation wireless technology. Sprint has struggled to compete with AT&T and Verizon in recent years, and has steadily lost subscribers despite being the only major carrier to offer unlimited data plans to smartphone subscribers.
The FCC would have to approve the transaction, but considering that Softbank currently only has a presence in the Japanese wireless market, we don't expect much resistance from the Commission. If both the Sprint and T-Mobile transaction are approved, it would mean a substantial shift in the national wireless market, and potentially more competition for Verizon and AT&T and the upcoming spectrum auctions, which are tentatively slated for 2014. With Softbank's deep pockets behind them, Sprint would suddenly become a viable contender to out-bid its opponents for valuable spectrum reclaimed from TV stations.