Sprint’s deal With Softbank seen roiling U.S. wireless industry

Clearwire Control

Softbank may help Sprint buy full control of Clearwire, a wholesale U.S. wireless carrier, though no decision on that step has yet been made, one of the people familiar with the matter said. Sprint already owns 48 percent of Bellevue, Washington- based Clearwire, which has airwaves in the same frequency as Softbank and the same TDD LTE variant of network technology.

“Sprint is unprofitable, but the reason for that is spending to set up its LTE network, so we can expect it to turn around in the future,” Shinji Moriyuki, an analyst at SMBC Nikko Securities Inc. in Tokyo, said in a report today.

A Sprint-Softbank deal could also create an operator financially strong enough to eventually bid for the assets Deutsche Telekom AG’s T-Mobile USA is trying to combine with Richardson, Texas-based wireless carrier MetroPCS Communications Inc., said a person familiar with Softbank’s plans, declining to be identified as the discussions are private. Deutsche Telekom said Oct. 3 it agreed to merge the U.S. unit with MetroPCS.

Softbank Decline

Sprint is holding off on an immediate counterbid for MetroPCS to gain time to scrutinize the planned combination with T-Mobile USA, people familiar with the situation said Oct. 10. Softbank, based in Tokyo, plans to buy MetroPCS through Sprint, Nikkei reported yesterday.

In a statement confirming talks for a “substantial” investment from Softbank, Sprint said it couldn’t assure a transaction would occur and didn’t provide any other details. Softbank also confirmed the talks in a statement to the Tokyo Stock Exchange today. MetroPCS, Clearwire, AT&T and Verizon also declined to comment.

Clearwire rose 6.8 percent to $2.37 at 9:42 a.m. in New York, adding to yesterday’s 71 percent gain. MetroPCS rose 0.9 percent to $11.74. Sprint slid 1.4 percent to $5.68, retreating from yesterday’s 14 percent increase. The stock has more than doubled this year, giving Sprint a market value of $17.3 billion before today.

Softbank shares fell 17 percent, the most on record, to 2,395 yen in Tokyo today. The stock has gained 5.7 percent this year, compared with a 0.9 percent increase in the Nikkei 225 Stock Average.

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