Sprint Nextel Corp., whose investors backed a takeover by SoftBank Corp. yesterday after an eight-month fight, is now preparing to use the firepower of its soon- to-be parent company to target Verizon Wireless and AT&T Inc.
The company stands to get about $5 billion from Tokyo-based SoftBank to help bolster its network and make acquisitions. While Sprint would have received more cash under a previous agreement that was changed to increase the payout to investors, the long-struggling company now has the wherewithal to better challenge its larger rivals.
“Now that the drama of the battle for Sprint has ended, SoftBank can focus on building a better wireless-data network that is needed to compete with AT&T and Verizon,” said Walt Piecyk, an analyst at BTIG LLC in New York.
Sprint, a distant third to Verizon and AT&T in the U.S. wireless market, is counting on a speedy new LTE network to win over customers and bring service to a range of devices. For SoftBank, a Japanese carrier with global ambitions, the idea is to apply its expertise in building fourth-generation networks and use Sprint as the stepping stone to a mobile-phone empire.
The combined company will be the sixth-largest telecommunications company globally by revenue and the second- biggest among mobile Internet carriers, according to data compiled by Bloomberg.
Sprint shareholders overwhelmingly approved the $21.6 billion deal at a meeting yesterday, with about 98% of the votes cast favoring the transaction. SoftBank, which has three of the four regulatory approvals needed to do the Sprint deal, still requires a final nod from the U.S. Federal Communications Commission.
“Sprint will be in a stronger competitive position, with greater financial flexibility, increased scale and additional industry knowledge and perspective,” said Scott Sloat, a spokesman for Overland Park, Kansas-based Sprint.
Mark Siegel, a spokesman for Dallas-based AT&T, declined to comment on the threat from Sprint following the merger. Brenda Raney, a spokeswoman for Basking Ridge, New Jersey-based Verizon Wireless, also declined to comment.
Sprint shares rose less than 1 percent to $6.94 at 9:58 a.m. in New York. The stock had gained 21 percent this year, as of yesterday, lifted by the bidding war. SoftBank fell 0.2 percent to 5,420 yen at the close of trading in Tokyo, paring its gain this year to 73 percent.