Unless you’ve been living under a rock all day, you know that Sprint recently revealed that it’s in talks with Japanese mobile carrier Softbank regarding a possible acquisition. Sprint’s statement to the press was short but sweet:
Sprint (NYSE: S) today confirmed that it is currently engaged in discussions with Softbank regarding a potential substantial investment by Softbank in Sprint. Although there can be no assurances that these discussions will result in any transaction or on what terms any transaction may occur, such a transaction could involve a change of control of Sprint. Sprint does not intend to comment further unless and until an agreement is reached.
Until recently, Softbank was Japan’s third largest mobile carrier, making it a kindred spirit of sorts with Sprint. But is this good news or bad news for Sprint’s current customers today, as well as for the mobile landscape in the United States?
It depends on who you ask – but in all honesty, no one really knows for sure yet. Analysts have estimated the deal to be worth roughly $13 billion, which is roughly the same amount of cash that Softbank had at the end of last year. Combine Sprint’s current $7 billion in cash with Softbank’s, and the newly formed company will have almost as much cash as Sprint’s $21 billion in debt – and that’s a really good thing.
A cash infusion from the likes of Softbank might allow Sprint to speed up its LTE deployment, and get its 3G network up to where it needs to be. In other words, this could be just the savior that Sprint has been looking for.
But others are expressing concerns that Softbank might do away with Sprint’s unlimited data plans. At this point in the game, I find this argument moot. T-Mobile, after all, recently brought unlimited data back, and I doubt Sprint would want to give one of its main competitors bragging rights to such an attractive feature from a consumer standpoint, especially since Sprint used to have sole bragging rights to unlimited data.
Speculation is also running rampant that Softbank might be looking at Clearwire, as well, finally combining the company with Sprint and taking advantage of Clearwire’s massive spectrum holdings. If that were to happen, I’d say unlimited data plans are fairly safe.
Still others are expressing concerns that customer service might start to suffer even more if Softbank were to outsource more of it overseas. Some, on the other hand, anticipate the availability of even more technologically advanced smartphones, similar to what’s available in the Japanese marketplace right now.
Like I said – it’s really too soon to tell. But I have a feeling that this acquisition of Sprint, if it were to proceed, would be great for the US mobile landscape. It would solidify Sprint’s position as a strong player and give it a much-needed cash infusion that might finally bring it out of the red. It would ensure that Sprint might have a fighting chance against a T-Mobile/MetroPCS conglomerate, in case that deal goes through. And I don’t think we have to worry about our unlimited data plans going away any time soon.
What do you think?[Sprint | CNN]