Sprint Nextel Investors Finally OK Softbank Deal

After a considerable wait that was protracted even further by DISH Network Corp. (NASDAQ:DISH)’s rival bid for the wireless carrier, Sprint Nextel Corporation (NYSE:S) shareholders finally provided the vote that should allow the $21.6 billion deal to acquire 78 percent of the U.S. wireless carrier to be finished in July.

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Sprint Nextel Corporation (NYSE:S) and industry insiders don’t anticipate any regulatory issues slowing the deal’s completion and the vote should allow Softbank Corp (TYO:9984) (OTCMKTS:SFTBF) to open its coffers in an effort to step up their game against U.S wireless giants Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T).

Sprint Nextel Needs Time To Expand Its Coverage

That will certainly present problems of its own. Unlike Japan, the United States is a vast country that requires considerably more time and money to expand and update Sprint Nextel Corporation (NYSE:S)’s wireless coverage.

According to The Wall Street Journal and data from Cisco Visual Networking Index, the average smartphone connection speed in Japan was 2.1 megabytes per second in 2012—nearly 40 percent faster than the average 1.5 megabytes per second in the U.S.

Softbank Bringing More Competition to U.S. Wireless Market

Despite the size of the United States, Softbank Corp (TYO:9984) (OTCMKTS:SFTBF) Chief Executive Masayoshi Son looks forward to the challenge and believes that the presence of a third carrier will change the playing field and force Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) to bring their “A” game to the competition.

“That will stimulate the whole industry in terms of both innovation, the prices, services, everything,” he said in an interview last month. Sprint Nextel Corporation (NYSE:S) has already begun to turn around its financial woes in the last quarter and shareholders are excited about the acquisition.

One of the things that makes Sprint Nextel Corporation (NYSE:S) different is the unlimited data plans it offers. Mr. Son has promised shareholders that he has no intention of changing this and even favors this business model.

“I’m not trying to say just a straight simple price discount,” he said. “There are all kinds of ways to excite the people with segmentation, with packaging or new campaigns or introduction of new innovative service or innovative products.”

Masayoshi Son Known for his Scorched Earth Approach

Mr. Son famously launched an attack on Japan’s two largest carriers with a scorched earth policy that resulted in a wholesale reshaping of Japan’s wireless industry.

“I would expect Mr. Son to advertise greater value for money—bigger bang for buck and more data speeds for a lower price than Verizon and AT&T,” said Richard Guppy, head of mobile strategy at consultancy Strategy Analytics. “But I don’t think he needs to repeat the kind of scorched-earth tactics it took in Japan. Sprint Nextel Corporation (NYSE:S)’s pricing plans are already low.”

About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com