Featured Articles

TSMC: Volume production of 16nm FinFET in 2H 2015

TSMC: Volume production of 16nm FinFET in 2H 2015

TSMC has announced that it will begin volume production of 16nm FinFET products in the second half of 2015, in late…

More...
AMD misses earnings targets, announces layoffs

AMD misses earnings targets, announces layoffs

AMD has missed earnings targets and is planning a substantial job cuts. The company reported quarterly earnings yesterday and the street is…

More...
Did Google botch the Nexus 6 and Nexus 9?

Did Google botch the Nexus 6 and Nexus 9?

As expected, Google has finally released the eagerly awaited Nexus 6 phablet and its first 64-bit device, the Nexus 9 tablet.

More...
Gainward GTX 970 Phantom previewed

Gainward GTX 970 Phantom previewed

Nvidia has released two new graphics cards based on its latest Maxwell GPU architecture. The Geforce GTX 970 and Geforce GTX…

More...
EVGA GTX 970 SC ACX 2.0 reviewed

EVGA GTX 970 SC ACX 2.0 reviewed

Nvidia has released two new graphics cards based on its latest Maxwell GPU architecture. The Geforce GTX 970 and Geforce GTX…

More...
Frontpage Slideshow | Copyright © 2006-2010 orks, a business unit of Nuevvo Webware Ltd.
Tuesday, 16 October 2012 10:30

Japan does a Pearl Harbour on US telecoms industry

Written by Nick Farrell



Softbank buys Sprint Nextel


Japanese mobile operator Softbank has bought 70 percent of the US Sprint Nextel for $20.1 billion. The move puts Softbank into the US and means that Sprint finally has the cash to expand its network and potentially buy peers. This is not the first time that Japan has targeted a US carrier, the last time was December 7, 1941, but this time it appears that Sprint Nextel was willing to be hit.

Sprint Nextel needs cash to build its 4G network to compete in a market dominated by AT&T Inc and Verizon Wireless. With the extra cash it could also buy Clearwire. The company owns 48 percent of Clearwire. The move has caught analysts by surprise.  While all of them have been saying that that US telecommunications industry few had expected a surprise raid from the Land of the Rising Sun.

According to Reuters, some analysts think it is a day which will live in infamy, and other believe that the surprise attack by Softbank means the company is biting off more than it can chew. But Softbank knows it needs to reduce its dependence on the highly competitive Japanese market which is just too ruthless to be worthwhile.  Combined, Softbank and Sprint will have 96 million users.

Softbank has created a US subsidiary called New Sprint which will buy $3.1 billion in old Sprint convertible bonds to start. After shareholders and regulators approve the proposed deal, Softbank will then buy $4.9 billion in New Sprint shares. The two together represent the $8 billion infusion directly into Sprint. All this will be completed by mid-2013, at which point New Sprint will be a publicly traded company and the old Sprint will survive as its subsidiary.

Japanese shareholders were less happy about the deal.  Softbank shares tumbled more than 8 percent on Monday before closing down 5.3 percent. The stock has lost more a fifth of its value since news first surfaced late last week about its interest in Sprint. Credit rating agency Moody's muttered that it was reviewing Softbank's ratings for a possible downgrade, but some analysts said Softbank's gamble might pay off in the end, unless regulators go all nuclear on them.

Nick Farrell

E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
blog comments powered by Disqus

 

Facebook activity

Latest Commented Articles

Recent Comments