Japan's Softbank is considering taking a large stake in Sprint Nextel, in a deal which could revive the struggling carrier's fortunes - and increase competition in a market dominated by Verizon and AT&T.
According to the Wall Street Journal, the deal could be worth as much as $12.8 billion, giving Softbank a 70 percent stake.
But it could help Sprint extricate itself from the problems it's been siffering over the last few years, since merging with Nextel in 2005. The company trails well behind its two biggest rivals, Verizon and AT&T, and is steadily losing customers.
It has $21 billion in long-term debt, and is mired in an expensive network restructure. More cash from Softbank would allow the company to speed up the development of its next-generation wireless network and perhaps make some acquisitions of its own.
But analysts are finding it harder to see what the advantages are for Softbank.
“While getting the backing of SoftBank would certainly improve Sprint’s financial position and resources, it wouldn’t improve the company’s operational position materially, given SoftBank’s lack of existing US assets,” Barclays Capital analyst James Ratcliffe tells the Financial Times.
What Sprint can offer Softbank is a huge block of spectrum and - once it's finished - an advanced network infrastructure. And as the US' third largest carrier, there's room for expansion.
Softbank operates Japan's third largest carrier and holds stakes in Chinese e-commerce company Alibaba and Yahoo Japan. It was the first Japanese phone company to offer the iPhone, a deal which has seen its fortunes rise ever since.
The deal's likely to be approved by US anti-trust authorities, as it should increase rather than decrease competition. And, given the precedent set by Deutsche Telekom's takeover of T-Mobile USA, foreign ownership shouldn't be a problem either.