SoftBank will face one nail-biter of a vote Wednesday at Sprint’s shareholder meeting. Dish Network has submitted a higher bid for Sprint, and the latter’s institutional investors are clamoring to reject SoftBank’s initial $20.1 billion offer. According to a Reuters report, SoftBank has a backup plan if the vote doesn’t go its way. That plan isn’t to raise its asking price for Sprint, though; rather it’s to buy up Sprint competitor T-Mobile US.
Citing two unnamed sources, Reuters claimed SoftBank would prefer to close the Sprint deal, putting control of the company in the Japanese carrier’s hands, but if that fails SoftBank is ready to turn attentions to the newly minted T-Mobile. Just two months ago T-Mobile was a wholly owned subsidy of Germany’s Deutsche Telekom, but in May it bought up MetroPCS and its NYSE ticker, becoming a publicly traded company. Reuters’ sources said SoftBank has already held several discussions with DT about buying a T-Mobile US stake, and those talks have intensified in recent weeks.
The Sprint-SoftBank is already well along its way to getting the final regulatory approvals. It’s gotten the okay from U.S. national security and antitrust authorities, and now only waits for the Federal Communications Commission’s final public interest review. SoftBank would have to start that process all over again if it turned its attention to T-Mobile.
T-Mobile — besides being a smaller prize — doesn’t have Sprint’s huge spectrum interests. Sprint is the majority investor in Clearwire and its nationwide treasure trove of 2.5 GHz airwaves. Sprint is trying to take over Clearwire ahead of the SoftBank deal, which would give SoftBank the spectrum basis for a massive U.S. LTE deployment.
But there are some benefits to abandoning the Sprint deal if Wednesday’s vote doesn’t go SoftBank’s way. According to Reuters, SoftBank could walk away from the deal with $5 billion in break-up fees, currency hedging gains and sales of the Sprint stock it has already purchased. Plus, Dish is challenging Sprint’s bid for Clearwire as well, which would complicate any SoftBank plans to use its spectrum.
Image courtesy Flickr user Mavis.