Japan’s SoftBank woos Sprint

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Sprint executives said they are in talks to secure a “substantial investment” from Japan’s SoftBank, confirming overnight reports that first surfaced in the Japanese newspaper Nikkei. While few details have emerged regarding any move, Reuters is reporting that SoftBank is eyeing a controlling stake worth $12.8 billion and is negotiating with several banks to secure a loan for the bid. Shares of Sprint jumped 19 percent on the news.

The tie-up would make sense both for Sprint and for U.S. consumers. Sprint has turned things around over the last year or two following the disastrous Nextel acquisition, but it desperately needs help closing the gap with Verizon Wireless and AT&T. Both Sprint and SoftBank operate CDMA networks, so there would certainly be an opportunity to cut infrastructure costs. And the move would pave the way for a variety of new mobile consumer devices, as Analysis Mason’s Steve Hilton wrote in a note to investors.

The one problem such a move wouldn’t address, though, is Sprint’s need for more spectrum as it builds out 4G services. The cash infusion certainly could help in that area, though, either via a straight spectrum buy or through the acquisition of another player who holds a substantial amount of the stuff. Which is why Dish Network might still be a good move even after any SoftBank investment.

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