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Banks about to close on $45 billion in financing for SoftBank's possible T-Mobile bid

Posted: , by Alan F.

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Banks about to close on $45 billion in financing for SoftBank's possible T-Mobile bid
 A published report on Wednesday revealed that Japanese telecom firm SoftBank is close to receiving $45 billion in financing from a number of banks including CitiGroup, JP Morgan and Bank of America. The amount of money provided in the financing could be reduced to $40 billion depending on how a deal for T-Mobile shapes up.

Meanwhile, SoftBank Chairman Masayoshi Son and Sprint CEO Dan Hesse are expected to come to a decision soon, on whether or not to go ahead and make an offer for the nation's fourth largest carrier. In meetings with both the DOJ and the FCC, SoftBank did not receive the reception for the deal from the U.S. regulators that it was hoping for. Both the DOJ and FCC were wary of a deal that would merge the nation's third and fourth largest carriers, despite SoftBank's stand that the deal was the only way to challenge Verizon and AT&T. Of the 225.2 million mobile subscribers using one of the top four U.S. mobile operators, 75% are customers of either Verizon or AT&T.

Even though Son really wants to forge ahead and make the bid official, both SoftBank and Deutsche Bank have agreed not to continue if there is no hope of getting the regulators in the U.S. to warm to it. The German telecom owns 67% of T-Mobile and it is this block of stock that SoftBank covets. But if there is no hope of getting an approval, Son will have to swallow his pride. The executive already said that SoftBank can't afford to pay a huge break-up free if the deal is quashed.

"SoftBank’s argument about a super-maverick could make sense at some point in the future, but not now when T-Mobile is winning more market share than anyone else. Before this week I saw the likelihood they could complete the deal as about 25 percent, now I put it below 10 percent."-Chris King, analyst, Stifel Nicolaus & Co.

While Son and Hesse talk about a Sprint-T-Mobile combination being a "Super Maverick" and shaking things up in the industry, the truth is that T-Mobile is doing this already, on its own. Led by consumer-friendly CEO John Legere, T-Mobile has been the most innovative firm in the business. Many believe that the U.S. regulators are taking a tough approach with Son and Hesse because they want to see how far T-Mobile can take the entire industry by itself, over the next few years.

source: Reuters, CNBC

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posted on 05 Feb 2014, 23:00 2

1. lexingtonsteeley (Posts: 11; Member since: 12 Jun 2013)


Soo.... If this goes through, that means Softbank will own Sprint, Clearwire, Tmobile and Metro PCS. Given what they did to Clearwire ( removed unlimited caps and raised prices ), i don't see them doing anything in the customers interests with T mobile. Praying it gets blocked by DOJ

posted on 05 Feb 2014, 23:15 1

2. Topcat488 (Posts: 1162; Member since: 29 Sep 2012)


Well if he wants to keep his customers, he'll have to do what CEO John Legere is doing for T-Mobile... Because if he doesn't I for one am not under any contract to stay... T-Mobile=The Uncarrier carrier...

posted on 05 Feb 2014, 23:18 1

3. Droid_X_Doug (Posts: 5867; Member since: 22 Dec 2010)


You can pray if you want to, but this deal ain't a-happening. Son will have to swallow more than his pride.

Son needs to practice humility and work on following through on his original promise to Sprint shareholders - that SoftBank would fund the buildout of Sprint's network infrastructure.

posted on 06 Feb 2014, 00:43

5. snowgator (Posts: 3240; Member since: 19 Jan 2011)


Doug, I think you finally got me to "click" in my fairly feeble mind what has been bothering me the most about this: Son trying to make this huge deal, when deal #1 isn't even completed yet. I know it is approved and happening, but Softbank has done zero to do any work for Sprint customers or improve Sprint in the marketplace or work Clearwire's tech and spectrum into any kind of true business model, but they already want T-Mobile, it's customer share, and it's spectrum. So... 3 different companies, 3 different sets of tech, 3 different sets of problems, and over 80 million customers and thousands of employees.

Too much, too soon, disaster. T-Mobile will still be able to be bought from Deutsche Telekom in the future. D.T. seems fine with holding onto them, and also fine selling them when the right bidder comes along. I think a 2 year window to see what Clearbank accomplishes with Sprint sounds about right.

posted on 06 Feb 2014, 01:29

6. Droid_X_Doug (Posts: 5867; Member since: 22 Dec 2010)


Sadly, when one tastes the thrill of 'doing the deal', it becomes almost unable to resist doing other deals. I have personally seen this in a past lifetime.

Son is all full of himself thinking he can browbeat the U.S. DoJ and FCC into believing his fairy tale about how the only viable competitor to AT&T and VZW is a combined Sprint & T-Mo. Just because he says the sun rises in the West and sets in the East doesn't mean that actually happens.

Right now, T-Mo seems to be doing just fine with Legere at the helm. Maybe Son is afraid that T-Mo will be taking customers away from Sprint? That would tend to undercut the rationale for SoftBank's acquisition of Sprint, eh? And would provide even less incentive for SoftBank to make the investment in Sprint's network infrastructure....

Net-net, it is time for SoftBank to follow through on the commitment it made to Sprint shareholders.

posted on 06 Feb 2014, 04:28 1

10. ardent1 (Posts: 1997; Member since: 16 Apr 2011)


Sprint IS a different company under new ownership. Without Softbank's backing, Sprint would have had a tough time with Dish over Clearwire -- where DID YOU THINK Sprint got the extra capital to raise its bid on Clearwire?

Second, you can see the changes at Virgin Mobile and Boost Mobile. It would not be a surprise if the two units are merging. You are also seeing fewer junk devices being sold on Virgin & Boost. You saw how Samsung devices were overpriced and were crappy. The first Samsung LTE device was launched at $300 on Virgin, it got crappy reviews, the price was cut to $250, and now it's being pushed for under $100 on sale. There are other examples of crappy overpriced android devices that don't sell and now must be discounted to move.

Another sign of a possible merger between Boost & Virgin is the number of announced layoffs.

These things that are happen because there's a new Sheriff in town.

posted on 06 Feb 2014, 15:41

16. TheRequiem (Posts: 157; Member since: 23 Mar 2012)


Your out of the loop, google sprint spark, they are rolling out the fastest network

posted on 06 Feb 2014, 02:06

8. tigermcm (Posts: 729; Member since: 02 Sep 2009)


is this TD-LTE thing Sprint is doing not apart of their buildout?

posted on 06 Feb 2014, 21:22

19. lsutigers (Posts: 742; Member since: 08 Mar 2009)


Sprint Spark, which is a combination of the 3 LTE bands (800 / 1900 / 2500), is part of Network Vision 2.0. The 800 and 1900 bands run on FD-LTE, band 41 (2500) spectrum runs on TD-LTE and is where the high speeds live due to massive spectrum capacity Sprint owns through Clearwire.

A friend in NYC, his company just switched him from Verizon to a Sprint HTC One Max which is Sprint Spark capable and he says the combination of the 3 bands works much better than VZ. Its the best combination of speed/coverage/performance. Consistent 50-60mbps outdoors, in the car and in small buildings with 2.5ghz. Good mix in some buildings with 1900mhz and great coverage inside large buildings with 800mhz.

I'm looking forward to our company upgrading to Sprint Spark iPhone's later this year.

posted on 06 Feb 2014, 00:38

4. Professor (Posts: 152; Member since: 02 Aug 2013)


You forget to mention that Sprint also acquired NextTell (and Boost) which were famous because of their phones with Walkietakie, and practically eliminated the company because their only interest was to acquire their spectrum. The real reason they also want to buy T-Mobile... To acquire its spectrum to increase their coverage and at the same time to eliminate one more of their competitors.

posted on 06 Feb 2014, 02:04

7. tigermcm (Posts: 729; Member since: 02 Sep 2009)


I read a couple articles where sprint stated because nextel had the oldest towers they would go bankrupt if they tried to upgrade them so instead they killed nextel

posted on 06 Feb 2014, 16:01

17. TheRequiem (Posts: 157; Member since: 23 Mar 2012)


What about gaining 35 million customers and billions of dollars in revenue? Im sure that has something to do with it

posted on 06 Feb 2014, 21:25 1

20. lsutigers (Posts: 742; Member since: 08 Mar 2009)


NextTell...WTF??

It's Nextel brah.

posted on 06 Feb 2014, 04:07

9. Doakie (Posts: 1274; Member since: 06 May 2009)


I can't believe this train wreck. Softbank should have just bought T-Mobile back in the beginning instead of buying Sprint. Sprints network backhaul is too much of a bottleneck, their EVDO backbone technology is too slow, their business plans are all empty promises, and their in store Vibe is too mundane for 2014. I was a Sprint customer for right around 11 years and simultaneously a T-Mobile customer for 8 years. Now I've taken my Sprint lines and moved them to AT&T. The in store feel of Sprint is so much more drab than T-Mobile, AT&T or Verizon. It actually doesn't have a good feel even buying equipment from them let alone the actual experience you get dealing with their taxed ultra slow network. If it wasn't for the 2 Year agreements they sign I think customers would be leaving them at a more alarming rate. I wonder if Softbank can sue whoever owned all that Sprint stock for selling them a sinking ship?

posted on 06 Feb 2014, 06:08

11. wiiandds (Posts: 60; Member since: 15 Mar 2013)


Check this link out, it shows you how T-moblie was not the first one to shake up the industry

https://ting.com/blog/t-mobile-ceo-john-legere-stole-my-2012-brand-strategy-and-my-1987-hair/

posted on 06 Feb 2014, 09:06

12. tokuzumi (Posts: 292; Member since: 27 Aug 2009)


If a deal tries to go through, AT&T should copy and paste Sprint's comments from the AT&T attempted buyout a few years ago. Besides, Sprint's network is still crap, and having multiple network technologies has not worked in Sprint's favor over the last decade (iDen, WiMax).

posted on 06 Feb 2014, 12:10

13. CEMIII (Posts: 110; Member since: 26 Jun 2013)


I have to disagree a little. If it weren't for the AT&T breakup fee. I believe T-Mobile would be singing a different at this point.
They need a big cash influx in some way to jump start a newbusiness model.
I do agree Softbank is taking to much to soon & hasn't structered his resources yet. But hey its still early the new baby isn't six mth old yet so let wait & see what happens.
They are just rolling out that Spark thing however their network is still slow & can not handle large data.

posted on 06 Feb 2014, 14:42

14. _VipeR_ (Posts: 47; Member since: 30 May 2011)


I have mixed feelings about the possible deal. I am all for Sprint and T-Mobile merging in an attempt to truly give either company a shot in the dark at competing with the big two. If the deal was to go through, I believe it would be in both company's best interest to have Legere as the president rather than Dan Hesse. I think in an age where technology is new and exciting and constantly changing, you need a president and face of your company to match that excitement. I just watched a Sprint Spark advertisement on youtube last night that had me completely sold on Spark. Not because they actually said anything about the speeds but because the way it was presented was fresh, upbeat, and made me feel excited about it. That's what Legere is to T-Mobile. The only real issue I have with the two companies joinging goes right back to the Nextel acquisition. There is just no way to run either company as a combined unit right now because of the CDMA and GSM networks. The only way this union works well is once both networks have completely rolled out both TD-LTE networks and convert their services to voLTE. Until then, Softbank would have to allow both companies to continue to operate as seperate entities, which defeats the purpose of the union in the first place. As for the DOJ and FCC wanting to see how far T-Mo can get on their own, really they just want to see how long it will take the mass public to see through the marketing magic that is "The UNcarrier" and "No Contract" reteric and realize that regardless of whether you are signing a contract for 2yrs of service and a subsidized phone or an agreement to pay full price for a phone over the course of 18, 20, or 24 months and pay for a slightly lower service plan, you are still signing a contract! Now that all 4 major carriers have this option, T-Mo is no longer special and until they also expand their network...they will still remain in the 4th slot in the states. So T-mo hasn't changed the industry...they just started a new trend!

posted on 06 Feb 2014, 14:57 1

15. wiiandds (Posts: 60; Member since: 15 Mar 2013)


completely agree. but they could combine the 2 networks and allow them to cross talk. so you could buy a t-mobile phone but be able to us it with sprint. all you would need is a cross talking sim card.

posted on 06 Feb 2014, 16:07

18. TheRequiem (Posts: 157; Member since: 23 Mar 2012)


I actually disagree, Hesse and his wirless revolution were are also huge and innovative idea's that are primarily responsible for turning Sprint around and back into profit. Remember simply everything plans? All T-Mobile could do was take it and spin it off as their own... and Ting has done all this way before T-Mobile, I think Hesse should lead. Just because John has been making headlines with his trash talk, doesn't mean he can lead the future company into success. Hesse has been just as innovative and so is Son.

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