Japanese carrier Softbank in talks to scoop up Sprint Nextel(Read article summary)
A Softbank deal might boost Sprint Nextel's ability to compete against Verizon and AT&T in the US.
As of late this summer, the carrier market in the US broke down like this: Verizon and AT&T jostling for first place, Sprint Nextel and T-Mobile in a distant third and fourth, and a cluster of smaller companies jostling for the scraps. So how does a carrier like Sprint Nextel make a play for a bigger market share?
With a stack of cash, naturally.¬†
According to Bloomberg,¬†Japanese wireless service provider Softbank is in the process of arranging $23 billion in financing for a deal with Sprint, in which Softbank would get a 70 percent stake in the American carrier. Unsurprisingly, Sprint shares shot up yesterday after news of the talks were confirmed by both Softbank and Sprint. (Sprint shares have slipped slightly since then.)¬†
Over at Read Write Web, Dan¬†Rowinski notes that Sprint, which lacks the resources of its chief rivals, has struggled to expand the scale of its fledgling LTE network.¬†
"So, where does Softbank fit into this equation?" Rowinski writes. "The simplest answer is that the Japanese carrier can give Sprint an influx of cash that will stabilize its financial position and enable it to more aggressively build ‚Äď or buy ‚Äď LTE infrastructure in the United States."¬†
Sprint Nextel, of course, is also facing mounting pressure from T-Mobile, which may soon be merged with¬†MetroPCS, a budget carrier based in¬†Texas.¬†The merger would give T-Mobile an extra 9 million subscribers, boosting the carrier's total subscriber count to 40 million. Sprint Nextel, by comparison, has 56 million subscribers.¬†
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