In what comes as a huge sigh of relief, Japan-based SoftBank Corp. has announced its intention to buy out around 70% of stake in Sprint Nextel Corp., giving it a much needed infusion of funds. The $20.1 billion deal makes this business deal one of the most expensive acquisitions by a Japanese company, and comes in the nick of time for Sprint, which has been struggling to develop a high-speed next-generation mobile network for its subscribers.
However, it is not yet all smooth sailing for the troubled mobile company as the acquisition plan is yet to get approval from the U.S. Justice Department and the Federal Communications Commission. Only if the FCC is convinced that this deal is in the best interests of the public for going over the regular 25% limit permissible for foreign investment in American telecom firms will this acquisition take place.
With a net debt of around $15 billion, growing over the past 5 years, the third largest wireless carrier could definitely stand to benefit from SoftBank’s offer. With this investment, Sprint can move ahead with its plans for offering 4G services on its network and significantly improve its 3G offerings as well.