Softbank’s purchase of 70 percent of Sprint Nextel “should...
Softbank’s purchase of 70 percent of Sprint Nextel “should be fine in Washington,” said Guggenheim Partners’ Washington Research Group Wednesday in an analyst note. “With no loss of wireless competition -- and with Sprint strengthened financially -- this deal seems…
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highly likely to win” FCC and Department of Justice clearance, Guggenheim analyst Paul Gallant said in the note. Softbank announced Monday it had a deal to buy control of Sprint Nextel for $20.1 billion (CD Oct 16 p1). Foreign ownership is also unlikely to be an issue, Gallant said, though he said he would not be surprised if Congress decided to hold hearings on the issue. “In some ways Softbank should be an easier sell because [Deutsche Telekom] was partly owned by the German government, whereas Softbank is privately owned,” Gallant said. If Softbank’s purchase is finalized, it could make any Sprint attempt to buy T-Mobile USA more difficult. “We suspect Sprint and T-Mobile will now have a harder time arguing that they need a merger to compete against [Verizon Wireless] and AT&T,” Gallant said. “The argument for the merger probably gets incrementally harder if Sprint ends up acquiring Clearwire or gains wireless capacity from Dish, and if T-Mobile buys Leap (and/or acquires spectrum from Dish).” The odds of such a deal clearing regulatory hurdles are such a “close call in our mind that it might well turn on whether [President Barack] Obama or [Gov. Mitt] Romney wins the election,” he said, saying the odds may also depend on what conditions regulators place on the merger. If Sprint does acquire Clearwire or spectrum from Dish, it would improve AT&T and Verizon Wireless’s chances of acquiring additional broadcast spectrum since Sprint would be less likely to make its own bid at a future auction, Gallant said.