SoftBank’s direct purchase of $8 billion in Sprint Nextel...
SoftBank’s direct purchase of $8 billion in Sprint Nextel shares will allow the No. 3 U.S. carrier to acquire assets sooner than anticipated, New Street Research analyst Jonathan Chaplin said Wednesday in a note to investors. “We took a cursory…
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look at four potential acquisitions and conclude that the market is pricing in the worst case scenario, an acquisition of Clearwire, while giving the company no credit for the value that Clearwire’s spectrum will bring,” Chaplin said in the note. “As such, we see little downside if this deal is announced and significant upside if Sprint actually manages to create value with the $8BN in new cash they have taken in.” New Street looked at the potential implications of four possible Sprint acquisitions -- a purchase of MetroPCS’s H-Block spectrum and potential purchases of Clearwire, MetroPCS and T-Mobile. All four have a long-term upside for the company, Chaplin said. “The SoftBank investment paves the way for Sprint to start the consolidation process sooner than we had previously expected,” he said. “We don’t know which asset Sprint will pursue first (although we have suspicions); however, we think Sprint will likely create significant value through consolidation over the next several years. In addition to consolidation, SoftBank could also help Sprint improve margins beyond what they will likely achieve with Network Vision.” The $8 billion is part of SoftBank’s total $20.1 billion investment in Sprint Nextel, which will give SoftBank a 70 percent ownership of the U.S. carrier (CD Oct 16 p1).