Pacific Money

SoftBank Readies $20 Billion for T-Mobile Purchase

Japanese telecom giant would become the world’s second most profitable carrier.

SoftBank Readies $20 Billion for T-Mobile Purchase
Credit: Twitter @mobirolla

SoftBank, one of Japan’s largest mobile carriers and the first to adopt Apple’s iPhone, is preparing to acquire a second American mobile phone carrier. If successful, the purchase of T-Mobile would make SoftBank the world’s second largest mobile carrier.

Masayoshi Son, SoftBank’s billionaire founder and the third-richest person in Japan, approached six banks over the weekend to discuss financing a T-Mobile bid. Bloomberg sources claim that the institutions that were approached – Credit Suisse Group AG, Mizuho Bank Ltd., Goldman Sachs Group Inc., Deutsche Bank AG, JPMorgan Chase & Co., and Raine Group LLC – are the same ones that financed and advised SoftBank’s purchase of Sprint last July.

“The plan would be to take control of T-Mobile by paying cash for the 67 percent stake owned by Deutsche Telekom AG (DTE),” the sources added. “Sprint would then be integrated with T-Mobile, combining the third and fourth-largest U.S. wireless carriers.”

Combining Sprint and T-Mobile, which together have nearly 100 million subscribers, would allow SoftBank to better compete with Verizon and AT&T – the top mobile carriers in the U.S. with just over 100 million subscribers each.

Additionally, the added revenue – which would push SoftBank to an estimated $70 billion – would plant the Japanese telecom giant firmly behind China Mobile as the world’s second largest carrier by revenue. The current global number two, Vodafone, made $54.5 billion last year. Behemoth China Mobile raked in more than $90 billion – a figure that is expected to grow after inking a multi-year contract with Apple on Monday.

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SoftBank’s $21.6 billion purchase of Sprint over the summer, the largest-ever foreign acquisition by a Japanese company, led many to believe that a T-Mobile deal would follow. Part of the Sprint deal included its acquisition of Clearwire – a Texas-based telecom operator specializing in LTE and broadband services.

“Clearwire is building out a next-generation LTE network on the same technology favored by Softbank back home in Japan, so could be a very useful fit for the operator as it moves into the U.S.,” The Wall Street Journal said in October. “Further down the line, with a large and ambitious international backer, Sprint could take the driver’s seat in the consolidation of the remainder of the market.”

A proposed deal between SoftBank and T-Mobile will inevitably face scrutiny from U.S. regulators. In 2011, AT&T attempted to purchase T-Mobile from Deutsche Telekom, but the acquisition was struck down by the Justice Department, citing antitrust concerns.

“The fact that Sprint is smaller than AT&T may tip the scales in SoftBank’s favor, but T-Mobile has been gaining subscribers recently,” said The Verge.  “A merger of Sprint’s market share, SoftBank’s capital, and T-Mobile’s momentum may prove too powerful in the eyes of the FCC.”