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SoftBank Readies $20 Billion for T-Mobile Purchase

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Pacific Money

SoftBank Readies $20 Billion for T-Mobile Purchase

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

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.

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.”