SoftBank Corp. (9984) will compete to provide Americans with broadband and wireless telecommunications service following approval by the Federal Communications Commission of its bid to buy Sprint Nextel Corp. (S:US)
The FCC announced yesterday that the $21.6 billion deal is in the public’s interest, giving SoftBank chairman and Japanese billionaire Masayoshi Son a position in the U.S. market.
“Today is a good day for all Americans who use mobile broadband services,” FCC Acting Chairwoman Mignon Clyburn said in a statement.
The FCC also approved Sprint’s offer to buy the half of wireless operator Clearwire Corp. (CLWR:US) it doesn’t already own.
“The increased investment in Sprint’s and Clearwire’s networks is likely to accelerate deployment of mobile broadband services and enhance competition in the mobile marketplace, promoting customer choice, innovation and lower prices,” Clyburn said.
SoftBank’s bid stands to boost Sprint, the third-largest U.S. wireless carrier, as a competitor to the nation’s two biggest mobile carriers, Verizon Wireless and AT&T Inc. (T:US) SoftBank’s founder, Son, has pledged innovative pricing and network investments.
“SoftBank’s investment in Sprint will bring innovation and increased customer focus, which will enable us to begin creating a true competitor in a market dominated by two companies,” Son said in a joint statement issued by the three companies.
Tokyo-based SoftBank will own 78 percent of Sprint, based in Overland Park, Kansas, after a bidding process that included competing offers for both Sprint and Clearwire from Dish Network Corp (DISH).
SoftBank doesn’t own spectrum licenses in the U.S. and plans to invest $5 billion into Sprint’s network to provide wireless broadband service, the FCC said in the order. The commission didn’t require divestitures of spectrum in any markets.
“Just two years ago, the wireless industry was at the doorstep of duopoly, but with these transformative transactions, we are one step closer to a stronger Sprint which will better serve consumers, challenge the market share leaders and drive innovation in the American economy,” Sprint Chief Executive Officer Dan Hesse said in the statement by Sprint, SoftBank and Clearwire.
American consumers “stand to benefit from an invigorated company better able to deliver advanced wireless products and services,” Ajit Pai, the only Republican on the FCC, said in a statement. “We’ve now shown that regulation need not impede access to the international financial markets and foreign capital.”
The five-member commission has two vacancies because the Senate hasn’t voted on the nomination of Tom Wheeler to be the next FCC chairman and a successor hasn’t been named for Republican Robert McDowell, who left in May.
The SoftBank-Sprint deal continues a re-ordering in the growing mobile market, after the fourth- and fifth-largest U.S. carriers combined May 1 into T-Mobile US Inc. (TMUS:US)
U.S. antitrust and security officials earlier cleared SoftBank’s bid. The companies gave assurances they would limit use of telecommunications gear made by Huawei Technologies Co., based in Shenzhen, China.
A congressional committee last year said Huawei’s connections to the Chinese army created the potential for electronic spying. Huawei has said its exclusion is “misguided” and doesn’t resolve vulnerabilities arising from common global equipment supply chains.
Erik Prusch, Clearwire’s CEO and president, said in the statement his company looks forward to joining Sprint “and deploying an even faster and richer 4G experience for consumers across the country.”
Clearwire’s board of directors has recommended approval of the deal and company shareholders are scheduled to vote July 8. Sprint, Clearwire and SoftBank anticipate all the transactions will close “in early July,” according to the joint statement.
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