Softbank Wins Sprint’s Shareholders, Now What?

Looks like the game really is won for Softbank’s roller coaster bid for Sprint Nextel. Today Sprint’s shareholders voted overwhelmingly for the deal, clearing the last big hurdle for the Japanese company’s purchase of 78% of the #3 wireless provider.

Whether they’ll get Clearwire as part of the bundle remains to be seen, but it looks like that game is entering the final inning to with Sprint’s $5 bid. If all goes well, the next big question is what Softbank does with it all. And my own question: what do they do with the wireline business?  It’s been in steady overall decline for years, although in IP/MPLS and unified communications it has continued to push forward with gusto.

I still lean toward them using the assets in some sort of complicated alliance/backhaul/consolidation deal with someone like CenturyLink. Sprint’s lack of a deep metro terrestrial footprint in the US is perhaps their biggest strategic weakness. Teaming up with CenturyLink or perhaps Level 3 to counterbalance the advantage AT&T and Verizon Wireless have in that department seems like a necessary way to keep control of the cost structure.

However, Softbank could choose to provide the wireline segment the resources it needs to revitalize itself of course, but it would never be to restore things to their prior glory. Rather, they would perhaps shift further into a fiber-light IP/MPLS backbone plus a focused managed-services and cloud footprint that can support their wireless and enterprise cloud needs.  That might mean Sprint’s wireline business keeps shrinking, but with EBITDA margins stabilizing and then rising.  And it could also mean further M&A down the line with Sprint buying the pieces it needs.

But it seems more likely to me that Softbankwill choose to focus their energy on developing all that spectrum rather than spend much mojo on re-inventing the wireline business.

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Categories: Mergers and Acquisitions · Wireless