SoftBank, a Japanese wireless provider, confirmed on October 15th that they had indeed entered into an agreement to buy 70 percent of the US mobile carrier Sprint Nextel for $20.1 billion. For customers of Sprint (like me), this appears to be good news indeed. A recent article from CNET gave plenty of details about the merger and the future for both companies.
My recent trip to the local Sprint store, to upgrade a couple of my family phones, allowed me to enter into a fairly revealing discussion with the Sprint representative. He confirmed the financial issues the company was having, and how the purchase and costs of the iPhone was a major cause of the current issues (which I later read was $15.5 billion over four years), and how delayed the 4G network was in coming to their customers. So while my mobile plan was not decreasing, I could see that the service was running a little behind some of the competition. As a customer for over ten years with little to no issues or horror stories as some other network friends have reported, I felt compelled to wait it out.
Well, now with this new merger, it appears that my patience will be rewarded, as the new owner SoftBank will be injecting $8 billion into Sprint’s technology to help boost them quickly into being able to offer new services quicker than originally expected. The main feature many of us have been waiting for is a wider availability of the 4G network. Currently, Sprint only offers 4G service in about 24 smaller than expected markets, while other networks like Verizon have the service available in close to 400 markets.
An article in the Huffington Post states that Softbank President Masayoshi Son has “a record of buying struggling mobile companies and turning them around, including the Japan unit of Vodafone.” Even though Sprint has been recovering on its own from the $21 million in long-term debt, this investment from SoftBank will speed up the process and get the network expansion in place more quickly. Son also expects that the two companies can work together, learning from each other, and can begin working on faster 4G LTE networks.
Son is considered a risk taker in what tends to be a cautious business circle in the Japanese market, and some investment agencies have worried about his action with this merger. Son is quoted in a recent Reuters article as saying:
It could be safe if you do nothing, and our challenge in the U.S. is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built. But not taking this challenge will be a bigger risk.
All of these plans will not be completed until around the middle of 2013, so there will be no changes taking place immediately, and it will be business as usual until that time. For me, I hope by about the time I am due to upgrade my own personal phone next Spring, that some of the benefits may be starting to appear on the horizon.
Image courtesy of FreeDigitalPhotos.net
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