Sprint Looks at Japan for Help

Sprint Corp has been facing a tough time for more than half of a decade with huge debt load and deep losses. Now, they are seeking help from Japan… Softbank Corp, Japanese Internet and mobile company is in high talks to purchase a significant share in the poor United States wireless carrier.

The agreement would provide billions of dollars support that could help Sprint plan for its future and better compete with richer and bigger rivals. The surprise deal is the 2^nd major move taken by a foreign firm to take over American-based carrier. Since Japanese companies are backed by a strong yen, they are investing in Sprint and similar companies to grow outside the home market.

Softbank Corp is planning to buy nearly 7-percent of Sprint, which has market value of $17.28 billion until the stock closed on Thursday night. This new deal would help Sprint to balance its finance sheet, forming a new platform, making additional purchase of US-based carries in near future. Softbank Corp spokesperson confirmed the news on Friday in Tokyo that the company had a discussion with Sprints about a near possible agreement. Both companies just had talks, but have not decided about investment.

There are some potential obstacles to an agreement, including winning over Sprint’s stakes and solving the complex relationship of Sprint and its partner group ClearWire Co.  If the deal finalizes, it should create a market where just 2 companies, AT & T and Verizon will have the bulk of clients and gains.

If Softbank invests on Sprint, it can make the company to spend money on next generation wireless networks, where it lags behind Verizon and AT&T. The recapitalized Sprint together with Softbank could purchase other carriers in the market, profiting to a high level, taking down the rivals that compete aggressively on assets.

Sprint made a big stride, merging with Nextel back in 2005; Dan Hesse, Chief Executive has shot declines in subscriber rolls and revenues and has taken benefits of low interest rate to push payment dues of Sprint’s debt. But $15.5 billion commitment and network upgrade to carry the Apple iPhone have exhausted the resources. It shuffled the company’s ability to compete aggressively with Overland Park, conducting mergers to add in bulk in the fast-fusing industry. He had been outspoken about the company’s needs to fake deals to compete with the rich rivals, which are almost double the size of Sprint. Softbank’s unusual move may help Sprint to get back on track.