If regulators and shareholders approve the deal, Japanese company SoftBank will buy a 70% share in Overland Park-based Sprint Nextel.
SoftBank will pay $12.1 billion for the Sprint stock, and make another $8 billion available for the cash-strapped company to spend or pay off debt.
Speaking at a press conference in Tokyo yesterday, Sprint CEO Dan Hesse said that cash infusion will help Sprint survive in a mark dominated by Verizon and AT&T.
“Over the long term I think we will see consolidation in the US wireless industry. And I think consolidation, outside the big two, or the duopoly, is good for the country and good for the industry,” said Hesse.
Hesse said the timing of the deal is impeccable.
“The $8 billion infusion of capital into the company makes surviving Sprint, if you will, a much, much stronger company,” he said.
Hesse says it will give Sprint a balance sheet that’s more balanced, like the ones at AT&T and Verizon, Sprint’s much bigger rivals. He says it could set Sprint up to be a hunter, rather than pray, in industry consolidation.
Sprint workers generally had a favorable response to the news. Sprint employee John Beecher thought the deal would be positive for both staff and customers.
“We have some stiff competition and I think it could only help, need some extra money to build out the network and form upgrades and stay competitive,” said Beecher.
For the near term, Sprint will keep its headquarters in Overland Park, and Hesse will remain at the helm, though the company’s board will be dominated by Softbank.