Softbank at US crossroads
Japanese telco may seek merger for Sprint -- or sell it off
TOKYO -- It looks like SoftBank Group is on the verge of making a difficult decision regarding its U.S. wireless operation.
The Japanese telecommunications company, led by the ambitious Masayoshi Son, bought Sprint in 2013. Cost-cutting efforts have helped to significantly improve the U.S. mobile phone carrier's earnings. But Sprint's subscriber base remains well behind those of the U.S.'s two top carriers, Verizon Communications and AT&T. What is more, it has recently slipped beneath T-Mobile, now the U.S.'s No. 3 cellphone service provider.
With U.S. President Donald Trump expected to relax telecom industry regulations, it may be time for Son to make his next move in the country.
One option would be to promote industry consolidation in the U.S.
Reuters and other media outlets on Friday reported that SoftBank is considering passing control of Sprint to T-Mobile. The reports say SoftBank will likely approach T-Mobile parent Deutsche Telekom in the months ahead with an offer to sell Sprint.
This would be quite the turnaround. In 2014, when Sprint was the No. 3 carrier, Son sought to acquire T-Mobile. Now news outlets are indicating that SoftBank, if it is indeed to sell Sprint, could be on the verge of withdrawing from the U.S. telecom market.
However, a source close to the matter told The Nikkei that this is not a realistic option for Son. The source said Son is keen on keeping a toehold in the U.S. so the Japanese company can more easily expand its internet of things business in the country.
Sprint's operating profit for the three quarters through December more than quadrupled from a year earlier to some $1.3 billion. For the same period of 2013, when SoftBank bought the carrier, Sprint was some $1.9 billion in the red. Earnings have been improving ever since, largely thanks to massive cost cuts.
Last year, Son reiterated that he did not intend to sell Sprint, which he said has the potential to be a major global carrier on its own.
So, what to do?
Soon after Trump took office last month, Son said he would seek opportunities, including a possible merger.
Other than Friday's reports that SoftBank may sell Sprint, there are rumors in the U.S. that Son might consider merging the telco with a cable TV service provider.