December 25, 2013 2:00 am JST

SoftBank eyes purchase of T-Mobile

Masayoshi Son, SoftBank's chief executive, is gearing up for a T-Mobile bid.

TOKYO -- SoftBank is moving to acquire fourth-ranked American wireless carrier T-Mobile US, a deal that would allow it to match up evenly with the two big American players if approved by U.S. regulators.

     The Japanese telecommunications giant intends to buy a majority of the shares in T-Mobile through U.S. subsidiary Sprint as early as next spring in a transaction estimated at more than 2 trillion yen ($19 billion). It is in the final stages of talks with T-Mobile's German parent, Deutsche Telekom, sources close to the matter said.

     Purchasing T-Mobile would boost the SoftBank group's revenue from mobile operations to 7 trillion yen a year, making it the world's No. 2 carrier, behind China Mobile.

     SoftBank had initially envisioned a stock swap. But it is believed to have added a tender offer and other transactions to the list of options, since Deutsche Telekom prefers a cash deal. It intends to borrow the funds for the acquisition and has begun discussing fund procurement with U.S. financial institutions and others.

     SoftBank bought third-ranked U.S. carrier Sprint for roughly 1.8 trillion yen in July, putting it in a tie for No. 4 in the world along with such firms as the U.K.'s Vodafone. But Sprint has only about 55 million U.S. subscribers -- a far cry from the roughly 110 million each of Verizon Wireless and AT&T. SoftBank aims to compete better with the two giants in the U.S. and gain a foothold for global expansion through the large acquisition.

     T-Mobile generates about 2.6 trillion yen in annual revenue. If the deal goes through, the company will likely be integrated with Sprint, giving birth to a carrier with some 100 million subscribers. SoftBank will control the new entity by holding a 60-70% stake.

     The SoftBank group's total subscribers in Japan and the U.S. combined would grow to about 140 million from 100 million through the acquisition. The increase in mobile phone sales would give the group more leverage in negotiating prices with handset manufacturers, leading to lower procurement costs.

     The deal needs approval by the U.S. Federal Communications Commission and Department of Justice. The FCC was believed to have opposed an industry shakeup that would reduce the number of big players from four to three. But SoftBank apparently grew emboldened by the Justice Department giving the green light last month to a merger of major U.S. airlines after having initially objected.