TOKYO U.S. telecom Sprint is "becoming a growth engine" for SoftBank Group, the head of the Japanese parent told reporters here Nov. 6, showing confidence in the unit's ability to make it alone following failed merger talks with rival T-Mobile US.
Masayoshi Son, chairman and CEO of the Japanese tech company, confirmed that a deal to combine Sprint -- the fourth-ranked U.S. mobile provider -- with the third-place carrier owned by Germany's Deutsche Telekom had fallen through. But Son remained upbeat, claiming he was "feeling bright" about the cancellation.
SoftBank and Deutsche Telekom failed to reach a compromise over integrating the U.S. providers, each seeking control over management of the resulting merged company. Late last month, the Japanese company proposed cutting off the talks. Eight people including the head of the German company met on Nov. 4 in Tokyo to discuss matters, but they decided no deal could be reached.
With the merger called off, Sprint intends to work toward expanding on its own. Sprint's earnings are healthy, Son said, with SoftBank's income from that segment climbing more than 90% on the year for the six months through September. He said the company was "growing, compared to Japan's maturing market."
SoftBank also said it would buy more Sprint shares and raise its stake to nearly 85%, clearly seeking a firmer hand in managing the U.S. unit. The Japanese parent regards the telecom as "a strategically indispensable company, thinking on a five- or 10-year basis," Son said.
Sprint also announced an agreement Nov. 5 to offer use of its cellular network to U.S. cable television provider Altice USA, a move expected to bring the telecom stable income.
Verizon Communications and AT&T, the top two U.S. mobile providers, control nearly 70% of that market. But with help from SoftBank's roughly $93 billion Vision Fund, Sprint can challenge that oligopoly through cross-industry tie-ups. Son sees "plenty of chances to take a little" market share from the two leaders.
The SoftBank CEO left the door ajar on T-Mobile, saying renegotiations are possible if the Japanese company could "hold right of management, or have control under some similar arrangement."