Financial Planning: Sprint and Softbank – Good Result, What’s Next?

Jul 3 • Financial Planning, Investments • 1757 Views • No Comments on Financial Planning: Sprint and Softbank – Good Result, What’s Next?

Last week Sprint’s shareholders approved a $21.6 billion deal with SoftBank Corp (see full article here).  In the deal, SoftBank, a Japanese company, will acquire about 78% of Sprint’s outstanding shares, and effectively take control of the company.  The shareholder approval of the sale put an end to the bidding war between SoftBank and Dish Network, a satellite TV provider out of Denver, Colorado.

We believe that Sprint shareholders made the right choice.  The sale to SoftBank is likely the better option for Kansas City as well.  As one of Kansas City’s largest employers, Sprint is an important piece to the local economy.  SoftBank plans to operate Sprint as an independent company, likely keeping the headquarters in Overland Park.  A merger with Dish Network would surely have resulted in the headquarters, and the jobs that go along with it, being relocated to Denver.

So what’s next for Sprint?  With the sale to Softbank in its final stages, the focus returns to Sprint’s comeback plan.  This hinges on an expansive network upgrade to LTE technology that will allow the company to more effectively compete with Verizon and AT&T in terms of speed.  The access to massive resources at SoftBank should allow Sprint to accelerate and possibly enhance its previous network improvement plan.  This is really a two part process.  The network upgrade isn’t the end game – Sprint must create a competitive network and turn it into new customers by stealing market share from its rivals.  SoftBank understands this, as their CEO, Masayoshi Son, said as much in the recent news release regarding the acquisition.

In terms of the stock market, Wall Street’s focus will also return to the business operations of the company to justify the stock price.  The stock has run up lately as the bidding war between SoftBank and Dish Network ensued.  After the deal closes, investors will again look to Sprint’s postpaid subscriptions, margins on new customers, and debt management.  These fundamental measures are likely to drive the stock price moving forward.

For Kansas City, we believe there are reasons for optimism.  The SoftBank deal should keep more jobs here, although there could still be some downsizing as SoftBank asserts its control and new ideas at the company.  In our opinion, the best result for Kansas City would be a Sprint that uses SoftBank’s resources to revitalize its network and make gains on Verizon and AT&T.  If this happens, more jobs and revenue could be coming Kansas City’s way.

For more information, visit our website at www.makinglifecount.com or contact Lucas Bucl – lbucl@makinglifecount.com, (913) 345-1881.

Photo credit: ZTW1 / Foter.com / CC BY-NC-ND

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