This agreement will bring the two nations closer by introducing a common platform since Sprint is the third largest U.S. mobile carrier. This acquisition is expected to create growth opportunities for Softbank. It is also expected to form a strong bond and increase the overseas purchasing power of corporations in Japan. Dormant domestic market of Japan appreciates such move as it aims at exploring growth opportunities in other parts of the world.
According to a Dealogic, a company that was keeping track of this deal said that, the deal would elevate the debt of the Japanese company to around $100 billion. This figure is twice that of last year. Board of both the companies is excited about this deal. However, the US regulators and Sprint shareholders are yet to approve the acquisition. Sources from Softbank reported that this transaction is expected to be completed by mid 2013. According to Softbank, this acquisition will give a tough competition to other major US mobile carriers like AT&T. US has the world’s biggest market of smart phones and this investment is expected to turn out a profitable venture for both the companies.
This deal has also left the shareholders and investors in confusion because it is a big investment that will lower the value of Softbank shares in the market. The acquisition means the Softbank shares are now lowered by one third. In addition, the credit rating of Softbank is also negative and the company has been placed in a credit watch by the Standard & Poor. Sprint was also struggling a lot in the last few years to compete with other major carriers like AT&T and Verizon. The company is dealing with a lot of internal issues in the last four years that include launch of costly structure of networking, agreement to a long-term debt of $21 billion. In addition, company entered into an agreement to buy $15.5 billion worth iPhones from Apple.
However, internal sources said that Sprint is in the process of improvement and is expected to recover successfully. Sprint is also going to receive cash as a result of this investment.