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What the Softbank Sprint Deal Means for Customers

Sprint and Softbank, a Japanese conglomerate that owns Japan's 2nd largest mobile operator, have announced a deal that will have Softbank acquiring 70% of Sprint for around $20 billion. Dan Hesse will remain as Sprint's CEO. But with a controlling interest, Softbank  will be calling the shots at Sprint.

Image: Softbank and Sprint CEOs Masayoshi Son and Dan Hesse shake on the deal.

Softbank's CEO Masayoshi Son is known as a risk taking deal maker with a history of turning weak companies around. There's some speculation that acquiring Sprint is only the first part of a plan by Son to eventually combine Sprint, Clearwire, MetroPCS and possibly T-Mobile into a mobile mega-operator that could be as large as AT&T or Verizon.

Financial analysts are saying that the deal is a good for one Sprint because it will reduce the company's massive $14 billion debt and give it the funds it needs to improve its overloaded network.

But will the deal be good for consumers, including prepaid customers? That's hard to say. Certainly a stronger, faster network is a good thing. The cash infusion from Softbank will help Sprint acquire new equipment and more spectrum to improve its network. Softbank/Sprint is expected to purchase the 52% of Clearwire that it doesn't already own. Clearwire holds a massive amount of nation-wide spectrum and  buying it would nearly quadruple Sprint's current spectrum holdings and actually give it more spectrum than either Verizon or AT&T.

But what about phone and plan pricing? In 2006 Softbank got into the mobile business by purchasing Vodafone Japan for $15.5 billion. Vodafone was a distant third in the Japanese market and had been losing market share for years. Softbank invested heavily in network infrastructure, launched an iconic ad campaign, cut plan prices and refreshed Vodafone's boring handset portfolio with trendy models including the iPhone. Within months, Softbank mobile became the fastest growing mobile operator in Japan and recently became the second largest Japanese operator in revenue.

Will Softbank be able to revitalize Sprint the way they did Vodafone Japan? I hope they do and expect a similar approach of network enhancements, an advertising blitz and innovative new phones. However I wouldn't count on seeing cheaper plans. Softbank, is borrowing heavily to do the the Sprint deal. The interest payments combined with the costs of acquiring Clearwire and upgrading the network won't leave Softbank with much room to compete on price.

The Softbank, Sprint deal must be approved by shareholders and regulators. Approval is expected and the deal should close within six months. Don't expect any big changes in Sprint's offerings until then.

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15 comments:

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  1. The question is what this all means for MVNOs, especially Ting... will New Sprint change the terms in such a way to force them to raise prices?

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  2. If you recall Ting tends to sell the "Sprint" handsets at prices higher than one could get at a competing wireless carrier. Second, Ting charges a basic monthly fee. Third, Ting was never competitive in data. Based on those factors, Ting should continue to do well for its demographics.

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  3. All I see here is Masayoshi Son is half the man Dan Hesse is..................

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    1. He might be half the height but he's worth $8 billion and about to become Dan's boss.

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  4. I truly hope this doesn't affect my service with Boost.

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    1. to my opinion they did not market Boost mobile well and should be no more as they already have a major prepaid that being Virgin Mobile

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  5. Prepaid has most definitely been one of Sprint's bright points in the last few years since the Nextel mess. I don't see why they would mess with one of the things from the old Sprint that actually has been working all this time.

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  6. yeswap i know u said you rather see t-mobile and metro together than sprint and metro but i was wondering after this do you still feel like that? i have t-mobile monthly 4g and i don't really care either way but we both know that with t-mobile shutting down metro cdma within only 2 and a half year span a lot of them customers will leave just like we are seeing with iden now on the sprint network. at least with sprint both companies have cdma and it can be converted instead of shut down. where as t-mobile metro merger your asking 9.3 million people to convert to new handsets we know all of them won't but again if 65 percent or higher convert to t-mobile handsets then i guess that with the spectrum will be worth it. but i think you know that softbank now with sprint and clear would be better if metro just gets thrown in and sprint could run it like boost virgin and metro would become nationwide and they would just use the spectrum and enhance thier 3g and 4g lte plus when they recomission iden towers this would be big for sprint!

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    1. The issue with MetroPCS' CDMA network is that for the most part it's on the old 1xRTT spec (theoretical 153 kbps down/up). I believe that MetroPCS' network upgrade plan was to re-farm their 1900MHz PCS holdings to LTE (with VOLTE) to match their deployment on 1700/2100MHz AWS. Under that scenario, all their older dual-band or tri-band CDMA handsets (such as the LG Optimus M) would have become obsolete anyways.

      I believe that Sprint needs an infusion of capital even more than additional spectrum holdings, which makes this proposed Softbank acquisition compelling to me. According to their "Network Vision" plan, they'll be re-equipping their cellular base stations so that they can implement hybrid CDMA 1xEVDOrevA (with HD voice) & LTE on a combined 800MHz SMR & 1900MHz PCS & 2.5GHz network (note that they have no significant AWS licenses). See http://www.extremetech.com/mobile/129198-network-vision-sprints-path-to-domination for further detail.

      Even so, the T-Mobile-USA/MetroPCS merger still appears more appealing to me as a consumer since their spectrum holdings match up over the PCS & AWS bands. Note that T-Mobile-USA's "Challenger" plan is to implement HSPA+ on PCS & LTE-Advanced on AWS. See http://www.extremetech.com/electronics/137442-t-mobile-and-metropcs-a-match-in-lte-heaven/ for more detail. IMHO, the key win for consumers is BYOD, something which is currently not offered by neither MetroPCS nor Sprint.

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  7. I still hope T-Mobile gets MetroPCS. They need even more now to compete effectively with a healthier Sprint.

    I expect that T-Mobile will give the remaining MetroPCS CDMA users free replacement GSM phones when the CDMA network is shut down.

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  8. It's Sad Dan Hasse could not correct the fall back's of Sprint, if you ask me he should of Improved 3g network a while back and Offer even more competitive Plan's I mean the current offer is good but now that T-Mobile has brought back True unlimited data from the dead, they need to work hard on offering something that is better than T-Mobile's offering, LTE is still pre-mature on Sprint built

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  9. Well, T-Mobile's true unlimited only applies to postpaid.

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  10. "What the Softbank Sprint Deal Means for Customers......will the deal be good for consumers, including prepaid customers? That's hard to say."

    Here is one answer:
    I tried to convince my relative to move from Sprint contract (450 min/unlimited for $76 total) to prepaid. His wife uses The 55 on Pageplus. He likes Sprint, and last weekend moved his wife to FramilyPlan. I could not believe what Sprint did: 1. Added wife to contract and gave her a $0 iPhone 5c; Upgraded his 4S to a 5C (he was due an upgrade); moved them to a new FramilyPlan with 1 unlimited line and 1 3GB line, $130/month + $19 taxes, fees. They did NOT sign an Easy Pay installment agreement for the new phones, and have NO extra phone charges each month. Sprint waived the $15/month extra service fees for BOTH iPhones. His wife will owe part of the cost of the iPhone if she cancels her line within 2 years (ETF carryover?). Bottom line? Their monthly cost goes up $23. They get 2 new iPhones for $99, plus a $36 activation fee for the wife. She now has 3GB LTE instead of 2.5GB of 3G. He has unlimited LTE, vs slow 3G. Their phones will roam on Verizon when necessary (he says he has never had a problem with this coverage, only 3G speed). I think Sprint must have backdated the purchase of the new, subsidized $0 iPhone to 1/10/14, to avoid the $15/month service fee for folks with a subsidized phone.
    That is not the end of this story.
    Yesterday, AT&T dropped the price of a 4-line family plan with 10GB Mobile Share by $100/month, to $160. Amazing. Each smartphone is only $15/month, not $25, when they share 10GB for $100. And the Value Mobile Share 300 MB for one smartphone is only $45, or $70 for two. These plans require BYOD, an installment contract or upfront phone purchase, but they were not even available before. Tmobile, then Sprint turned up the heat, and AT&T blinked. AT&T will put some pressure on Verizon with these prices. Verizon costs $100 more/month for 4 smartphones sharing 10GB. And AT&T is paying $450 to buy new customers who switch.
    Maybe a new phone blog, or a new section is in order as this continues?

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    1. Correction: AT&T is paying up to $450 ETF, plus an extra $100/new line to buy and keep customers.

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    2. Correction 2: AT&T dropped the price for 4 smartphones by $40/month, not $100.

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