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June 24, 2017

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Softbank eyes monster Sprint takeover

TOKYO -- Japanese mobile carrier Softbank is eyeing a multibillion-dollar entry into the U.S. telecoms market through the purchase of Sprint Nextel, possibly vaulting it among the top three mobile firms globally.

The potential takeover of Sprint, which Japan's leading Nikkei business daily pegged at being worth US$23 billion, would also be one of Japan Inc.'s biggest-ever overseas expeditions.

Other reports have put the deal's price tag at about half that figure.

Investors threw cold water on the potential marriage as shares of Softbank, Japan's third-biggest carrier, plunged almost 17 percent to 2,395 yen on the Tokyo Stock Exchange Friday.

"Investors were discouraged by the possibility that the company could be saddled with a heavy financial burden," said Kenji Shiomura, strategist at Daiwa Securities.

"Putting aside whether the deal could be successful in the long run, the market is cautious."

Sprint Nextel confirmed Thursday it was talking with Softbank, sending its U.S.-traded shares 14.3 percent higher to US$5.76.

"Although there can be no assurances that these discussions will result in any transaction or on what terms any transaction may occur, such a transaction could involve a change of control of Sprint," said a Sprint statement.

On Friday, Softbank also confirmed it was in talks to buy a controlling stake in Sprint, the third-biggest U.S. carrier.

The Nikkei reported Friday that Softbank was also eyeing fifth-ranked U.S. carrier MetroPCS Communications at just a fraction of the Sprint price tag. Softbank declined to comment on that potential deal.

Acquiring Sprint and MetroPCS could total 2 trillion yen (US$25.5 billion), and make Softbank the world's No. 3 mobile player, putting it just behind China Mobile and U.S.-based Verizon Wireless, the report said.

Softbank, little known outside Japan, is perhaps the country's most colorful and dynamic among the major mobile carriers, headed by the charismatic tech entrepreneur Masayoshi Son.

Its outlets across Japan were the first to carry Apple's iPhone and the company's television commercials starring a talking snow-white dog — and once featuring U.S. actor Tommy Lee Jones — have garnered wide attention.

The Japanese firm plans to buy more than two-thirds of Sprint's outstanding shares, but the Nikkei said a sharp jump in Sprint Nextel's share price could derail the acquisition plan.

"The scale of the Sprint deal is massive, and frankly, difficult to fully dissect at this point," said Toshiyuki Kanayama, market analyst at Monex.

The news comes a week after T-Mobile USA unveiled its own plan for a merger with MetroPCS in a deal that would boost the fourth-largest U.S. wireless carrier's effort to compete in the fast-growing American market.

T-Mobile's parent Deutsche Telekom will hold a 74-percent stake in the new company.

Some analysts said the Softbank offer for Sprint could be part of a more complex effort to acquire MetroPCS before the T-Mobile deal is consummated.

Softbank would then be positioned to take a run on T-Mobile to create a rival with the scale to challenge the big two U.S. operators, AT&T and Verizon.

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