Report: SoftBank to wind down Silicon Valley offices following collapse of T-Mobile deal

Sprint (NYSE: S) parent SoftBank plans to clear out most of the staff of its Silicon Valley offices, according to a Reuters report, following SoftBank's aborted effort to merge Sprint with T-Mobile US (NYSE:TMUS).

The report, citing unnamed sources familiar with the matter, said that the downsizing of the office in San Carlos, Calif., reflects a decision within SoftBank that the company will not be trying to forge a deal with T-Mobile anytime soon. SoftBank opened the office in September 2013, shortly after it closed its deal to acquire a controlling stake in Sprint. Rumors of a deal with T-Mobile first surfaced in December 2013.

When asked why he had set up the Silicon Valley office, SoftBank CEO Masayoshi Son told Nikkei it was because "Silicon Valley is the global center of the IT industry." The office also gave Son and other Japanese executives a U.S. base that was closer to Japan than Sprint's headquarters in Overland Park, Kan. SoftBank spent much of this year trying to negotiate a deal with T-Mobile and its parent Deutsche Telekom to increase the carriers' scale, but the talks collapsed in August amid opposition from regulators.

The Reuters report said SoftBank is now moving "the bulk" of its workers out of the California office and is sending development engineers to Sprint's headquarters. SoftBank is also considering renting out one of two buildings it leased at an annual cost of over $3 million. "There were people sent to Silicon Valley for the purpose of making (mobile phone) platforms, but that job was done and there's nothing else to do," one source told Reuters.

SoftBank spokesman Matthew Nicholson told Reuters some SoftBank employees are moving back to Tokyo or are moving to Kansas as certain joint projects between the company and Sprint have finished. He declined to comment regarding the relationship between the departures and the failed T-Mobile deal.

In late October Sprint appointed SoftBank executive Junichi Miyakawa to the newly created position of Technical Chief Operating Officer. He reports directly to Sprint CEO Marcelo Claure. Miyakawa previously led SoftBank's network operations, which rely heavily on TD-LTE technology using 2.5 GHz spectrum. Sprint controls around 120 MHz of spectrum in that band in 90 percent of the top 100 markets and is using that spectrum to provide expanded capacity and higher speeds to customers.

Sprint CFO Joe Euteneuer and Yoshimitsu Goto, the managing executive officer of SoftBank, said at an investor conference earlier this month that Miyakawa had brought engineers with him to Kansas.

Euteneuer noted that Sprint executives used to have weekly video conferences with Son when the deal between SoftBank and Sprint was first sealed, but that "a lot of that is going away because we are into one operating rhythm with them." He said that he consults "all the time" with his SoftBank counterparts on finance issues.

"And so I think it's just become a lot more cohesive and especially with Marcelo stepping in," Euteneuer said, according to a Seeking Alpha transcript of his remarks. "I mean you have two entrepreneurs that have the same philosophical bent on how to run a company. And so the trust factor and integration there is its best ever."

For more:
- see this Reuters article

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