SoftBank buys $87M more in Sprint shares in show of confidence

Sprint (NYSE: S) parent SoftBank bought around $87 million more shares in the carrier, a sign of confidence that SoftBank is standing behind Sprint as the company continues its turnaround push.

Softbank said it bought 22.9 million shares at a weighted average price of $3.80, or around $86.9 million. The company said it intends to keep its stake in Sprint below an 85 percent threshold that would trigger a tender offer for the remaining shares, a condition of SoftBank's $21.6 billion deal to acquire Sprint in 2013. In September 2013 SoftBank pushed its stake in Sprint past 80 percent.

As The Wall Street Journal notes, SoftBank's purchase of the Sprint shares adds to the $1 billion SoftBank spent last week buying shares of its own company, which it said were undervalued due to doubts about Sprint's turnaround.  

In a statement, SoftBank said it "is enthusiastic about Sprint's prospects. The SoftBank Group and Sprint teams have been working closely together on Sprint's network strategy to enhance Sprint's competitiveness and reduce its capital expenditures and operating costs."

Over the past year top executives from Sprint (NYSE: S) parent SoftBank floated the possibility of selling Sprint to both Comcast (NASDAQ: CMCSA) and European telecom firm Altice, according to a WSJ report from earlier this week, which cited unnamed sources. The efforts never went anywhere and SoftBank CEO and Sprint Chairman Masayoshi Son has firmly backed Sprint, but turning around the carrier has been anything but smooth for Son and SoftBank.

Son said last week on Sprint's earnings conference call that over the last few months he has been "totally refocused" on helping Sprint CEO Marcelo Claure and the management team execute on "the historical turnaround of the company."

"I believe Sprint is going to be one of the very, very good companies of which I will be very proud," Son said last week.

Sprint and SoftBank are working with investment partners to set up companies to lease both handsets and network gear for Sprint's network densification project, which will push debt off Sprint's balance sheet, though some financial analysts said it should still be treated as debt.

Claure said last week on Sprint's earnings call that the carrier is on track to cut $1.5 billion in expenses in fiscal 2015. Sprint also expects 2015 to be the year when its pattern of burning through its cash peaks. Sprint expects additional "aggressive" expense reductions in 2016 and beyond equal to or greater than $1.5 billion.   

For more:
- see this SoftBank release
- see this WSJ article (sub. req.)
- see this Reuters article
- see this FT article (sub. req.)

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