Sprint, Softbank urge FCC to approve $20.1B deal

Sprint Nextel (NYSE:S) and Softbank filed documents with the FCC asking the commission to approve Softbank's deal to acquire 70 percent of Sprint for $20.1 billion, arguing that the deal is in the public interest and will increase U.S. wireless competition.

The filing is standard but necessary because the companies need FC approval for Softbank to take ownership of Sprint's spectrum licenses. The FCC must determine that the transfer is in the public interest in order to approve the deal.

In the filing, which runs 101 pages, Sprint argues that the deal will not harm the market in any way. "To the contrary, the transaction is expected to greatly stimulate wireless competition and innovation. It offers the potential to transform the U.S. wireless marketplace by creating a more vibrant rival to compete with today's two predominant wireless providers, Verizon Wireless (NYSE:VZ) and AT&T (NYSE:T)."

Sprint and Softbank said the deal will allow Sprint to strengthen its balance sheet and lower its borrowing costs, and that more financial firepower will allow Sprint "to increase its network investment, accelerate its broadband deployment across multiple spectrum bands and improve its coverage."

Sprint also said the transaction will allow it to offer a wider range of devices and services to consumers and that Sprint "anticipates taking advantage of other market opportunities to enhance its ability to provide superior service to its customers." Some analysts have said Sprint may use its improved financial position to make acquisitions. Sprint also said the deal will give it greater economies of scale for handsets and network gear, though some analysts have discounted that argument because Sprint and Softbank use different technologies for their respective 3G networks.  

Softbank and Sprint said that Softbank's 2006 purchase of Vodafone's Japanese wireless operations injected competition into the market to challenge incumbents NTT DoCoMo and KDDI. Sprint said the same thing will happen in the U.S. market if the deal goes through.

"As a result of Sprint's more formidable competitive position, and the inevitable responses by AT&T and Verizon, consumers should expect to enjoy more choices and new, innovative applications, features, and services," Sprint said.

Interestingly, the companies noted that they are also are filing applications to transfer Sprint's prospective de jure controlling interest in Clearwire's (NASDAQ:CLWR) spectrum licenses to Softbank "because Softbank, by virtue of its acquisition of an approximately 70 percent indirect interest in Sprint, also will indirectly acquire Sprint's interest in Clearwire."

Last month, roughly a week after the Softbank deal was announced, Sprint increased its ownership stake in Clearwire to 50.8 percent but made clear that Sprint does not control Clearwire and that Clearwire remains an independent entity. Indeed, Sprint once held a 54 percent stake in Clearwire but did not have control over its board or strategic direction.

For more:
- see this FCC filing (PDF)
- see this Reuters article
- see this MarketWatch article

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