Softbank Corp., Japan’s third-largest mobile phone company, has announced that it will take a 70% stake in Sprint, paying $20.1 billion for the privilege. A domestic market in decline has prompted it to look elsewhere for growth, and the U.S. has become its target.
Bloomberg reported Monday that Softbank’s chairman and CEO, Masayoshi Son, is looking for expansion in the U.S. market, which is still growing even as Japan’s is shrinking. Shareholders will be paid $12.1 billion, and $8 billion in new capital will provide Sprint with the means to pay down its debt, expand its 4G network or make acquisitions that will allow it to face off against competitors Verizon and AT&T.
It’s not an easy path to go,” said Son in the report. “But without taking on a challenge, we may end up facing bigger risks.” Some investors apparently do not agree with that sentiment; shares of the company fell again on Monday, losing 5.3% on top of a record 17% drop Friday after news of the deal leaked.