Sprint Asks FCC to Transfer Licenses to Softbank as Part of Merger Plan

NEWS ANALYSIS: Sprint has asked the Federal Communications Commission to grant authority for the mobile carrier to transfer its licenses to Softbank as it proceeds to sell most of itself to Japanese wireless giant.

The two companies must demonstrate that the merger would be in the public interest, which is the basic purpose of the filing.

“Sprint expects its proposed merger with SoftBank to greatly stimulate wireless competition and innovation,” Sprint spokesman John Taylor said in a prepared statement. “The transaction can potentially transform the U.S. wireless marketplace by helping Sprint improve the speed, coverage, reliability, and capabilities of its wireless network and thereby offer consumers more competitive choices in a broadband world.”

Many observers expect the acquisition of 70 percent of Sprint by Softbank to make it through the approval process. To date there’s been little or no opposition to the deal, which is expected to close in the first half of 2013. While the deal will give the perennially troubled Sprint some much needed working capital, it doesn’t really increase the size of the company in the United States.

One thing that the merger will do if it’s approved by the regulatory authorities is to put a significant amount of the U.S. wireless business in foreign hands. Verizon Wireless, for example, is a joint venture between Verizon and global telecom giant Vodafone, which is based in the UK and owns 45 percent of the company. T-Mobile USA is wholly owned by German telecom giant Deutsche Telekom. When the Softbank deal with Sprint closes, it will be 70 percent owned by Softbank, a Japanese telecom giant.

The only major carrier that will remain completely in U.S. hands is AT&T, although Vodafone has periodically suggested that it may sell its part of Verizon Wireless to someone else, most likely Verizon Communications. But that hasn’t happened, and it may never happen, considering that Vodafone is earning nearly half of the $8.5 billion dividend that VZW announced recently.

So does it matter that so much of the wireless business in the U.S. is foreign owned? After all, isn’t this part of the whole globalization thing? It matters in two areas. First, the profits that these companies make from US customers aren’t staying in the US, which isn’t good for the U.S. economy.

Second, it gives foreign companies a great deal of control over telecommunications in the U.S. Right now that’s not a problem, but perhaps it might be depending on the practices of other governments and the state of the economy in those nations. It would be disappointing to see the owners of these wireless companies sink if the economies in their home countries falter, and in the process drag down the U.S. wireless business.