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.
Sprint Nextel has requested that the Federal Communications Commission to approve the transfer of its wireless licenses to Softbank, the Japanese wireless giant that’s announced its intentions to buy 70 percent of Sprint in a $20 billion dollar deal.
The transfer of licenses is necessary because Softbank would own controlling interest in Sprint. In addition, Softbank would need FCC approval of the transfer because it’s a foreign corporation that would own more than the normally permitted 25 percent.
In addition, Sprint has asked for transfer of Sprint’s prospective interest in Clearwire’s licenses in advance of the completion of Sprint’s purchase of a controlling interest in Clearwire of more than 50 percent ownership. Effectively, Softbank would control Clearwire because it would own Sprint.
In a public interest statement filed on Nov. 15 with the FCC, Sprint said that the merger and the transfer of licenses would create no competitive harm to the wireless market since Softbank currently has no other interests in the US wireless market.
“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 and AT&T,” the company said in its statement to the FCC.
In the filing, Sprint revealed that it anticipates an infusion of $8 billion in new capital, which it says it needs to accelerate its broadband deployment. Sprint also said that the merger and resulting license transfer would allow Sprint to offer new forms of competition in terms of new products and services.
Sprint also noted in the filing that the merger is expected to enhance the company’s ability to obtain products, including handsets, and mobile services on more favorable terms because together the companies would have some 92 million subscribers. The filing said that this would put the combined company on the same scale as AT&T and Verizon Wireless in the United States.
In addition to this filing, the Sprint and Softbank have petitioned to allow the foreign ownership of Sprint. “In addition to the transfer of control applications, Sprint and SoftBank have submitted a Petition for Declaratory Ruling to allow SoftBank’s indirect foreign ownership of Sprint to exceed the 25 percent benchmark set forth in Section 310(b)(4) of the Communications Act. As set forth in that petition and in this Public Interest Statement, there are strong public interest benefits to permitting this level of foreign ownership.” Sprint said in its statement.
Besides approval by the FCC for the license transfer, the Softbank merger must be approved by the Committee on Foreign Investment in the U.S. (CFIUS), by the U.S. Department of Justice and the Federal Trade Commission.