Its official now that Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) have now finalized the terms for the deal. This deal is very important strategically for the Japanese Telecom company Softbank. This deal might bring some good news to Softbank as its voice revenues started to decline recently. Marc Einstein of Frost & Sullivan was on CNBC early today and he too felt that the deal might bring good news for the Japanese Telecom company.
Einstein began the conversation mentioning that the deal between Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) is so important and mission critical for Softbank because the voice revenues have been declining rapidly in Japan. The reason behind this as per Einstein was:
“Voice revenues in Japan have been declining very very rapidly because of a free voice app called LINE”
Softbank owns 87 % percent in Sprint Corporation (NYSE:S), the T-Mobile US Inc (NYSE:TMUS) deal makes a lot of sense for the Japanese giant as merging the third and fourth largest network would give them access to a much larger spectrum and this would give them a better access to the US market.
When Einstein was asked about the improvements that he sees in Sprint Corporation (NYSE:S) ever since Softbank has bought the company, he stated
“It is still early days. I think the management transition is happening now as we speak, the headquarters is moving from Kansas to Silicon Valley. So things are really just underway and it’s too early to see any top-line difference due to the investment.”
Softbank is coming up with a robot called Pepper which is a humanoid and it’s a lot cheaper than the ones introduced earlier by companies like NEC, Honda and other companies. The plus point is that Pepper would be available for sale for common public unlike the earlier ones. So the pricing strategy used by Softbank might actually act as a catalyst and revolutionize the robot market.
Einstein also believed that the hardware business is not doing very good and hence the Japanese Telecom company needs to stay in the network business, the content business and the deal between Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) has just helped its case to stay up in the market.
When asked if the deal might be objected by the regulatory authorities in the US as the subscriber base of both between Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) combined is far less as compared to AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), Einstein agreed to an extent and said that the major issue for this deal would be the outcry in social media where users might raise concerns over increase in tariffs due to less competition. He also said that the FCC is looking into the other telecom deals too along with this one.
John Paulson’s Paulson & Co has about 16.20 million shares, being one of the largest shareholders of the company. The other key investors in the company are James Dinan’s York Capital management with 11.51 million shares and Third Point that has about 9.50 million shares as of the end of March. These firms would see immediate gains due to the per share price offered by Sprint Corporation (NYSE:S).
However, this deal might happen as T-Mobile from Germany said that they need to get off this business and Softbank is really interested in this business. So The Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) deal might actually open up a realm of possibilities for the Japanese Telecom Giant.