Softbank, Deutsche Telekom agree on Softbank's planned acquisition of T-Mobile; banks to set up loans up to USD 39.4bn
Softbank Corp. [TYO: 9984], Japan’s third-largest mobile phone service operator, and Deutsche Telekom[ETR: DTE], the largest shareholder of T-Mobile US, have agreed on Softbank’s planned purchase of the US company, the Nihon Keizai Shimbun reported, without citing sources.
Softbank plans to acquire more than 50% stake in T-Mobile from Deutsche Telekom, which currently owns 67% stake in the US fourth-largest mobile phone operator, via a combination of cash payment and a share swap deal, the Japanese-language newspaper said.
The deal is estimated to exceed JPY 1.7tn (USD 16.8bn), the newspaper reported. For financing the acquisition, three Japanese banks and five foreign banks, including Mizuho Financial Group [TYO: 8411],Mitsubishi UFJ Financial Group [TYO: 8306], Sumitimo Mitsui Financial Group [TYO: 8316],JPMorgan Chase [NYSE: JPM], and Deutsche Bank [ETR: DB1], will set loans up to JPY 4tn, the report added.
The purchase cost will be funded first by a short-term bridging loan to Softbank, and then the debt will be shifted to long-term bonds issued by Sprint [NYSE: S], the US third-largest mobile phone service operator that Softbank acquired in July last year, according to the report.
Softbank purchased Sprint for about JPY 1.8tn, and the US company is losing money and subscribers. The Japanese company and Deutsche Telekom have agreed that it is necessary to combine Sprint and T-Mobile to strengthen competition in the US mobile phone industry, the Japanese newspaper said.
The combination of the two US companies will bring 100 million subscribers, comparable with that of bigger rivals, Verizon [NYSE: VZ] and AT&T [NYSE: T], the item noted.
To complete the acquisition, Softbank needs to gain approvals from the US Federal Communications Commission, and the US Department of Justice, which may take a year or two from announcement, the newspaper reported.
Source Nihon Keizai Shimbun