SoftBank has spent $87m to buy additional shares in Sprint in another affirmation of founder Masayoshi Son’s commitment to his struggling US wireless carrier.
The purchase came as shares in Sprint have nearly halved since the Japanese telecoms and internet group acquired a controlling stake in 2013. Turnround efforts have been slow, with Sprint recently slipping to fourth place among the major US mobile operators.
SoftBank on Thursday said it had acquired another 22.9m shares in Sprint over the past three days, raising its stake from 79.4 per cent to 79.9 per cent. The company said it does not plan to increase its stake to 85 per cent or more, at which point Sprint would become eligible for delisting.
Shares in Softbank fell as much as 3.6 per cent in Tokyo following the announcement. The company recently announced plans to spend nearly $1bn to buy back up to 1.68 per cent of its shares, which Mr Son said were undervalued.
Mr Son acquired Sprint with the intention of merging the group with T-Mobile US but his plan was thwarted by US regulators. Given the tough prospects of reviving the loss-making unit as a standalone group, investors and analysts have long speculated Mr Son would seek to sell the loss-making unit.
Over the past couple of weeks Mr Son has made repeated pledges to stand by Sprint, even making a rare appearance on Sprint’s earnings call. He admitted he had considered selling Sprint at one point but insisted he is now confident in Sprint’s turnround plan.
“It was a long and dark tunnel, but I’m seeing light at the end of it,” Mr Son said last week after SoftBank reported quarterly results, predicting that he would be able to turn round Sprint in about two years.
As part of its new strategy Sprint plans to free up cash to fund improvements to its network by setting up two standalone equipment leasing companies — one for customer handsets and another for network equipment.
That will allow Sprint to remove the significant costs of procuring equipment from its own balance sheet.
In addition to reducing operating expenses, Sprint and SoftBank engineers are working on revamping the carrier’s network, Mr Son said, although few details have been disclosed on what the improvement would entail.
For its fiscal first quarter, Sprint reported a loss per share of 1 cent, compared with the 7-cent loss analysts were expecting, while revenues of $8bn were about $300m shy of Wall Street expectations.
The company lost 12,000 so-called postpaid customers, who are billed for their service on a recurring monthly basis — a big improvement on the previous quarter, when it lost 201,000, and on the same period of last year when it haemorrhaged 620,000 of those subscribers.
The rate at which postpaid customers are leaving the company, or “churn”, fell to a record low of 1.56 per cent. Still, its total number of subscribers fell below that of T-Mobile.