Sprint parent Softbank may take part in US spectrum auction

While US mobile carrier Sprint may not participate in the FCC’s upcoming incentive spectrum auction, its Japanese majority shareholder Softbank reportedly may do so. Softbank may set up a separate company to acquire airwaves in the auction, set to begin on 29 March, and potentially sell or swap them later.

While US mobile carrier Sprint (NYSE:S) may not participate in the FCC’s upcoming incentive spectrum auction, its Japanese majority shareholder Softbank (TYO:9984) reportedly may do so.

Softbank, founded by Masayoshi Son (pictured), may set up a separate company to acquire airwaves in the auction, set to begin on 29 March, and potentially sell or swap them later, CTFN reported citing a sector banker.

Sprint has declined to comment and Softbank was not immediately available.

On 7 March, the Japanese telco announced plans to divide its business into two companies: one for its domestic operations and the other for its foreign operations, which include its majority stake in Sprint, the smallest of the US’ four MNOs.

On 10 March, Softbank said that, in connection with the restructuring, it expects to record a loss of Y344.9bn (US$3bn) on the sale of shares in Starburst I and Galaxy Investment Holdings, the fully owned subsidiaries via which it holds its Sprint shares, for the year ending 31 March 2016. Softbank said it expects the impact on its consolidated financial results to be minor.

Sprint is the sole US MNO to have said it will sit out the auction. Larger rivals AT&T, Verizon and T-Mobile US could face competition for the 600 MHz airwaves from satellite broadcaster Dish, cableco Comcast and investment and technology firms. The FCC is expected to announce a list of bidders shortly, potentially this week.

During a conference call on its Q3 2015 results in late January, Sprint said it will focus on cost-effective network densification, deploying dark fibre and wireless backhaul. It also intends to overbuild certain high-roaming areas and work with Competitive Carriers Association partners to boost its LTE presence.

Sprint reported a net loss of US$836m for the quarter.

In a recent research note, Wells Fargo analyst Jennifer Frtizsche said she believes the key to a bull Sprint thesis is the company’s ability to pay down near-term debt and become a self-funding entity.

“In order to do this, Sprint has to prove to the market that the continued cash infusion and tranches may be attained through both Mobile Leasing Solutions (MLS) as well as the expected Network LeaseCo.”

Softbank helped Sprint to develop MLS, the device leasing company it launched last November. Its first sale-and-leaseback transaction provided the US carrier with a US$1.1bn cash infusion. The company expects to execute future transactions via the leaseco on an approximately quarterly basis, raising US$3bn to US$4bn in fiscal 2016, depending on the number of lease sales to customers.

In January, Sprint said it was also creating a network-related financing entity with Softbank.