TOKYO -- SoftBank Corp. (9984.TO) has reached a basic agreement
to acquire T-Mobile US Inc. (TMUS) from German parent Deutsche
Telecom AG (DTE.XE), paving the way for a merger between the
fourth-ranked U.S. mobile carrier and rival Sprint, The Nikkei
reported in its Saturday morning editions.
The two sides are still ironing out the details, and the deal
needs clearance from U.S. regulators. Together, third-ranked Sprint
Corp. (S), acquired by SoftBank last year, and T-Mobile have some
100 million U.S. subscribers, putting their combined customer base
on par with those of Verizon Wireless and AT&T.
The Japanese carrier plans to buy more than 50% of T-Mobile
shares through Sprint from Deutsche Telekom, which owns a roughly
67% interest. SoftBank will pay cash and use stock swaps to cover
the estimated purchase cost of more than Y1.7 trillion.
Eight financial institutions will bankroll the deal by setting
credit lines of about Y4 trillion. In addition to Japan's three
megabanks, such foreign financial institutions as J.P. Morgan Chase
& Co. (JPM) and Deutsche Bank (DB) will take part. To keep
interest rates low, the SoftBank group is expected to first procure
the funds through bridge loans, which will then be replaced with
Sprint-issued corporate bonds and other long-term borrowing.
SoftBank had more than Y9 trillion in interest-bearing debt as
of March 31. But the banks apparently have confidence in the
telecommunication company's ability to repay loans, given its solid
domestic wireless business.
The U.S. Federal Communications Commission and the Department of
Justice need to approve the deal, a process expected to take a year
or two. Deutsche Telekom is concerned that T-Mobile's
competitiveness will suffer if capital investment is put off during
the screening period and the deal is not approved. It is asking
SoftBank to compensate for the loss if this happens. The two sides
apparently have not finalized several other conditions as well.