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Monday, March 27, 2023

Japan’s Softbank poised to supercharge Sprint network

Softbank CEO Masayoshi Son isn’t impressed with the high-speed wireless networks in the United States.

“Everytime I come to the U.S., I say ‘Oh my God, the mobile phone network is so slow,'” Son said during a conference call with analysts today.

Now, Son is in a position to change things to his liking after Softbank and Sprint Nextel agreed on a deal in which Softbank would take a 70 percent stake in the U.S. carrier.

Sprint, which has struggled as a distant No. 3 carrier behind AT&T and Verizon Wireless, could get a boost from the deal, in which Softbank spends $12.1 billion to buy the controlling stake and another $8 billion in investment into the company.

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If Son’s comments are any indication, speed may be a priority for Sprint under Softbank’s control.

That’d be a boon to Sprint consumers who are left waiting for faster 4G LTE service even as Verizon and AT&T aggressively roll out their respective networks. Son said that on average, Japanese wireless networks were much faster than their U.S. counterparts, and he looked forward to bringing speed to these shores.

“I think we can provide much better competitive technology and services that U.S. citizens have never experienced,” he said.

Sprint so far has 24 markets covered with its faster 4G service and has committed to rolling out the network to many major cities. But it’s well behind Verizon, which is poised to surpass 400 markets this week. In the meantime, many of its latest smartphone customers, who have LTE devices, are stuck on the slower 3G network.

In Japan, Softbank has aggressively rolled out its 4G LTE service. Of course, hooking up Japan and building out a network in the U.S. are two completely different tasks, given the dramatic disparity in geography. The infusion of cash will certainly help speed things up.

In addition, Softbank uses a variant of LTE called TD-LTE, which is similar to the technology that Clearwire is using. Sprint has already committed to Clearwire as its largest customer and shareholder, and plans to use Clearwire’s network to augment its own coverage in big and crowded markets.

Son pointed to Softbank’s experiencing in turning around businesses, including Vodafone Japan, and expressed confidence that his company could do the same with Sprint.

He noted that the U.S. is dominated by a duopoly in AT&T and Verizon, similar to the Japanese market, which is led by NTT Docomo and KDDI, and that he has spent his career fighting duopolies and doing so successfully.

Son praised Sprint CEO Dan Hesse’s efforts in leading Sprint’s recovery, but said it was time for the investment stage of the turnaround.

Sprint’s leadership team, including Hesse, will remain in Overland Park, Kansas, and run as a unit under Softbank. Sprint and Softbank are forming a new, publicly traded company in which Softbank will take the majority control, while Sprint shareholders get the rest.

Don’t expect any major upgrades or changes soon; the deal isn’t expected to close until the middle of next year, and still requires regulatory approval.

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