Shares in SoftBank Group Corp. rose nearly 3 percent in morning trading on Monday after a Reuters report that the Japanese company is prepared to cede control of Sprint Corp. to T-Mobile US Inc. to clinch a merger of the two U.S. wireless carriers.
SoftBank is expected to approach T-Mobile parent Deutsche Telekom AG for negotiations when an ongoing auction of airwaves ends in April and a ban on talks between rivals is lifted, people familiar with the matter told Reuters.
A potential deal could bolster SoftBank’s shift towards what billionaire founder Masayoshi Son calls the “Berkshire Hathaway of the tech industry,” or a company with cutting-edge tech investments as the telecoms services markets mature.
The proceeds of the possible sale of all or a portion of its Sprint stake to a third party could improve SoftBank’s credit rating and “allow it to dedicate more of its managerial and financial resources to growth businesses,” analysts at SMBC Nikko Securities said in a research note.
While SoftBank’s domestic mobile business remains a cashcow necessary to fund investments, analysts have said it may be hard for Sprint to grow on its own as it lacks the scale to challenge larger rivals.
Read more: St. Louis Post-Dispatch