Softbank Corp is in talks with Deutsche Telekom AG over a possible deal for T-Mobile US Inc, as the Japanese company looks for alternatives to enter the US wireless market if its deal with Sprint Nextel Corp falls apart, sources familiar with the matter said on Friday.
Softbank and Deutsche Telekom were in talks last year about a deal for T-Mobile USA and have had discussions since then, but those conversations have intensified in recent weeks after Dish Network Corp made a US$25.5 billion counterbid for Sprint, two of the sources said.
Softbank is offering US$20.1 billion for 70 percent of Sprint.
Deutsche Telekom owns 74 percent of T-Mobile US, and one possibility is for Softbank to buy that stake instead, the sources said.
Softbank still wants to complete the Sprint deal after spending months on it and is looking at a possible T-Mobile transaction only as “Plan B,” the sources said, who declined to be named because the talks are private.
T-Mobile’s shares rose more than 3 percent after the news of Softbank’s interest, while Sprint shares fell 1.2 percent.
The talks come ahead of Wednesday’s Sprint shareholders’ vote on the Japanese firm’s bid for the No. 3 US wireless carrier and could add pressure on investors as they decide how to vote.
Earlier this week, proxy advisor Glass Lewis said Sprint shareholders should not vote on Softbank’s bid while the board reviewed Dish’s offer.
The Softbank deal is much farther along in the process than Dish’s rival offer, which is still preliminary. Softbank has cleared a key review by the agency that oversees foreign investments in the US and is also getting closer to finishing the US Federal Communications Commission review. ISS, a major proxy advisory firm, has also backed the Softbank deal.
Moreover, if Softbank decides to walk away from the Sprint deal, it would stand to make somewhere around US$5 billion from currency hedging gains, its previous purchase of Sprint shares and breakup fees, the sources said.