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Saturday, Oct. 13, 2012
Softbank-Sprint tie could be game-changer in Japan, abroad
If Softbank Corp. manages to acquire Sprint Nextel Corp., the deal would dramatically increase the mobile carrier's influence in both the domestic and overseas markets and severely rattle its major rivals, experts said Friday.
Softbank's move could also potentially assist domestic handset makers looking to expand abroad by creating new distribution channels through Sprint, the third-largest U.S. carrier, they said.
"Japanese makers have traditionally supplied DoCoMo with their best phones" but they may well switch to Softbank if it buys a majority stake in Sprint, said Tsutsumu Ishikawa, a journalist who follows the cellphone industry.
Ishikawa said the sheer scale of a potential Softbank-Sprint tieup would reshape the entire telecommunications industry in the eyes of handset manufacturers, as well as service content providers: If Softbank's roughly 39 million subscribers are combined with Sprint's 56 million, the alliance would boast nearly 95 million users worldwide.
But Ishikawa said many details of the ongoing negotiations between Softbank and Sprint remain unknown, creating a degree of uncertainty over whether the two firms will actually be able to reach an agreement. Softbank's shares plunged 17.1 percent Friday to close at ¥2,395 on the Tokyo Stock Exchange.
The domestic market is rapidly approaching maturity since there are currently around 127 million cellphone subscribers in Japan, roughly equivalent to the size of its ever-declining population.
Additionally, the market is dominated by NTT DoCoMo Inc., with around 60 million users, almost 50 percent more than Softbank's total subscribers.
Softbank's bid to acquire Sprint therefore is presumably an attempt to expand its operations overseas, especially as the U.S. is the hub of the global cellphone industry, he explained.
The potential synergies with Softbank's domestic business are also expected to be substantial, while the move would enable the carrier to expand its next-generation TD-LTE communications network, Ishikawa added.
All of the models in Softbank's latest smartphone lineup, unveiled earlier this week, are compatible with TD-LTE technology, which the company calls Softbank 4G.
Sprint owns a large stake of Clearwire Corp., which is a Washington-based mobile network operator and plans to deploy a TD-LTE network. Some media reports said Softbank is looking to acquire Clearwire as well to expand the TD-LTE at a global level.
And since Japanese and American cellphone users are somewhat alike in their predilection for high-tech models, Softbank and Sprint would also be able to significantly boost their procurement power by offering the same handsets in their respective product lineups, Ishikawa said.
Sprint's present product lineup features handsets procured mainly from overseas manufacturers, including South Korea's Samsung Electronics Co. and Taiwan's HTC Corp.
The global market share of domestic handset makers such as Sony Corp., Sharp Corp. and NEC Corp. has remained marginal for years, but Hiroshi Sakai, chief analyst at SMBC Friend Research Center, said if Softbank acquires Sprint, the makers will have chances to sell handsets in North America through Softbank.
"Japanese handset manufacturers would have far more opportunities to expand their business" in the world's key telecommunications market, he said.
What's more, "the domestic market has reached maturity and Apple Inc. and Samsung are expanding their share," Sakai said. "There is no choice for Japanese makers but to turn to overseas markets."