Softbank spends $73M on latest Sprint stock purchase
Sprint parent company Softbank continues to invest in its U.S. operations as this week it pumped another $73 million into a stock transaction that boosted Sprint’s stock price and increased Softbank’s ownership stake.
According to a filing with the U.S. Securities and Exchange Commission and published reports, Softbank picked up 16.8 million shares of Sprint stock in its latest purchase. The investment followed last week’s $87 million purchase of 22.9 million shares.
The latest acquisition boosted Softbank’s stake in Sprint to more than 80%. Bloomberg Business reported a Softbank spokesman said the company did not plan on increasing its stake in Sprint beyond 85%, which could trigger a delisting from the New York Stock Exchange. Softbank initially purchased a controlling stake in Sprint for $21.6 billion in mid-2013.
Investors appeared keen on Softbank’s latest purchase, with Sprint’s stock (S) trading up nearly 4% Tuesday at more than $4.75 per share after the news broke. Sprint’s stock has rebounded significantly since bottoming out in late July at a new 52-week low of $3.10 per share.
Softbank CEO and Chairman Masayoshi Son noted during Sprint’s recent quarterly financial conference call that he had become disillusioned with his U.S. investment, but that he is now back on track in supporting its turnaround. That disillusionment nearly drove Son to dump Sprint, according to a report from The Wall Street Journal. The report claims Son “put feelers out” for a potential buyer, but having found no takers redoubled his turnaround efforts.
While Sprint’s fiscal first-quarter results were not quite strong enough for Sprint to hold off T-Mobile US in the race for the market’s No. 3 position, the carrier did post some positive numbers that provided hope to investors. One of the more significant numbers was a dramatic dip in postpaid customer churn, which Sprint’s management said continued to build momentum into the early part of its fiscal Q2.
Sprint CEO Marcelo Claure said he expects the carrier to report positive postpaid “phone” growth in Q2, turning around what has been a sore point for the carrier. Claure’s confidence is based on the carrier’s well-received rate plans and improvements in network quality, which were at the core of Sprint’s customer defection crisis.
Device contracts dumped
Claure this week also told Bloomberg Business that Sprint is looking to expand its recently introduced iPhone device promotion in a move that would do away with contracts tied to device subsidies.
Sprint announced new and upgrade-eligible current customers can pick up an iPhone 6 16 GB model at a lease price of $22 per month. Customers will then be able to upgrade to a base-level iPhone when new models become available at the same $22 per month fee. Apple has been rolling out a new iPhone model every year.
For a limited time, Sprint is offering a discounted per-month fee of $15 for new and upgrade-eligible current customers who move on the offer before Dec. 31. This includes the ability to pick up the current iPhone 6 before a new model rolls out, which is expected to occur late next month, and upgrade to the newly launched model before Dec. 31, keeping the $15 per month charge until a new iPhone rolls out, theoretically in 2016.
To take advantage of either offer, new customers need to trade in their current device or upgrade-eligible Sprint customers need to take advantage of that eligibility and turn in their current Sprint device.
The offer can be combined with any of Sprint’s rate plans, including its $60 per month “unlimited” offer, resulting in a total monthly price of $75 per month before taxes. That price would then increase to $82 per month once the customer upgrades to a new iPhone in 2016.
The promotion takes advantage of Sprint’s push into device leasing that has consumers paying a monthly fee for their device that could eventually lead to a customer paying off the full amount of the device and gaining ownership. However, Sprint is more interested in people continually walking into stores and picking up the latest version of their favorite device – and remaining a Sprint customer – on the yearly schedule device makers have seemingly set up in terms of refreshing their portfolios.
Sprint has not officially announced when it plans to end device subsidies. Sprint customers can currently pick up any device at a subsidized price and tied to a two-year device contract. Sprint also offers the ability to pay full price for the device up front or make monthly payments on the full price over a 24-month term.
Verizon Wireless last week launched new rate plans eliminating subsidized device pricing. AT&T Mobility followed the move by updating pricing and sizes of its shared data buckets, but continues to offer the option of a device subsidy tied to a two-year contract.
T-Mobile US is seen as the domestic leader in the move away from device subsidies, launching its device payment program in 2013.
Bored? Why not follow me on Twitter
Photo copyright: abluecup / 123RF Stock Photo
