Sprint is looking for a buyer or a partner in the wireless space, and it appears that the company’s owner, SoftBank’s CEO Masayoshi Son, isn’t sticking to just other wireless carriers or even cable companies. According to The Wall Street Journal, Son met with Warren Buffet as well as Liberty Broadband’s John Malone last week at an annual gathering of CEO’s in Sun Valley, Idaho. The report notes that negotiations are still in a very early stage, and it’s entirely possible that nothing could come of it. But one scenario does have Berkshire investing over $10 billion in the company. And as BTIG Research noted in its report, a $10 billion investment would represent around 23% of the company, and that’s assuming this deal was done with common equity at its current price.
Since this report came out, analysts have been going over what a potential investment from either of these two people could mean for Sprint. Analysts believe that even if Buffet or Malone did invest in Sprint, it wouldn’t stop the carrier from looking for a merger or acquisition elsewhere. Sprint is in dire need of a cash influx right now, with over $20 billion in debt coming due in just a few short years (by 2020). Sprint needs to do something to be able to pay those creditors back, and it’s clear that the carrier is doing whatever it can to make it happen.
When SoftBank purchased Sprint in 2012 for around $20 billion, it had planned to also buy T-Mobile and merge the two carriers together to compete with the larger two carriers – Verizon and AT&T. However, the regulators weren’t having any of it, and SoftBank ultimately put it on the back burner until a new administration took office. That has now happened, and the Incentive Auction is also over, so these companies can talk again. Sprint is reportedly in talks with T-Mobile and its owner Deutsche Telekom, as it believes that would be the best option for Sprint. But it is also talking with cable operators including Comcast and Charter. Although nothing has come out of these talks just yet, it’s likely only a matter of time for SoftBank and Sprint.