SoftBank suspended its efforts to buy more of Sprint’s weakening stock that the Japanese conglomerate announced earlier this fall as part of its endeavor to increase its stake in the fourth largest mobile service provider in the country from 83 to 85 percent, BTIG Research’s analyst Walter Piecyk observed earlier this month. The firm previously estimated SoftBank is primarily seeking to bump the price of Sprint stock to approximately $6 per share but has now failed to do so after its purchasing activity was essentially suspended for no clear reason. As of Monday morning PST, Spring is trading at $5.64 per share, with that low valuation being originally prompted by its failed merger negotiations with T-Mobile and its parent Deutsche Telekom.
If SoftBank is still interested in seeing its original plan through and given the average daily volume of shares it’s been purchasing in recent weeks before suspending its efforts to do so, the tech giant won’t be able to hit the tender-triggering 85 percent threshold until at least January, Mr. Piecyk estimated. While Sprint stock resisted the outcome of its consolidation talks with T-Mobile better than some analysts predicted, its overall valuation is still under a question mark in the aftermath of the failed negotiations, with the company currently trading approximately 16 percentage points down its previous value which relied on a scenario in which it merges with the DT-owned wireless carrier to a significant degree.
SoftBank founder and Chief Executive Officer Masayoshi Son already said he expects the Overland Park, Kansas-based company to go through a “tough” period given recent developments but repeatedly stated its parent isn’t giving up on its prospects. SoftBank’s insistence that Sprint is able to turn things around is essentially the primary reason why the mobile service provider didn’t end up merging with T-Mobile given how the Japanese conglomerate was reportedly unwilling to relinquish control of the hypothetical combined entity. Based on the mantra that actions speak louder than words, if SoftBank truly believed Sprint was a lost cause, it wouldn’t have had any issues with completely selling out to DT. Despite SoftBank’s vote of confidence, it remains to be seen how Sprint will lead its overleveraged business going forward.
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