SoftBank Group Corp. has been buying up shares of Sprint Corp.,
a show of confidence that Sprint's Japanese parent is a believer in
the struggling carrier's latest turnaround plan.
SoftBank said Wednesday it had bought 22.9 million shares at a
weighted average price of $3.80, or about $86.9 million. The
company didn't say whether it intends to keep buying more shares,
but if it does, it intends to keep its stake below an 85% threshold
that would trigger a tender offer, a condition SoftBank agreed to
when it bought less than an 80% stake in Sprint in 2013 for $22
billion.
The Sprint share purchases add to the $1 billion SoftBank spent
last week buying shares of its own company, which it said were
undervalued due to doubts about Sprint. The company had to wait
until after Sprint reported earnings last week to buy its
shares.
Shares of Sprint have fallen 32% over the last 12 months, and
rose 1% Wednesday to $3.88. Its shares hit their lowest level since
SoftBank acquired its stake on July 27 at $3.10.
The moves reflect SoftBank CEO and Sprint Chairman Masayoshi
Son's renewed confidence in the U.S. carrier's turnaround plan,
which Mr. Son said in a recent interview has him "totally
excited."
In a statement, SoftBank said it "is enthusiastic about Sprint's
prospects. The SoftBank Group and Sprint teams have been working
closely together on Sprint's network strategy to enhance Sprint's
competitiveness and reduce its capital expenditures and operating
costs."
After Mr. Son acquired Sprint in 2013, he planned to merge it
with T-Mobile US Inc. to create a bigger rival to counterbalance
industry rivals AT&T Inc. and Verizon Communications Inc. Mr.
Son dropped those plans in the face of stiff regulator opposition
last summer.
Afterward, Mr. Son said he lost confidence for a time in
Sprint's ability to improve as a stand-alone company. It has bled
subscribers and money for years while smaller rival T-Mobile
flourished.
In a recent interview, Mr. Son said that after the deal failed,
"I was thinking to myself, 'I made one of the biggest mistakes in
my life,' which was the misjudgment of the U.S. regulatory
environment."
Mr. Son said he put feelers out to find a buyer but there was no
interest. He considered writing it off, but reconsidered because
the company still has customers and employees.
"If nobody wants to buy it and we still have the customers, we
still have employees, so I have to take care," he said.
Mr. Son hunkered down with his top 100 engineers from SoftBank
in addition to many at Sprint over a four-month stretch to come up
with a plan to overhaul the carrier's network without pouring in
much more money.
Mr. Son says his plan will work, although he has declined to
specify what it entails. Sprint has said it would install tens of
thousands of small cells using much cheaper and more efficient
technology to increase data speeds and capacity.
Meantime, Sprint has shown signs of a recovery. The carrier
added 310,000 mainstream customers in the three months ended June
30, compared with 181,000 losses in the year ago period. It also
had its lowest cancellation rate in company history. It only lost
12,000 phone customers, a significant improvement over past
quarters.
It is network has also improved greatly on call quality,
according to independent network analysts at RootMetrics, though it
still lags behind on data speeds in many places.
The carrier is still losing money. It burned through $2.2
billion in the latest quarter. Sprint says cash flow should
significantly improve in the coming years.
"Even though it's not an easy route, it's a tough route," Mr.
Son said in the recent interview, "I'm totally happy that I did not
sell because I see the light at the end of the tunnel."
Write to Ryan Knutson at ryan.knutson@wsj.com
Corrections & Amplifications: Sprint shares closed at $3.88
Wednesday. An earlier version of this article incorrectly stated
they closed at $3.89
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