Sprint & Softbank Discuss Merger

Posted by Sam Churchill on

Sprint said yesterday that it’s in talks to take a “substantial” investment from Softbank, Japan’s third-largest mobile-phone company. Softbank would reportedly take a stake of as much as 75 percent in Sprint for $19 billion.

Softbank also plans to buy MetroPCS through Sprint, according to the Nikkei newspaper. Softbank stock plummeted today amid concern that turning around unprofitable Sprint will prove costly.

Three Japanese banks, including Mizuho Corporate Bank, are considering extending credit to Softbank to fund its purchase of the No. 3 and No. 5 wireless carriers, according to the Nikkei newspaper. If Softbank’s 39 million subscribers are combined with Sprint’s 56 million, the alliance would boast nearly 95 million users worldwide.

Both Japan and the United States are reaching cellular saturation. In Japan, there are 127 million cellphone subscriber, roughly equivalent to the size of its ever-declining population. In the United States there are now 322 million US mobile phone subscribers amongst a population of 314 million, reports the CTIA.

Vodafone, the world’s second-largest mobile telecommunications company after China Mobile, owns 45% of Verizon Wireless, the largest mobile telecommunications company in the United States.

On Oct. 3, 2012, T-Mobile USA, a subsidiary of Deutsche Telekom, agreed to merge with Metro PCS, which would allow the companies to better compete against AT&T, Verizon Wireless and Sprint Nextel.

DoCoMo invested almost $10 billion for a minority stake in AT&T, in November 2000, with AT&T Wireless receiving $6.2 billion. It was the largest ever credit deal in Japan. NTT expected SMS would be big in the United States and had an early lead in 3G. AT&T Wireless and DoCoMo launched four U.S. markets using W-CDMA by the end of 2004, but NTT DoCoMo, Japan’s largest carrier with more than 53 million customers, eventually wrote down most of its investment in the predecessor to AT&T, recalls Olga Kharif in Business Week.

Sprint’s market value jumped by $2 billion to around $17 billion on news of its talks with Softbank. It has net debt of about $15 billion, while Softbank has net debt of about $10 billion. Sprint, with more than 56 million subscribers, is the No. 3 cellphone service provider in the US.

Shares of Clearwire jumped nearly 71 percent Thursday on the prospect of a takeover by Sprint. Sprint currently owns about half of Clearwire’s shares.

Clearwire has been promoting “hot zones” for urban cores for some time. It can focus coverage in areas where it is most needed, such as Chicago, New York, or San Francisco. Tiny microcells, like Lucent’s LightRadio, can be mounted on utility poles.

The innovative small cell work being done by China Mobile, Softbank in Japan, O2 in the UK, and Clearwire in the US, will show how microcell LTE-A deployment is done.

Japan’s third largest mobile operator, Softbank, is implementing a TD-LTE system like that planned by Clearwire in the USA. Softbank 4G is built and run by Wireless City Planning (WCP), a division of Softbank’s E-Access.

Their AXGP system is expected to be compatible with China’s TD-LTE, is using a modified standard called AXGP (Advanced eXtended Global Platform), which Softbank says is “highly compatible” with TD-LTE and also operates with their Personal Handyphone system, basically a cordless phone that allows roaming between hotspots.

Softbank will also launch Frequency Division LTE networks built by Nokia Siemens Networks and Ericsson in 900 MHz frequency band this fall.

Softbank already has a large-scale 1.9GHz PHS (Personal Handy-phone System)/ Its AXGP base stations will share its footprint, feeders and antennas from their TDD spectrum in the 2.6GHz band acquired from Willcom last year. Softbank’s TD-LTE network is being deployed in Japan with the help of ZTE and Huawei (pdf) on the 2.6 GHz band. Softbank uses virtually the same LTE-A technology as Clearwire plans.

Ninety-nine percent of the Japanese population will be covered by 2012, says Softbank’s Wireless City Planning, their TD-LTE unit. The company claims their network is the largest commercial TD-LTE network in the world. “We have already launched our system — on November 1 last year,” says Yoshioki Chika, the chief technology officer of the project.

Softbank awarded Huawei and ZTE construction contracts for their TD-LTE network. Huawei will build 7,000 basestations and ZTE 4,600 basestations this year. Softbank expects one million TD-LTE subscribers by the end of 2012; with TD-LTE base stations to reach 30,000 by March 2013. Softbank’s 2.6 GHz TD-LTE network will cover 90% of the area and population in Japan by the end of 2013.

SoftBank’s 102Z mobile WiFi router, developed by ZTE, uses TD-LTE in the 2.6 GHz band and was the first to feature Qualcomm’s MDM9x15 chipset.

A Clearwire/Softbank entity might develop dense TD-LTE “hot zones” (pdf) in the top tier markets where it has nearly 100 MHz of spectrum (such as New York, Los Angeles, Chicago, Atlanta and Boston). Sprint might then purchase Dish spectrum at 2.1 GHz and incorporate it into their FD-LTE Network Vision on the PCS band.

Should Sprint and Clearwire split (with Sprint/Dish and Clear/Softbank), then a minority stake in each others networks could insure mutual roaming. A deal like that would effectively shut out AT&T, requiring that the nation’s 2nd largest carrier do a virtual operator deal with Clear.

Isolationists in the United States, however, are trying to ban Huawei and ZTE gear in the United States.

Last month, Intel announced a joint agreement with China Mobile to develop “cloud basestations”, in conjunction with a Chinese vendor, thought to be ZTE.

China Mobile has been promoting the idea of C-RAN since 2010. It is also very active in various international standard organizations on promotion of R&D on C-RAN. Like ALU’s lightRadio, Intel’s Cloud – Radio Access Network (C-RAN) splits the base station from the integrated antenna/radio at the cell site.

Intel can support up to 100 base stations in a single server, with built-in load balancing. China Mobile is also working with Alcatel-Lucent, combining AlcaLu’s lightRadio with China Mobile’s Cloud RAN initiative.

The isolationist movement may cause problems for the Sprint/Softbank deal, as well as the (assumed) ZTE/Intel deal, and Clearwire’s ability to use perhaps the world’s leading technology provider and innovator for TD-LTE infrastructure.

Legislators and the feds are generally a few steps behind private industry. Maybe they will promote Cisco Routers in Space, which are fully approved by the DOD (only kidding). The Defense Information Systems Agency, based in Ft Meade, Maryland, provides Cisco’s Internet Routing In Space (IRIS) to federal agencies.

Cisco is proud to work with the DOD. Who could fault them for that. But perhaps their commercial routers should be subject to the same scrutiny as Huawei and ZTE gear.

Excuse me [your author Sam Churchill] for interjecting here; but if Congress wanted to do something positive, they could start by promoting city-owned fiber to municipal infrastructure.

Microcells can now be placed on streetlights to deliver needed capacity. All the carriers in the United States will seek to do this. But it requires fiber to the infrastructure.

Muni-owned fiber infrastructure enables free-market competitors to buy backhaul capacity equitably. It generates revenue for cities and enables cloud-based basestations that can cut the cost of delivering wireless broadband in half.

Chicago is creating a model for muni-owned fiber that the country should monitor, and perhaps emulate. Carriers can get access to city-owned infrastructure in exchange for services. Chicago’s approach encourages free market competition, not expensive and wasteful overbuilding.

It is one approach that may enable the United States to remain competitive with South Korea, Japan, and many other countries. Vastly superior broadband connections in Asia/Pacific and Europe will enable them to pull ahead of the United States. End of sermon.

Ericsson and Alcatel-Lucent hold the top spots in overall LTE revenue share, but Huawei and ZTE captured the first top spots in TD-LTE sales thanks to their roles in Japanese operator Softbank Mobile’s Wireless City Planning project, according to Dell’Oro.

Softbank awarded Huawei and ZTE construction contracts for their TD-LTE network. Huawei will build 7,000 basestations and ZTE 4,600 basestations this year. Softbank expects one million TD-LTE subscribers by the end of 2012; with TD-LTE base stations to reach 30,000 by March 2013. Softbank’s 2.6 GHz TD-LTE network will cover 90% of the area and population in Japan by the end of 2013 (although projections vary).

Meanwhile, Sprint is adding FD-LTE in their PCS band to more than 20 additional cities in coming months, including including Boston; Charlotte, N.C.; Chicago; Indianapolis; Los Angeles; Memphis, Tenn.; Miami; Nashville, Tenn.; New Orleans; New York; Philadelphia; and Washington, D.C. Sprint’s LTE network compliments the Clearwire LTE-Advanced network which won’t switch on until mid 2013.

Presumably, China will place a hefty import tariff on the iPhone 5 as retaliation for Congressional moves against ZTE and Huawei.

Japan’s Softbank, with similar infrastructure as China Mobile and Clearwire, may be able to take advantage of Apple’s (new) weakness by leveraging volume purchases.

The move by Softbank would apparently put a crimp in any (rumored) plans by América Móvil, the fourth largest mobile network operator in the world, to team up with Sprint. Who knows, maybe América Móvil and AT&T will team up to get Dish spectrum.

OMG, the sky is falling.

Related Dailywireless articles include; Japan & Korea: More LTE than USA , Intelligence Committee: Huawei & ZTE Security Threats , Dish Planning Internet-based TV Service?, Clearwire: On the Hot Zone , Japan and S Korea Report Big LTE Growth, SK Telecom Introduces Voice over LTE, MetroPCS Moves to Voice over LTE, SK Telecom Does Multi-Carrier LTE, South Korea Completes Nationwide LTE Coverage, Qualcomm Demos LTE to WCDMA Call, Voice Over LTE, Clearwire: Riding the TD-LTE Wave?, China Mobile Announces TD-LTE Rollout, China iPhone Projections, Clearwire and China Mobile Announce TD-LTE Testing Plan, LTE Situation Report

Posted by Sam Churchill on Friday, October 12th, 2012 at 8:34 am .

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