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Softbank Posts Biggest Drop in 12 Years on Sprint Investment

Softbank Corp. (9984) shares slid as much as 17 percent in Tokyo trading, the biggest decline since March 2000, after Japan’s third-biggest phone operator said it’s in talks to invest in Sprint Nextel Corp. (S)

Shares fell 477 yen to 2,404 as of 9:32 a.m. on the Tokyo Stock Exchange. The Nikkei 225 Stock Average fell 0.1 percent.

Softbank is seeking control of Overland Park, Kansas-based Sprint, according to two people familiar with the matter, who asked not to be identified because the discussions are private. Softbank also plans to acquire MetroPCS Communications Inc. (PCS) through Sprint, Japan’s Nikkei newspaper reported yesterday.

“Investors tend to worry more about the financial burdens initially when it comes to any major purchases, rather than hopes for growth,” said Takashi Oba, a senior strategist at Okasan Securities Co.

The Japanese company would provide much-needed financial support for Sprint as the third-largest carrier in the U.S. tries to compete with bigger rivals Verizon Wireless and AT&T Inc. (T) Sprint would give Softbank a base for entering the U.S. market with a compatible wireless network via its joint venture with Clearwire Corp. (CLWR), said Jennifer Fritzsche, an analyst at Wells Fargo & Co.

Sprint “represents the only way for a potential new entrant to get a national presence immediately in the U.S.,” Fritzsche wrote in a report. Softbank and Clearwire, a wholesale U.S. wireless carrier that is partially owned by Sprint, use airwaves on the same frequency and the same TDD LTE high-speed mobile technology.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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