(By Balachander) Sprint Nextel Corp. (NYSE:S) confirmed media reports that it is in talks with Softbank regarding a potential substantial investment by the Japanese mobile carrier in the U.S.-based telecom company.
The Overland Park, Kansas-based company's shares jumped in early trading on Thursday amid media reports that Softbank is considering acquiring two-thirds of Sprint.
The deal is worth more than 1 trillion yen ($12.8 billion) Reuters reported, citing source with direct knowledge of the matter.
Softbank agreed earlier this month to acquire smaller local rival eAccess Ltd. for $1.84 billion to strengthen the infrastructure of its Long-Term Evolution, or LTE, network.
Japan's Nikkei newspaper, without citing sources, reported that SoftBank hopes to use the acquisition as a base for entering the U.S. market.
"Although there can be no assurances that these discussions will result in any transaction or on what terms any transaction may occur, such a transaction could involve a change of control of Sprint," the company said.
Sprint said it does not intend to comment further unless and until an agreement is reached.
Kansas-based Sprint Nextel offers its wireless services under the Sprint, Boost Mobile, Virgin Mobile, payLo, and Assurance Wireless brands. Sprint, led by Dan Hesse, served more than 56 million customers at the end of the second quarter of 2012.
Sprint postpaid net additions amounted to 442,000 and post paid churn rate improved to 1.69 percent from 1.72 percent last year. Average revenue per user (ARPU), a key metric for telecom companies, rose 16 percent to $63.
Media reports indicate that Sprint had been considering its own acquisition of MetroPCS (NYSE:PCS), or a merger with T-Mobile. Sprint has been actively courting both T-Mobile and MetroPCS, which makes this merger a bit of a surprise. Should a T-Mobile/PCS combination be consummated, Sprint would benefit competitively due to the significant potential for operational distractions.
MetroPCS and T-Mobile, an arm of Germany's Deutsche Telekom, agreed to combine in a reverse merger transaction announced last week.
Sprint shares surged 66 cents, or 13.10 percent, to trade at $5.70 at 12:46 pm EST on Thursday.