SoftBank to spend $1.26 billion for majority Brightstar stake

Fri Oct 18, 2013 6:48pm EDT
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By Sinead Carew

NEW YORK (Reuters) - Japan's SoftBank Corp said on Friday it had agreed to pay $1.26 billion for a 57 percent stake in privately held cellphone distributor Brightstar Corp as it looks to boost its bargaining power with handset makers.

SoftBank, which owns 80 percent of No. 3 U.S. mobile operator Sprint Corp, said that under the agreement its ownership of Brightstar would increase to 70 percent over the next five years, or upon certain unspecified events.

SoftBank, which is valuing Brightstar at $2.2 billion, had announced earlier this week it was in talks with the company, which delivers phones, tablets and accessories from manufacturers to wireless operators and retailers.

SoftBank's billionaire founder, Masayoshi Son, has said that buying Sprint would allow SoftBank, which also runs a mobile network in Japan, to buy phones in bigger volumes and avail of discounts from an industry dominated by Samsung Electronics Co Ltd and Apple Inc.

As part of the deal, the companies said that a buying & innovation division in Brightstar would realize savings and efficiencies for SoftBank, Sprint, and Brightstar. Under the agreement, Brightstar will become the exclusive provider of handsets to certain SoftBank affiliates.

By combining the buying power of Brightstar's customers in 50 countries with that of SoftBank's various telecom affiliates, Brightstar would become a buyer of $20 billion worth of mobile equipment and services per year according to a person familiar with the deal who asked not to be named.

"When you have that level of buying power it puts you at the table, not just from a savings perspective, but also when device manufacturers want to talk to you about the latest and greatest products," said the person who hopes the deal will start to level the playing field with bigger operators and SoftBank.

However, it was not immediately clear how the deal might affect existing partnerships at Brightstar which lists Sprint's three biggest rivals Verizon Wireless, AT&T Inc and T-Mobile US as customers. T-Mobile declined to comment for the story and AT&T and Verizon did not respond.   Continued...

A pedestrian using a mobile phone walks past a shop window of Japan's mobile phone operator Softbank in Tokyo, September 20, 2013. REUTERS/Yuya Shino