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Sprint + Soft Bank
Sprint - SoftbankDutta Roy & TeamM&A Analysis
01. Background
Background•Soft Bank
• Venture finance• Japanese wireless provider• Information Technology• Bought Vodafone-Japan in 2008• 16% CAGR in subscribers since• Consistent pay down of debt• 3rd largest carrier in Japan
•Growth Strategy•Global market launch
Background• Wireline turned wireless powerhouse
• Focused US footprint• International highspeed IP backbone
• Remarkable subscriber loss starting 2010 spurred by lack of game changing iphone offering
• Survival Strategy – Capital investment
Opportunity•Sprint
• Attractive US market• Investing in infrastructure• 54% ownership and offer for 100% of Clearwire (4G LTE infrastructure)
• Potentially looking for a capital investor
•NewCo=SoftBank+Sprint• Largest TEV wireless provider in Japan• SoftBank gets Clearwire positioned in US• Global Telecom
Valuations
Market Multiples
Assumptions
Valuation
WACC-DCF $/Share APV $/Share4
5
6
7
8
9
10
7.78
6.91
Min
Max
Sprint
Synergy❖ Through Operational Expenditures:
➢ Economies of Scale on Procurement■ Devices = Smart Phone, Network materials■ Improving credit screening & pricing structure
➢ Network■ Traffic Management, Best Practices (Softbank - vodafone exp)
➢ Human Capital & other Operational Efficiency■ Customer Care Service Structure■ Improved handling times (global cross functionial support)
Annual Synergies: $2B from 2014-2017
Effective Tax Rate: 35%
Discount Rate: ~10%Terminal Growth: ~1.5%
$4.46 per Share
02. Recommendations
Deal Dynamics
Negotiating Range (Share Price) $6 - $9Softbank’s Financing Choices Cash : 1/3
Debt : 2/3Ratio of Ownership Softbank : 75%
Sprint : 25%Exchange Ratio for Sprint 0.34
Exchange Ratio for SoftBank 1
Sprint capital infusion 12.5 B
Synergy Share $3.35 x 3 B shares
Do The Deal – Soft Bank To Acquire Sprint!
Q&A