Japanese businessman and Sprint Chairman Masayoshi Son met this week with Warren Buffett, a rock star in the investment world, and Liberty Broadband chair John Malone, reported the “Wall Street Journal” on Friday, referring to persons familiar with the matter.
The possibilities of an investment in Sprint were discussed. The separate talks, however, are at an early stage. The meeting point was the annual gathering of business and media moguls in Sun Valley, Idaho and Sprint CEO Marcelo Claure was also involved in the negotiations process.
How a transaction could look concretely is unclear. In a separate report on Friday, Bloomberg said that Buffett’s investment plan in Sprint ranges between $10 billion and $20 billion. The rumors are circulating just days after Berkshire announced plan to buy electricity transmission company Oncor for $9 billion.
“One of Warren’s requirements is that the company is profitable and successful,” said telecom analyst Roger Entner of Recon Analytics. “Sprint is not profitable. He has never bought anything in telecom,” he added.
The Sprint shares rose sharply following the report and recorded a gains of around 4 percent last year. The shares of the competitor T-Mobile US reacted hardly.
“Clearly they are having a tough time, so Sprint is trying to bring Malone and Buffett into the fold so a deal can be reached — likely with all four of these players,” said FBN analyst Robert Routh.
Son, who holds over 80 percent of Sprint with Softbank, is clearly pushing efforts to buy a share. A possible participation of US cable giants Charter Communications, where Malone is the largest investor, had already been reported in June. Buffet’s investment firm Berkshire Hathaway could participate with more than ten billion dollars, it recently said.
Deutsche Telekom is also involved in the bid for Sprint. The embattled wireless company had already tried to buy their US subsidiary T-Mobile, but this failed due to the US regulatory authorities. However, the new government under Donald Trump could be better off.
“I don’t think Sprint ‘needs’ any money,” Drexel Hamilton LLC analyst Barry Sine said, despite its high levels of debt.
“[T]here was one point of time when Sprint was having a lot of debt and there were lots of rumors. And we would say, our market was also concerned that Sprint may not be able to pay all its debts,” Son said. “The interest rate is going to cost us. Sure, try to go steadily, safely is good, but interest rate is going to be a cost. In other words, we currently are really almost cash heavy.”
