KCRag Forum

The debt won't really be combined from Sprint perspective. They are forming a new US based holding company and New Sprint will be a subsidiary. It will be a separate entity that is still traded on US market, with HQ still in KC (for now). So Sprint isn't really tied to Softbank debt if I understand right from the perspective of Sprint's books.

Softbank is the one taking the risk. Sprint doesn't have much to lose in short term. They can pay off some debt at the expense of Softbank, fully fund the LTE rollout and maybe buy Clearwire. If Softbank eventually fails, Sprint subsidiary could spinoff or be bought by someone else (Google?) with Sprint likely in much better shape thanks to the SB investment and they have been improving anyway. One possible bad scenario though is that Softbank other gambles don't work out across the board, limps along for 10+ years and drags Sprint with them by not investing much more into them as what happened to Tmobile for a while. It's good that Sprint will be a separate subsidiary in case Softbank blows up as it will be easier for Sprint (actually the US holding company) to disconnect.

Softbank is taking advantage of buying Sprint cheap as Sprint is worth much more than market value (the spectrum alone will be worth much much more in 5-15 years) and the strong yen over dollar makes it even cheaper to buy. Big risk for Softbank otherwise to get into US market. I suspect they could split in 5-10 years over culture differences or some misalignment and Sprint will in the end benefit from the investment. Not many Japanese companies have had success entering US market.

AMC to China, Sprint to Japan...we need a direct MCI to Tokyo Flight.

how many times when company A buys company B, A says "B will stay the same", "B will not change names", "no layoffs for B employees", "B won't move to another city". And how many times does company A keep their word? I hope Sprint(or whatever new name it might be) will still be here in 5 to 10 years...


about a flight from MCI to Tokyo, in addition to AMC and Sprint, add Nitto Denko to that list too.

mailman641 wrote:how many times when company A buys company B, A says "B will stay the same",

Nobody wants Sprint to stay the same. This is an immediate capital infusion of $3B soon, $5B when approved. This is not typical with 'mergers'. This is the wireless telcom industry where spectrum is limited by physics. There is only so much that is usable and the value can only go up. Sprint has a massive amount of spectrum and alone is worth way way more than market price of company.

"B will not change names"

British Vodafone owns near 50% Verizon and once owned majority yet no Vodafone name. NTT Docomo was the largest stockholder of ATT Wireless back in 2000 and no name change. Tmobile only has same name since they started it. Sprint name highly highly likely won't change but could post as "Sprint, a Softbank company'. What may happen are the bizarre Japanese commercials.

"no layoffs for B employees"

This happens with traditional mergers but not with telcom cash infusions like this. Sprint runs pretty tight now, if anything we may see an increase in jobs in KC but maybe not immediately. The 100+ contracting/service companies that have a presence in KC and service Sprint will likely see a boost in local employees before Sprint themselves boost FTE count. This is hugely risky for Softbank but more likely very good for KC no matter what happens to Softbank.

"B won't move to another city".

This can happen, especially since Softbank will likely continue a buying binge. Also, they are creating a 'holding' company based in US. The 'holding' company (which is really just a board) may quickly move to I'm betting San Fran as that is where Son went to school and is quickest hop to Japan. The holding company will own Sprint and any other US companies they will likely grab in future, especially as long as yen is stronger than dollar. But the Sprint subsidiary I'd think will stay in KC unless maybe they buy Tmobile later - hopefully much later if at all. Sprint/KC will likely lose Fortune 100 HQ status if holding company moves elsewhere in US, but Sprint subsidiary could stay based in KC long term.

Then again Mr. Son sounds like a loose canon and high risk taker so who knows what he could do to Sprint.

KCPowercat wrote:AMC to China, Sprint to Japan...we need a direct MCI to Tokyo Flight.

Will they move it to place with direct flights to Tokyo?

Hasn't ATT moved around a lot, i believe they are HQ in Dallas now.

brewcrew1000 wrote:Hasn't ATT moved around a lot, i believe they are HQ in Dallas now.

The original SBC was based in San Antonio, TX when they acquired AT&T (based at that time in Basking Ridge, NJ) and changed the SBC name to AT&T. After the longtime chairman/CEO (I forgot his name) left (retired) his successor moved the newly merged SBC/AT&T/Bell South HQ to Dallas.

Pork Chop wrote:

brewcrew1000 wrote:Hasn't ATT moved around a lot, i believe they are HQ in Dallas now.

The original SBC was based in San Antonio, TX when they acquired AT&T (based at that time in Basking Ridge, NJ) and changed the SBC name to AT&T. After the longtime chairman/CEO (I forgot his name) left (retired) his successor moved the newly merged SBC/AT&T/Bell South HQ to Dallas.

SBC, (then Southwestern Bell) moved to San Antonio from St. Louis. Will Sprint move to Dallas or someplace with a large hub airport?

The new Holding company will likely move to W Coast (my guess) with operational HQ staying in KC. So KC may lose a Fortune 500 company if the holding company moves out, which is really just a board and small office. So not many jobs but HQ status likely gone. I'm guessing it will reside in San Fran area as that is where Son went to school, easiest hop to Japan, and he is buddies with many industry players there. If the holding company later buys Tmobile in Seattle, it could hurt Sprint operations in KC, so real jobs could leave (or gain). Either Seattle or KC would lose/gains jobs depending on who wins operational HQ. The job impact would be much greater than just Sprint, it would also impact 100+ companies that have a presence in KC providing services to Sprint.

earthling wrote:The new Holding company will likely move to W Coast (my guess) with operational HQ staying in KC. So KC may lose a Fortune 500 company if the holding company moves out, which is really just a board and small office. So not many jobs but HQ status likely gone. .

Isn't the operational HQ in Northern Virginia now anyway?

^When Sprint/Nextel merged, the primary HQ was in DC area for a while and operational HQ in KC. Sprint then brought the primary HQ back to KC as Nextel role diminished. Sprint currently shows as a Fortune 500 based in KC, but for a while did not.

With the new deal if approved, Softbank will setup a new US-based 'holding' company that owns (apparently 70% of) Sprint and Sprint will become a separate entity, a subsidiary. So essentially Sprint KC may go back to being the operational HQ, but I don't think it will show as based in KC in terms of Fortune 500. It will show the holding company (the board and senior management), which I'm guessing won't stay in KC for long and maybe go to SF Bay area. The US-based holding company will own Sprint and any other US companies they acquire, and seems likely more acquisitions will occur given the unusual yen strength over the dollar.

earthling wrote:The new Holding company will likely move to W Coast (my guess) with operational HQ staying in KC. So KC may lose a Fortune 500 company if the holding company moves out, which is really just a board and small office. So not many jobs but HQ status likely gone. I'm guessing it will reside in San Fran area as that is where Son went to school, easiest hop to Japan, and he is buddies with many industry players there. If the holding company later buys Tmobile in Seattle, it could hurt Sprint operations in KC, so real jobs could leave (or gain). Either Seattle or KC would lose/gains jobs depending on who wins operational HQ. The job impact would be much greater than just Sprint, it would also impact 100+ companies that have a presence in KC providing services to Sprint.

These kind of deals almost never go well for KC as history so poignantly has proven.

A decent airport with some actual connections to international locations, however, would help. Im2kull tells us that we do not need one so I guess our outdated, obsolete airport is sufficient to keep KC as the rollicking business center that it is.

^The airport size impacting location may not matter in this case. The holding company players probably use private jets to smaller nearby airports anyway. And if Sprint were based in MSP, Minneapolis doesn't have direct flights to Tokyo, Denver either.

KC may have Sprint's subsidiary HQ for quite a while but maybe not overall corporate HQ of the holding company. If holding company buys many other US telcom companies (like Tmobile), then KC HQ and possibly jobs are at risk if later consolidating. One similar scenario is that the holding company may eventually be setup like GE and Sprint would be like NBC subsidiary, which is a separate entity, separate HQ, separate CEO, but owned by GE. NBC doesn't directly trade stock or show up as F1000 company, GE does.

And now it looks like Sprint might take control of Clearwire (Sprint's WiMAX provider), not full ownership but >50% control - today it's 48%.

Edit: a bit more clarity

This shows a high level of structure planned but still lots of details unknown...
http://webcast.softbank.co.jp/en/pdf/20 ... 015_01.pdf

This implies that after deal is closed, Sprint will still trade on market independent of the holding company, not particularly clear though. This could mean that Sprint subsidiary would still show up as F100 company based in KC even if HoldCo is somewhere else. But if they eventually setup like GE, then the holding company is traded and the subsidiaries are not and don't show up on F1000. Final structure may depend on Fed input too. And structure could change if HoldCo makes a lot of other acquisitions in US but outside of Sprint subsidiary.

Edit 2: more detail found.

http://investorshub.advfn.com/boards/re ... d=80556808

OK, also found on the intertubes that the Holding Company is already setup in Delaware as Startburst I, which makes sense as many setup holding companies there (including Sprint) to avoid taxes yet not have any operations - isn't clear if DE is declared as the HoldCo HQ though as many companies do this yet declare HQs elsewhere, and I'm still guessing HoldCo may operate in SF Bay area. But since it appears (for now) that it's the Sprint subsidiary that would trade US stock, not the holding company, Sprint should show up as F100 company based in KC. If HoldCo eventually 'wholly owns' Sprint, things could then change. The stock would apparently trade at HoldCo level and I don't think at the Sprint level.

Seems KC should be OK job wise unless/until HoldCo buys other companies and possibly consolidates somewhere else. With the $8B cash infusion, will hopefully mean more KC jobs in the near term.

earthling wrote:The new Holding company will likely move to W Coast (my guess) with operational HQ staying in KC. So KC may lose a Fortune 500 company if the holding company moves out, which is really just a board and small office. So not many jobs but HQ status likely gone. I'm guessing it will reside in San Fran area as that is where Son went to school, easiest hop to Japan, and he is buddies with many industry players there. If the holding company later buys Tmobile in Seattle, it could hurt Sprint operations in KC, so real jobs could leave (or gain). Either Seattle or KC would lose/gains jobs depending on who wins operational HQ. The job impact would be much greater than just Sprint, it would also impact 100+ companies that have a presence in KC providing services to Sprint.

Since Washington state is known for being a high tax state, will Kansas give them enough tax cuts to stay or move?

earthling wrote:^The airport size impacting location may not matter in this case. The holding company players probably use private jets to smaller nearby airports anyway. And if Sprint were based in MSP, Minneapolis doesn't have direct flights to Tokyo, Denver either.

What about Dallas?

Chater moved its corporate HQ from STL to CT because the new CEO did not want to move to STL from CT

Sprint is going to purchase a controlling interest in Clearwire.

pstokely wrote:

earthling wrote:The new Holding company will likely move to W Coast (my guess) with operational HQ staying in KC. So KC may lose a Fortune 500 company if the holding company moves out, which is really just a board and small office. So not many jobs but HQ status likely gone. I'm guessing it will reside in San Fran area as that is where Son went to school, easiest hop to Japan, and he is buddies with many industry players there. If the holding company later buys Tmobile in Seattle, it could hurt Sprint operations in KC, so real jobs could leave (or gain). Either Seattle or KC would lose/gains jobs depending on who wins operational HQ. The job impact would be much greater than just Sprint, it would also impact 100+ companies that have a presence in KC providing services to Sprint.

Since Washington state is known for being a high tax state, will Kansas give them enough tax cuts to stay or move?

? Washington does not have a state income or corporate income tax.

pstokely wrote:

earthling wrote:^The airport size impacting location may not matter in this case. The holding company players probably use private jets to smaller nearby airports anyway. And if Sprint were based in MSP, Minneapolis doesn't have direct flights to Tokyo, Denver either.

What about Dallas?

Yeah, Dallas does at times but the point was that even if KC had a fairly major airport like MSP/DEN, it wouldn't make much difference in this case. And top management/board players will probably fly private jets into Olathe Exec or Downtown airport anyway.

KCMax wrote:Sprint is going to purchase a controlling interest in Clearwire.

pstokely wrote:

earthling wrote:The new Holding company will likely move to W Coast (my guess) with operational HQ staying in KC. So KC may lose a Fortune 500 company if the holding company moves out, which is really just a board and small office. So not many jobs but HQ status likely gone. I'm guessing it will reside in San Fran area as that is where Son went to school, easiest hop to Japan, and he is buddies with many industry players there. If the holding company later buys Tmobile in Seattle, it could hurt Sprint operations in KC, so real jobs could leave (or gain). Either Seattle or KC would lose/gains jobs depending on who wins operational HQ. The job impact would be much greater than just Sprint, it would also impact 100+ companies that have a presence in KC providing services to Sprint.

Since Washington state is known for being a high tax state, will Kansas give them enough tax cuts to stay or move?

? Washington does not have a state income or corporate income tax.

Why did Boeing move from Seattle then?

earthling wrote:

pstokely wrote:

earthling wrote:^The airport size impacting location may not matter in this case. The holding company players probably use private jets to smaller nearby airports anyway. And if Sprint were based in MSP, Minneapolis doesn't have direct flights to Tokyo, Denver either.

What about Dallas?

Yeah, Dallas does at times but the point was that even if KC had a fairly major airport like MSP/DEN, it wouldn't make much difference in this case. And top management/board players will probably fly private jets into Olathe Exec or Downtown airport anyway.

Pizza Hut moved from Wichita to Dallas to be near a hub airport