TOKYO: Japanese mobile operator Softbank Corp. said it will buy about 70 percent of Sprint Nextel Corp, the third-largest US carrier, for $ 20.1 billion — the most a Japanese firm has spent on an overseas acquisition.
The deal, announced by Softbank’s billionaire founder and chief Masayoshi Son and Sprint Chief Executive Dan Hesse at a packed news conference in Tokyo on Monday, gives Softbank entry into a US market that is still growing, while Japan’s market is stagnating.
It also gives Sprint the firepower to buy peers and build out its 4G network to compete in a market dominated by AT&T Inc. and Verizon Wireless.
Shares in one potential target, Clearwire Corp, surged 21 percent to $ 2.81 yesterday.
Sprint owns 48 percent of Clearwire. While Softbank said no action was required, most analysts and investors see a Sprint-Clearwire tie-up as an inevitable consequence of the Softbank deal.
One way or another, analysts have long said the US telecommunications industry needs to consolidate, but few looked to Japan as a catalyst. Some investors and rating agencies worried that Softbank is biting off more than it can chew.
But the 55-year-old Son, a rare risk-taker in Japan’s often cautious business circles, is betting US growth can offer relief from cut-throat competition in Japan’s saturated mobile market. Combined, Softbank and Sprint will have 96 million users.
“It could be safe if you do nothing, and our challenge in the US is not going to be easy at all. We must enter a new market, one with a different culture, and we must start again from zero after all we have built,” Son told the news conference.
“But not taking this challenge will be a bigger risk.”
Softbank said that as part of the deal, it will buy $ 3.1 billion of bonds convertible into Sprint stock at $ 5.25 a share, while about 55 percent of existing Sprint shares would be exchanged for $7.30 per share in cash, with the transactions to be completed by mid-2013.
Sprint added 0.4 percent to $ 5.75 on Monday after surging last week on the first reports of a pending deal.
The offer, while at a substantial premium, is still less than some observers had hoped for.
A fund manager at T. Rowe Price, a top-15 Sprint shareholder, told Reuters last week he thought Sprint would be worth $10 a share in 18 months.
Hesse, who will stay on as Sprint CEO, said the Softbank investment would give Sprint opportunities it hadn’t had since he joined the firm in late-2007, and enable the US firm to play a bigger role in future market consolidation.
“This is pro-competitive and pro-consumer in the US because it creates a stronger No. 3 ... it competes with the duopoly of AT&T and Verizon. When you look at what Softbank has accomplished in Japan with the No. 3 carrier, it’s something we can learn from,” he said.
Hesse, one of the few corporate CEOs in America to star in his own company’s TV commercials, also acknowledged the financial challenges Sprint has faced — which the new capital could fix quickly.
“Sprint has been engaged in turnaround since 2008. We have been at a disadvantage due to our debt,” he said on an investor call Monday morning.
But it was not all serious, as the American took some time for a bit of levity with his Asian counterparts. At the press conference, Hesse noted it was the first time he had seen his long-time acquaintance Son with a tie on.
Softbank shares tumbled more than 8 percent on Monday before closing down 5.3 percent to their lowest finish in five months. The stock has lost more than one-fifth of its value — or $8.7 billion — since news first surfaced late last week about its interest in Sprint.
On Monday, credit rating agency Moody’s said it was reviewing Softbank’s ratings for a possible downgrade, but some analysts said Son’s gamble might pay off in the end.
“It’s the same (market) reaction as when Softbank said it was going to buy Vodafone a few years ago. Everyone came out and said it was far too expensive,” Fumiyuki Nakanishi, general manager of investment and research at SMBC Friend Securities, said ahead of the announcement.
Softbank bought Vodafone’s Japan unit for $ 15.5 billion in 2006.
“Son made a company worth 3 trillion yen, and now it will be worth 6 trillion yen. That’s quite impressive, and I think investors will realize he’s making the right decision down the road,” said Nakanishi.
Four banks — Mizuho Financial Group Inc, Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group M and Deutsche Bank — have approved loans totaling 1.65 trillion yen ($ 21.1 billion) to Softbank, three sources with direct knowledge of the matter told Reuters.
Sprint, which has lost money in its last 19 quarters, has net debt of about $ 15 billion, while Softbank has net debt of about $ 10 billion.
Brokers have warned the deal could leave Softbank with “unacceptably high” gearing — a ratio of debt to shareholder capital.
Standard & Poor’s has warned the deal “may undermine Softbank’s financial risk profile” and pressure its free operating cash flow for the next few years.
Reflecting the concerns, Softbank’s 5-year credit default swap spreads — the cost of protecting its debt against default — widened to 267/327 basis points from around 160 basis points before the deal, and yields on its yen bonds have risen sharply.
Analysts have said the Softbank acquisition of 70 percent of Sprint for $20 billion would imply the No. 3 US wireless company is worth about $28.6 billion, some two-thirds more than its market capitalization at Friday’s close.
Sprint is going through a $ 7 billion upgrade of one of its networks, while closing its Nextel iDen network, which makes Softbank’s capital especially useful. But the Clearwire question looms large as well.
Macquarie analyst Kevin Smithen, in a note to clients, described Softbank as the “white knight” that could give Clearwire management and investors a successful exit, though he also warned the company may drive a hard bargain in negotiations.
An alliance with Sprint could also give Softbank leverage when dealing with Apple Inc, helping bolster its domestic position against KDDI Corp, which also offers the iPhone in Japan, and market leader NTT Docomo, which has yet to offer the Apple smartphone.
With Sprint in hand, Softbank may also look to acquire smaller US carrier MetroPCS Communications Inc, Japanese media have reported.
Sprint has long had an interest in MetroPCS, which earlier this month agreed to merge with T-Mobile USA, part of Deutsche Telekom AG.
The Sprint deal takes outbound deals by Japanese firms to a record $ 75 billion this year, according to Thomson Reuters data, underscoring a strong appetite for overseas assets seemingly unaffected by signs of slowing global growth.
This is not the first Japanese foray into telecoms overseas. NTT Docomo racked up big losses after a string of failed investments in names like AT&T Wireless and Taiwan mobile operator KG Telecom in the late 1990s and early 2000s.
Raine Group LLC, a boutique merchant bank focused on the technology, media and telecoms sector, and Mizuho Securities were lead financial advisers to Softbank.
Softbank snaps up Sprint in $ 20 bn deal
Softbank snaps up Sprint in $ 20 bn deal
Middle East CEOs among the most confident globally, driven by investment momentum
RIYADH: CEOs in the Middle East remain among the most confident globally, with 88 percent expecting economic growth in their territories to strengthen, compared with a global average of 55 percent, according to a survey by PwC.
In its latest report, the professional services firm underlined that business chiefs in the Middle East continue to deploy capital, scale artificial intelligence and expand selectively into new sectors, supported by a strong investment momentum and long-term national transformation agendas.
Confidence in economic growth is even higher among CEOs in the Gulf Cooperation Council, with 93 percent of business leaders expressing an optimistic outlook for the future.
The findings by PwC align with a report released by KPMG in November, which said that CEOs in the Middle East are entering 2026 with stronger confidence levels and a higher readiness to deploy AI responsibly than many of their international peers.
Commenting on the latest analysis, Hani Ashkar, territory senior partner at PwC Middle East, said: “These findings reflect the strong underlying confidence we are seeing across the Middle East. CEOs in the region are resilient and are ready to deploy capital for long-term growth.”
He added: “Supported by national transformation agendas and sustained investment in artificial intelligence, the Middle East is well positioned to compete, adapt and grow.”
Speaking to Arab News, Thomas Kuruvilla, managing partner at Arthur D. Little Middle East and India, said that Gulf CEOs’ optimism is driven by a combination that is genuinely hard to replicate elsewhere, driven by large-scale fiscal capacity, political decisiveness, and national vision programs that are actually being executed, not just announced.
Kuruvilla also highlighted the growing prominence of Saudi Arabia in the GCC business landscape and added that “the Kingdom’s giga-projects, including Neom, Diriyah and Red Sea, are not just construction plays but are demand engines pulling entire ecosystems forward.”
Sarah El-Tarzi, co-founder and managing partner at Konnexions Communications, shared similar views, highlighting that CEOs in the region are clearer about what they stand for and more willing to engage openly with markets, employees, and the public.
“From my perspective, the optimism going into 2026 is coming from a shift in how the Gulf operates, not just how fast it grows. What has changed is execution. Strategies are no longer abstract. They are visible, measurable, and moving,” added El-Tarzi.
Capital strengthening in Middle East
According to PwC, GCC continues to consolidate its position as a global investment hub, with Saudi Arabia and the UAE named among the top 10 global investment destinations, reinforcing their role as anchor markets for international and intra-regional capital.
Commenting on the survey results, Munir Al-Daraawi, founder and CEO of Orla Properties, told Arab News that the overwhelming optimism among 93 percent of Gulf CEOs is a testament to the region’s successful economic diversification.
“Beyond oil, we are seeing massive capital inflows driven by regulatory reforms and the rapid maturation of the real estate and tourism sectors. This confidence is underpinned by a stable macroeconomic environment that encourages long-term infrastructure investment,” said Al-Daraawi.
The PwC report added that Middle East businesses are also the most active globally when it comes to investing beyond their home markets, with 88 percent of CEOs planning to invest outside their domestic territories.
Almost three-quarters of these investments will stay within the Middle East, signalling deeper regional integration and growing confidence in local value creation.
“The Gulf has proven it can mobilize capital quickly; the real competitive advantage now is speed of execution at scale,” said Kurivilla.
Riad Gohar, CEO of BlackOak Real Estate, told Arab News that population growth, real end-user absorption, and a predictable policy environment are increasing confidence among business leaders in the region, resulting in the mobilization of capital.
“Capital in 2026 is also different. It is not speculative. It is coming from residents, repeat investors, and institutions reinvesting locally because they understand the fundamentals and are building for the long term,” said Gohar.
AI adoption
According to the report, CEOs in the Middle East region, particularly in the GCC, report significantly higher application of AI than the global average.
More than a third of Middle East and GCC leaders report integrating the technology directly into their offerings, compared with fewer than one in five globally.
Adoption is strongest in demand generation functions such as sales, marketing, and customer service, where 39 percent of Middle East CEOs and 43 percent of GCC CEOs report extensive AI use.
Uptake is also strong across support services, with nearly 40 percent of Middle East CEOs deploying AI, well above global averages.
Mona Abou Hana, chief corporate and network officer at PwC Middle East, said: “Leaders across the region are investing with intention in AI, cybersecurity and new capabilities because they understand that resilience today is built through action.”
Some 80 percent of business leaders in the Middle East revealed that their culture enables AI adoption, while 70 percent have a clearly defined AI roadmap, well ahead of global benchmarks.
“For CEOs, AI serves as a powerful lever for scalability; it allows us to process vast market data in real-time, enabling faster, more accurate decision-making that is essential for cross-border expansion. By automating routine complexities, leadership can focus on high-level strategy and innovation,” Al-Daraawi told Arab News.
Kuruvilla said that AI is becoming a strategic differentiator in the Middle East, while the real opportunity is not in adopting this advanced technology faster, but the way in which it can be used more boldly.
“In sectors such as financial services, energy, and logistics, companies in Saudi Arabia and the UAE are already deploying AI for predictive analytics, fraud detection, and operational optimization. Saudi Aramco’s use of AI in upstream operations is a clear example of how scale and data density can create global leadership,” added the Arthur D. Little official.
Managing Director at A.A. Al Moosa Enterprises, Mobility Division, Rahul Singh, told Arab News that AI is helping leaders take smarter, faster decisions, while accelerating growth without sacrificing quality or reliability.
“By using AI to forecast demand and improve customer experiences, companies can confidently expand services into new markets,” added Singh.
Dealmaking shifts toward capability-led growth
PwC said that mergers and acquisitions demand remains strong in the GCC region, with 72 percent of Middle East CEOs planning a major acquisition over the next three years.
The report added that deal activity reflects a growing emphasis on capability-building, as CEOs look to strengthen skills, talent and data to support long-term growth.
“M&A activity in the Gulf is set to remain strong, but the nature of deals is changing. CEOs are increasingly using acquisitions to buy time rather than just scale, acquiring digital, AI, and sustainability capabilities that would take years to build internally,” said Kuruvilla.
Chief Investment Officer at Century Financial, Vijay Valecha, told Arab News that the PwC survey findings point to the region’s growing attractiveness for dealmakers as ambitious national visions and robust economic growth underpin this momentum.
“Companies are already expanding into new regions, competing more aggressively for skilled talent, and acquiring advanced technologies to stay ahead. Sovereign wealth funds are playing a central role in this shift, actively supporting diversification into renewables, digital infrastructure, and advanced manufacturing,” added Valecha.
Amit Dua, president of SunTec Business Solutions, shared similar insights, highlighting that Saudi Arabia and the wider GCC region are likely to see continued deal activity, especially in technology-driven sectors, consumer markets, and industrial services, aligned to national diversification agendas.
“In many cases, M&A is becoming the tool leaders use to enter adjacencies, build strategic depth, and future-proof business models in a more complex global environment,” said Dua.
Near-term caution
According to the PwC report, geopolitical conflict remains the region’s most significant concern, directly shaping boardroom decision-making, with near-term caution weighing on CEO sentiment across the Middle East.
Despite heightened geopolitical, cyber and climate risks, CEOs are choosing to invest through uncertainty rather than wait for stability, with 60 percent saying they can lead effectively through disruption and 42 percent indicating they can create new business opportunities that arise from such disruptions.
As a strategic response to geopolitical risk, nearly 30 percent of Middle East CEOs and 32 percent of GCC CEOs expect to reconfigure supply chains.
Nearly one in five indicated they would restructure tax obligations to manage geopolitical exposure, while 17 percent were prepared to exit markets that become too risky.
“Middle East CEOs are not deterred by global risk; they are planning through it. What stands out is the discipline behind their confidence,” added Hana.
