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Japanese Firm Looking to Purchase Sprint?

October 11, 2012

by Jeff Pinkerton

An October 11  article in The Kansas City Star reports that a Japanese company, Softbank Corp., may be negotiating to buy Sprint. It’s too early to tell whether a deal will actually happen, but the possibility is noteworthy.

Sprint’s employment numbers have dropped over the past decade, but it is still one of the region’s largest private employers. A potential sale could have serious consequences — good or bad —for the regional economy.

At one extreme, the sale could have a positive effect. Softbank would be buying an asset that allows them to enter the U.S. telecommunications market. In the best scenario for Kansas City, Softbank would want to build on this asset and turn Sprint (or whatever the new company might be named) into a more formidable player in the market. Local employment could be boosted. This outcome would be similar to what we experienced when Sprint and Nextel merged. The company’s headquarters temporarily moved to the Washington, D.C., area, but the vast majority of employees stayed at the Overland Park campus.

On the other hand, in the doom-and-gloom scenario, Softbank may just be buying the Sprint brand and not necessarily needing the assets (employees, offices and equipment) currently located here. Kansas City experienced a similar scenario with Marion Labs. This homegrown company was sold and resold to various companies over time. Today, there is essentially no trace of Marion Labs left in Kansas City  beyond a few employees who went on to work for other local pharmaceutical companies in the region.

If the Softbank sale comes to pass, our reality will likely be somewhere in the middle. We tend to believe it would be closer to the good scenario than the bad. If Softbank Corp. really wants to enter the U.S. market successfully, they will need to retain the market expertise that now resides within Sprint.

Either way, this is certainly big news for the Kansas City economy. We will continue to follow this story as it unfolds.

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