DealBook: SoftBank of Japan Said to Be Near Deal for Control of Sprint

SoftBank of Japan is nearing a deal to buy control of Sprint Nextel, giving the struggling American cellphone service provider a deep-pocketed backer to help finance its turnaround effort.

Talks are at an advanced stage, and a transaction may be announced soon, a person briefed on the matter said on Thursday. But the person cautioned that details were still being negotiated and a transaction may not transpire.

If a deal is completed, Sprint would gain substantial financial heft. SoftBank, one of Japan’s biggest cellphone service providers, could provide additional resources for Sprint build out its next-generation network.

Sprint has long labored in the shadow of its bigger rivals, Verizon Wireless and AT&T, and in recent years has sought to compete primarily on price. But the company risked being overshadowed by T-Mobile USA’s plan to merge with MetroPCS, a deal that could create a tougher competitor in the lower end of the cellphone market.

Sprint currently has 56 million customers, while the newly enlarged T-Mobile would have 42.5 million subscribers.

And while Sprint has committed billions of dollars to revamping its infrastructure, hoping to build out a Long Term Evolution high-speed network, it is constrained by limited financial resources. The company carried nearly $21 billion in long-term debt as of June 30, and it has lost money every year since 2007.

It had nearly purchased MetroPCS earlier this year, only for its board to veto the deal because it deemed the acquisition too expensive. Reports had said that Sprint was considering making another run at MetroPCS, weighing down on the bigger service provider’s shares for days.

Buying Sprint would give SoftBank an entryway into the American market, one of the largest in the world. The Japanese company has steadily surpassed rivals in its home country, in large part through acquisitions. Earlier this month, it agreed to buy a smaller competitor, eAccess, to become the second-biggest service provider in Japan.

A deal for a Sprint stake would be among the biggest in SoftBank’s history, rivaling its $15.4 billion takeover of Vodafone‘s Japan operations. Shares in Sprint closed up 1.8 percent on Wednesday, giving the company a market value of about $15.1 billion.

A spokesman for Sprint declined to comment. A representative of SoftBank was not immediately available for comment.