Sprint confirms Softbank is buying a 70% stake for $20.1B

Just as we heard yesterday, Sprint confirmed this morning that it’s selling 70 percent of the company to Japan’s Softbank for $20.1 billion. The deal will help Sprint manage its debt and avoid potential bankruptcy, and it also comes as the carrier is beginning to deploy its LTE 4G network across the U.S.

As part of the deal, $12.1 billion will be paid out to Sprint’s existing stockholders, while the remaining $8 billion will be new capital for Sprint. The deal is expected to close in the middle of 2013.

Combined, Sprint and Softbank will be the world’s third-largest carrier by sales with around $32 billion in annual mobile revenue.  The companies will have around 96 million subscribers (compared to Verizon’s 111 million and AT&T’s 105 million).

“This transaction provides an excellent opportunity for SoftBank to leverage its expertise in smartphones and next-generation high speed networks, including LTE, to drive the mobile internet revolution in one of the world’s largest markets,” said Softbank chairman and chief executive Masayoshi Son in a statement today.

The road to Softbank’s majority stake will be a long one. The company will create a new U.S. subsidiary, New Sprint, which will be used to invest a $3.1 billion convertible senior bond in the existing Sprint company. That bond will eventually turn into shares of Sprint, which will then transform into a subsidiary of New Sprint. After that dance is complete, Softbank will pay out the additional $17 billion.

Sprint says the deal won’t involve any changes with its relationship with Clearwire, in which it was previously a non-voting majority stakeholder.

Sprint store photo via Consumerist’s Flickr