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.

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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