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Will Softbank Cut Sprint’s Prices?

Softbank has big plans for Sprint, the third biggest player in the U.S. wireless market. The Japanese telecom giant has already signaled its plans to help Sprint speed up the rollout of a faster network. But some analysts say consumers could also see snazzier marketing – and cheaper cell phone plans.

Softbank Corp.’s $20 billion takeover of Sprint Nextel Corp., announced this week, gives the Japanese firm a 70% stake in the U.S. carrier. And Sprint could give Softbank a platform to do in the U.S. what it did when it bought Vodafone Group PLC’s Japanese operations in 2006: unleash a series of high-profile, bargain basement plans that undercut the bigger rivals. “Softbank has been a vigorous competitor in Japan,” says Craig Moffett, senior analyst at Bernstein Research. “It lowered rates and introduced the iPhone. I would expect the same thing here.”

When Softbank took over Vodafone in Japan, it launched an aggressive campaign with what were then the lowest prices in the industry. In 2007, Softbank unveiled its “White Plan”, a two-year contract for 980 Yen ($12.50) a month. Analysts say the move paid off for Softbank; indeed, rivals KDDI and NTT DoCoMo soon followed suit.

Softbank did not respond to requests for comment about the Sprint acquisition.

In a conference call with analysts this week, Softbank CEO Masayoshi Son complained about slow network speeds in the U.S., saying, “Every time I come to the U.S., I say ‘Oh my God, the mobile phone network is so slow.’” With Softbank’s deep pockets, Sprint will be able to invest in its network to speed up the rollout of its faster 4G long-term evolution or “LTE” services; a Sprint spokesman said the Softbank acquisition would help the carrier to become a “stronger and more robust competitor.” With a faster network, Softbank can help Sprint break Verizon and AT&T’s “duopoly dominance,” says Carrie MacGillivray, program vice-president of mobile services at IDC Research.

Some marketing experts hope that Softbank will also bring Sprint some much-needed pizzazz. Several black-and-white ads for Sprint’s “truly unlimited plans,” for example, have featured CEO Dan Hesse walking around New York. “Sprint’s advertising is generic and uninspired, and I’m a Sprint customer,” says branding consultant Rob Frankel.

Softbank’s ads offer a sharp contrast. In this spot: directed by Spike Jonze, actor Brad Pitt plays a personal assistant to the Japanese sumo wrestler Musashimaru. In another starring Pitt, director Wes Anderson borrows from Jacques Tati’s 1953 French farce, “Les Vacances de Monsieur Hulot” with Pitt, clad in head-to-toe yellow, as a frisky tourist in a French seaside town. (Sprint declined to comment on the future of its advertising campaign.)

 

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