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Does SoftBank (9984JP) to buy the remaining 15% or so of Sprint (S) it doesn’t already own?

A possibly material question for Sprint investors, as Walter Piecyk of BTIG Research today opines that open-market purchases of Sprint shares by SoftBank of late have helped to “prop it up,” keeping the stock from falling below $6. Sprint today is at $6.10, down 5 cents.

There’s an 85% threshold of ownership above which chairman Masayoshi Son has said he doesn’t intend to go. But things can change, so Piecyk asks whether Son would change his mind.

That’s the question pondered today by Walter Piecyk of BTIG Research, after taking note of the fact the company recently was in a frenzy of share buying and then stopped.

After Sprint (S) dropped sharply on the announcement earlier this month it and T-Mobile US (TMUS) ended their talks to merge, SoftBank stepped in and bought 4.3 million shares in one day, and then made further purchases of 17.0 million shares, over the course of eight days.

Then, writes Piecyk, SoftBank stopped and hasn’t done anything for the past seven trading days.That, he writes, leaves SoftBank with the ability to buy another 58 million shares before it would hit the 85% limit.

Piecyk goes through a list of reasons why there seems little to be gained from owning all of Sprint. SoftBank already reports Sprint’s results in its filing, so that wouldn’t change. And $4.9 billion it would cost to buy the remaining chunk could be better spent on things like Son’s “Vision” fund for cutting-edge tech.

"It’s not clear what the incremental value of owning all of Sprint would be to SoftBank, other than its view of buying what it believes is an undervalued asset,” he writes.

As for Sprint, “We believe the downside from here is material,” writes Piecyk. He has a valuation of $4 per share for Sprint, based on 7.5 times what he thinks Ebitda may be in 2019.

"it will be more challenging for Sprint to remain above $6 per share without SoftBank’s open market purchases or an outright tender for the stock,” concludes Piecyk.

Piecyk opines T-Mobile is the better of the two as far as playing the U.S. wireless market:

SoftBank may have helped stabilize Sprint’s stock, but T-Mobile’s stock has performed much better since deal talks were called off. The ratio of T-Mobile’s stock price to Sprint is now over 10:1 and we expect that to widen further. The movement of the current ratio is an affirmation of Deutsche Telekom decision to remain firm on price and control demands. The 10:1 ratio is much higher than the press reports during the negotiation that referenced an “at-market” deal ratio of 8:1. We previously discussed why any ratio tighter than 10:1 was too generous to Sprint shareholders, even factoring in the synergy opportunity of the merger. We believe a standalone T-Mobile is worth $84 by the end of 2018.

T-Mobile stock today is down $1.31, or 2%, at $61.47.

See also: T-Mobile To Benefit from Collapse of Sprint Deal, Says Moffett Nathanson, November 27th, 2017.