Sprint Nextel - outgunned - FT.com If this is a one-act play, it will be a farce, if not a tragedy. SoftBank is paying $12bn for 55 per cent of Sprint's existing shares and another $8bn for newly issued equity. Chief executive Masayoshi Son says that he is investing at the inflection point in Sprint's recovery story. But he is buying 70 per cent of the company at the equivalent of $6.30 a share, more than double the Sprint share price a year ago. The price also equates to an enterprise value of 6.5 times forward earnings before interest, tax, depreciation and amortisation, a decent premium to the rest of the sector. There are no operating synergies in a US-Japan tie-up but the companies have pointed to purchasing synergies, that is, better prices for handsets and network equipment. It is hard to say how significant these will be, given that both companies were already fairly big purchasers. Another argument for the deal is that the SoftBank team has special experience in technological upgrades and turning round second-tier players in competitive markets. This is deeply unconvincing. Sprint's problem was never strategic or technological wherewithal. The problem is that it is economically outgunned. Sprint spent $3.1bn on wireless capital expenditure in the last year. The two biggest companies in the market, AT&T and Verizon, spent $10bn and $7.5bn on capex over the same period. A one-time $8bn cash infusion will not close this gap and neither will "expertise." Sprint chief executive Dan Hesse has suggested that a stronger balance sheet would let the new Sprint participate in potential further consolidation of US market. This has to be the second act of the SoftBank-Sprint drama if it is to end happily. There is, unfortunately, just one tie-up that could dramatically reshape the competitive landscape: a newly recapitalised Sprint and the recently combined T-Mobile and MetroPCS. But will the new T-Mobile want to merge? And will regulators give their blessing? The audience waits with bated breath.