Standard & Poor’s has cut Softbank’s credit rating to reflect increased financial risks following clearance of its $21.6 billion acquisition of Sprint Nextel Corp.
S&P said Monday it cut Softbank’s rating to BB+, which is the highest junk-grade rating, from BBB. Softbank shares fell 3.4 percent in Tokyo.
The ratings agency says Softbank’s debt will increase substantially as a result of buying 78 percent of Sprint.
The Federal Communications Commission approved the Sprint deal on Friday.
S&P says Sprint, the third-biggest U.S. wireless carrier, has a weak cash flow and high debt, while Sprint’s acquisition of Clearwire will add to the financial burden on Japan’s Softbank.
But S&P expects Sprint’s profitability to improve under its new owner, and says Softbank is supported by its strong market position in Japan.
In other Sprint news, Clearwire Corp. says its shareholders have voted in favor of selling the rest of its shares to majority owner Sprint Nextel Corp.
Sprint offered $5 per share for the rest of Clearwire, which runs a mobile broadband network that Sprint uses to provide “Sprint 4G” service on many of its phones.
Sprint hopes the deal will make it more competitive with bigger rivals Verizon Wireless and AT&T Inc. It had to raise its original bid for Clearwire to overcome a competing bid from Dish Network.
Bellevue, Wash.-based Clearwire says about 82 percent of its shares that were not affiliated with Sprint were voted in favor of the sale. Sprint and Clearwire expect to complete the transaction on Tuesday.