Filed by Starburst II, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
And deemed filed pursuant to Rule 14a-6
Under the Securities Exchange Act of 1934
Subject Company: Sprint Nextel Corporation
Commission File No.: 001-04721
SoftBank-Sprint Merger
Discussion Materials
May 20, 2013
Cautionary Statement Regarding Forward Looking Statements
This document includes “forward-looking statements” within the meaning of the securities laws. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan,” “providing guidance” and similar expressions are intended to identify information that is not historical in nature.
This document contains forward-looking statements relating to the proposed transactions between Sprint Nextel Corporation (“Sprint”) and SoftBank Corp. (“SoftBank”) and its group companies, including Starburst II, Inc. (“Starburst II”), and the proposed acquisition by Sprint of Clearwire Corporation (“Clearwire”). All statements, other than historical facts, including, but not limited to: statements regarding the expected timing of the closing of the transactions; the ability of the parties to complete the transactions considering the various closing conditions; the expected benefits of the transactions such as improved operations, enhanced revenues and cash flow, growth potential, market profile and financial strength; the competitive ability and position of SoftBank or Sprint; and any assumptions underlying any of the foregoing, are forward-looking statements. Such statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. You should not place undue reliance on such statements. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, that (1) there may be a material adverse change of SoftBank; (2) the proposed financing may involve unexpected costs, liabilities or delays or may not be completed on terms acceptable to SoftBank, if at all; and (3) other factors as detailed from time to time in Sprint’s, Starburst II’s and Clearwire’s filings with the Securities and Exchange Commission (“SEC”), including Sprint’s and Clearwire’s Annual Reports on Form 10-K for the year ended December 31, 2012, and other factors that are set forth in the proxy statement/prospectus contained in Starburst II’s Registration Statement on Form S-4, which was declared effective by the SEC on May 1, 2013, and in other materials that will be filed by Sprint, Starburst II and Clearwire in connection with the transactions, which will be available on the SEC’s web site (www.sec.gov). There can be no assurance that the transactions will be completed, or if completed, that such transactions will close within the anticipated time period or that the expected benefits of such transactions will be realized.
All forward-looking statements contained in this document and the documents referenced herein are made only as of the date of the document in which they are contained, and none of Sprint, SoftBank or Starburst II undertakes any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
Transaction Summary
SoftBank has an unparalleled track record in building a wireless market leader Combined scale and SoftBank expertise will drive cost / CapEx synergies ?US market and Sprint offer compelling opportunity for SoftBank to apply mobile leadership Transaction structure provides:
1) Sprint with much needed capital
2) Shareholders with cash proceeds today and future value creation Merger on track to meet target closing on July 1, 2013
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SoftBank Overview
SoftBank History
2008
Mobile
2001 Internet
Broadband
1996
Internet
1981
Software
Distribution
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SoftBank Business Segments
Mobile Communications
Segment
SoftBank Mobile Corp.
Broadband Fixed-Line
Infrastructure Structure Telecommunications Segment
SoftBank BB Corp. SoftBank Telecom Corp.
SoftBank Corp.
(a pure holding company)
Others
Distribution of PC software
and peripheral devices
Fukuoka SoftBank HAWKS
related Business and others
Yahoo Japan Corp.
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Content and Services
SoftBank Group Companies
*As of Mar.31, 2013 6
SoftBank
Mobile Track
Record
M&A History
2004 2006 2010 2012
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Core Strategies |
SalesSales/ Marketingke i Network
Devices Contente /SServicesvices
9
Net Additions Market Share Improvement
Net Additions Share
FY2005 FY2012
Source: Company filings.
10
Monthly Net Additions #1 Ranking
2005 2006 2007 2008 2009 2010 2011 2012 2013
Jan. Feb. Mar. Apr. May June July Aug. Sept.
Vodafone
SoftBank
Oct. Nov. Dec.
11
Source: Company filings.
11
Mobile Subscribers
42.2mm
Steady
Growth
15.2mm
Apr. 2006 Apr. 2013 12
Source: Company
12
Mobile Service Revenue
15.2
($ bn) 13.9 Steady Growth
9.9 9% Increase in FY2013
(FY)
Source: Company filings.
13
Mobile Service Revenue Growth
SoftBank +9%
Verizon +8% Sprint +6% AT&T +4% Metro PCS +3% NTT DOCOMO (1%) No.1 in
au (1%) Japan & US
T-Mobile (7%)
Source: Company filings. Note: Reflects communication service revenue for personal segment for au.
14
Mobile EBITDA
7.6 ecord High for
( 6.6 6 Consecutive Years
$ bn)
SoftBank 14% Increase
Vodafone in FY2013
Japan
2.9
Source: Company filings.
15
Mobile EBITDA Margin
Global No.1
SoftBank 50%
China Mobile 48% Verizon 47% NTT DOCOMO 42%
AT&T 39%
Source: Company filings.
16
Mobile EBITDA Growth
SoftBank 14%
Verizon 12%
AT&T 7%
China Mobile 1% Global
NTT DOCOMO (1%) No.1
Source: Company filings.
17
Sprint Transaction Rationale
Mobile Subscribers
350mm Large
Growing
Market
150mm
CY2001 CY’03 CY’05 CY’07 CY’09 CY’11 CY’13 19
Source: Wireless Intelligence.
Active Smartphone Users
(mm)
US 170
China 130
UK 30
Korea 30
Japan 20 Global No.1
Germany 20
France 20
Source: Flurry Analytics, Active Devices during July 2012. 20
Note: Number of activated iOS and Android devices.
ARPU
Japan
US
Brazil
Russia
China
Indonesia
India
High ARPU
Source: Wireless Intelligence (October to December 2012). Note: 7 largest countries by number of subscribers.
Postpaid Ratio
Japan
US
Brazil
China
Russia India Indonesia
High Postpaid Ratio
(Sophisticated Credit Environment)
Source: Wireless Intelligence as of March 31, 2013. Note: 7 largest countries by number of subscribers.
22
Effective Mobile Data Speeds
Japan
UK
Australia
Italy
US
Germany
China
Slow Network Speed
23
Duopolistic Market
Source: Wireless Intelligence.
Note: Subscribers as of March, 2013, EBITDA as of FYE 12/2012.
24
Sprint Highlights
3rd Largest Post-Paid Carrier 2nd Largest Pre-Paid Carrier Among Most Recognized US Brands Rated #1 in Customer Satisfaction Highly-Experienced Management Team Differentiated Spectrum Portfolio
25
Sprint Recovery In Process
Phases of the Sprint Turnaround
I. Recovery II. Investment III. Margin Expansion
• Improve the Brand • Build world-class • Margin improvement • Reverse subscriber network platform from Network Vision trends • Eliminate duplicative • Continued revenue • Begin growing revenue network cost structure growth • Eliminate costs • Growth of core Sprint • Conserve capital business
• Fund FCF losses with SoftBank investment
2008—2011 2012—2013 2014+
26
Synergies
SoftBank / Sprint Synergy Overview
1) Average annual OpEx synergies of $2bn+ through 2017 with $3bn run-rate thereafter
2) Annual CapEx synergies of 32%—36% of Sprint planned network investment through 2017
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SoftBank / Sprint OpEx Synergies
% of 2014—2017
Item OpEx Synergies Description
Device / Accessory 38%—Joint development through SoftBank global vendor relationships
Procurement1
- Develop comprehensive portfolio of emerging products
- Volume incentives / discounts from joint purchasing efficiencies Network OpEx 19%—Implementation of SoftBank traffic management and network technology best practices
- Insourcing of network monitoring and maintenance Churn Improvement 16%—Improved credit screening and pricing structures
- Results in CPGA savings
IT 13%—Joint development of cost-efficient IT platform
- Cooperation of IT development and operations resources Customer Care 14%—Implementation of SoftBank care service structure
- Improvement of average handling times 29
Source: SoftBank.
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Includes handsets, connected devices, accessories, insurance and related costs. |
SoftBank / Sprint CapEx Synergies
% of 2014—2017
Item CapEx Synergies Description
Vendor Scale Benefits 42%—Equipment / construction incentives and discounts from joint purchasing efficiencies
Traffic Management 7%—Implementation of SoftBank traffic management efficiencies
(mm) Global Procurement Scale
28.8 Competitive
26.9 26.5
Economies
of Scale
13.3
8.5
Verizon AT&T Sprint / NTT KDDI
Source: Company filings. SoftBank DOCOMO 31
Note: SoftBank, NTT DoCoMo, KDDI reflect FYE 3/2013. Others reflect FYE 12/2012.
Global Procurement Scale
($ bn)
20.4 Economies of Scale
Global No. 2
11.9 10.8
9.9
8.9
7.5
3.3
China Mobile Sprint / AT&T Vodafone Verizon NTT KDDI
SoftBank (Consolidated) DOCOMO
Note: Vodafone, SoftBank, NTT DoCoMo and KDDI reflect FYE 3/2013. Others reflect FYE 12/2012. 32
Source: Company filings.
Sprint-SoftBank Joint Planning Projects
Synergies are
real and
ready for
implementation
Planning Meetings
Increased Financial Flexibility
Transaction Summary
Post-Closing
Step 1 Step 2A Step 2B Ownership
(Completed October 2012)
$3.1bn in Convertible Debt @ $5.25/share
$4.9bn in Newly Issued Shares@ $5.25/share
$12.1bn Cash to Shareholders
@ $7.30/share and new Sprint Shares
Post-Closing Ownership
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Significant Premium
Secondary ($7.30)
Primary ($5.25)
Source: Company filings (including Sprint DEF14A).
Note: As of 10/10/2012, last trading day before reports of the merger.
1 Day 30 Day 90 Day 360 Day VWAP
1 Day 30 Day 90 Day 360 Day VWAP
36
Fully Financed
New Shares
($5.25/share)
Existing Shares
($7.30/share)
$3.1bn $4.9bn
$12.1bn
Completed Investment h on Hand
37
On Track to July 1, 2013 Closing
CFIUS Approvals STATE
Expected by Expected by 22 of 23 received
May 29 May 28 Final expected by May 23
New Sprint Governance Protects Minority Shareholders
Board (Years 1 & 2) includes 10 members: 3 independent, 3 legacy Sprint independent, 3 SoftBank, CEO
Year 3: 6 independent, 3 SoftBank, CEO After Year 3: 3+ independent
Independent representation on all committees except finance1
One SoftBank independent to serve as “Security Director” per agreement with DOJ, DOD and Homeland Security2
Non-compete in the US with exception for investments <$100mm Key approval rights for majority of Disinterested Directors
Dividends, differential consideration to SoftBank, business combinations with SoftBank, waiver / amendment of governance provisions related to SoftBank
1 Audit Committee comprised of all independent directors (at least three); as long as SoftBank owns 50% or more, SoftBank selects all Finance Committee members from its designees. Other committees must have at least one independent director. Anticipated that the Security Director must be a Compensation Committee member.
2 Designee subject to government approval.
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Strengthened Capital Structure
Current Net Debt ¹ Conversion of Merger Primary Proceeds from Post-Closing Net SoftBank Warrants Debt Convertible
Source: Sprint filings as of Q1 2013.
1 Assumes 100% acquisition of CLWR for $2.97/share.
2 Excludes all SoftBank OpEx synergies.
3 Includes $2.0bn average SoftBank OpEx synergies.
4.7x Net Debt / LTM EBITDA ²
2.6x Improvement
2.1x Net Debt / LTM EBITDA ³
40
Significant Funding Requirement
(Projected Sprint + Clearwire Standalone FCF per Proxy)
2013 FCF Losses 2014 FCF Losses Funding Gap
Source: Company filings (including Sprint DEF 14A). Note: As per “Clearwire Acquisition Model” from Sprint Proxy.
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Value Creation
Comparable Mobile Trading Multiples
(EV / 2014E EBITDA)
7.2x
6.2x Mean: 6.2x
5.3x
Source: Company filings and consensus 2014E EBITDA per CapIQ. Market data as of May 17, 2013. 43
Equity Value Creation
(Illustrative New Sprint Share Price1)
Total Per Share2
$14.8 $8.34
$53.4
$38.6 4.6bn Shares PF
Enterprise Net Debt Equity
Value Value New Sprint Share Price
6x 2014E EBITDA Multiple3
Source: Company filings.
1 Assumes 100% acquisition of Clearwire @ $2.97/share and conversion of SoftBank convertible debt and merger primary. 44
2 Reflects 4.6bn pro forma New Sprint shares outstanding.
2 2014E EBITDA of $6.9bn as per “Clearwire Acquisition Model” from Sprint Proxy. Includes $2.0bn in OpEx synergies per 2014-2017 projected average.
Equity Value Creation
(Illustrative New Sprint Share Price1)
$10.26
$9.30
$8.34
$7.38
5.50x 6.00x 6.50x 7.00x
2014E EBITDA Multiple2
Source: Company filings. 45
1 Assumes 100% acquisition of Clearwire @ $2.97/share and conversion of SoftBank convertible debt and merger primary.
2 2014E EBITDA of $6.9bn as per “Clearwire Acquisition Model” from Sprint Proxy. Includes $2.0bn in OpEx synergies per 2014-2017 projected average.
Equity Value Creation
(SoftBank Consideration per Share Build1)
$7.30 X 55% $8.34 X 45%
$ 7.76
Long Term Value
$3.74 $ 3.74 Participation
+
$4.03 $ 4.03 Premium Cash
Consideration
Cash Equity @ 6x 2014E Consideration per
EBITDA² Share
Source: Company filings (including Sprint DEF14A).
1 Assumes 100% acquisition of Clearwire @ $2.97/share and conversion of SoftBank convertible debt and merger primary. 46
2 2014E EBITDA of $6.9bn as per “Clearwire Acquisition Model” from Sprint Proxy. Includes $2.0bn in OpEx synergies per 2014-2017 projected average.
Equity Value Creation
(SoftBank Consideration per Share1)
$ 8.20 $ 8.63
$7.33 $7.76
$3.31 $3.74 $ 4.17 $ 4.60
$4.03 $4.03 $ 4.03 $ 4.03
5.50x 6.00x 6.50x 7.00x
2014E EBITDA Multiple2
Cash Consideration Equity Consideration
1 Source: Assumes Company 100% acquisition filings. of Clearwire @ $2.97/share and conversion of SoftBank convertible debt and merger primary. 47
2 2014E EBITDA of $6.9bn as per “Clearwire Acquisition Model” from Sprint Proxy. Includes $2.0bn in OpEx synergies per 2014-2017 projected average.
Equity Value Creation
(Illustrative New DISH Share Price1)
Total Per Share2
$30.44
$42.3
$62.6
669mm PF
Shares
$20.4
Enterprise Net Debt Equity New DISH Share Price
Value Value
5.5x 2014E EBITDA Multiple3
Source: Company filings.
1 Assumes 100% acquisition of Clearwire @ $2.97/share. 48
2 Reflects 669mm pro forma New DISH shares outstanding.
3 2014E EBITDA of $11.4bn including Sprint EBITDA as per “Clearwire Acquisition Model” from Sprint Proxy, DISH EBITDA, $1.3bn in OpEx synergies (attributed full year 1 synergies, although expected mid 2014 close).
Equity Value Creation
(DISH Consideration per Share Build1)
$4.76 X 100% $30.44 X .0595
$ 6.57
$1.81 $ 1.81 Equity Consideration
+
$4.76 $ 4.76 Cash Consideration
Cash Equity @ 5.5x Consideration per
2014E EBITDA² Share
Source: Company filings.
1 Assumes 100% acquisition of Clearwire @ $2.97/share. 49
2 2014E EBITDA of $11.4bn including Sprint EBITDA as per “Clearwire Acquisition Model” from Sprint Proxy, DISH EBITDA, $1.3bn in OpEx synergies (attributed full year 1 synergies, despite expected mid 2014 close).
Sprint Consideration Comparison
$ 7.76
$ 6.57
Equity $ 3.74 $ 1.81
Cash $ 4.03 $ 4.76
Methodology 6.0x Wireless Multiple¹ 5.5x Wireless / DBS Multiple²
Source: Wall Street research, Management presentation, Company materials. 50
1Offer value includes $ 2.0bn of synergies added to SoftBank/Sprint 2014E EBITDA.
2Offer value includes $ 1.3bn of synergies added to DISH/Sprint 2014E EBITDA.
Transaction Summary
SoftBank has an unparalleled track record in building a wireless market leader Combined scale and SoftBank expertise will drive cost / CapEx synergies US market and Sprint offer compelling opportunity for SoftBank to apply mobile leadership Transaction structure provides:
1) Sprint with much needed capital
2) Shareholders with cash proceeds today and future value creation Merger on track to meet target closing on July 1, 2013
51