Transmittal Letter a

SUPPLEMENT submitted by c/o Lawler, Metzger, Keeney & Logan, LLC

Supplement

2012-12-21

This document pretains to ITC-T/C-20121116-00304 for Transfer of Control on a International Telecommunications filing.

IBFS_ITCTC2012111600304_979107

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. In the Matter of: ) ) SPRINT NEXTEL CORPORATION ) Petitioner/Transferor ) IB Docket No. _____________________ ) SOFTBANK CORP., ) File No. ISP-PDR-2012-_____________ STARBURST I, INC., and ) STARBURST II, INC. ) Petitioners/Transferees ) ) Petition for Declaratory Ruling Under ) Section 310(b)(4) of the Communications ) Act of 1934, as Amended ) To: International Bureau Federal Communications Commission PETITION FOR DECLARATORY RULING SPRINT NEXTEL CORPORATION SOFTBANK CORP. STARBURST I, INC. STARBURST II, INC. Regina M. Keeney John R. Feore A. Richard Metzger, Jr. John S. Logan Charles W. Logan Christina H. Burrow Emily J.H. Daniels Michael H. Pryor of of Lawler, Metzger, Keeney & Logan, LLC Dow Lohnes PLLC 2001 K St., N.W., Suite 802 1200 New Hampshire Avenue, NW Washington, DC 20006 Washington, DC 20036 (202) 777-7700 (202) 776-2000 Its Counsel Its Counsel November 15, 2012

TABLE OF CONTENTS I. THE PROPOSED TRANSACTION AND FOREIGN OWNERSHIP. ........................ 2 A. Description of Proposed Transaction. ..................................................................... 2 B. Foreign Ownership of the Parties to the Proposed Transaction. ............................. 5 1. Sprint Nextel Corporation. ................................................................................... 5 2. Starburst Entities. ................................................................................................. 6 3. SOFTBANK CORP. ............................................................................................ 7 a. SoftBank’s Businesses. ............................................................................... 7 b. SoftBank’s Home Market Is Japan, a WTO Member Country................... 9 c. SoftBank’s Ownership Is WTO-Compliant. ............................................. 10 II. GRANT OF THIS PETITION IS IN THE PUBLIC INTEREST. ............................... 13 A. The Parties Are Entitled to a Presumption That SoftBank’s Indirect Foreign Ownership in Sprint Serves the Public Interest. ................................................... 13 B. Petitioners Affirmatively Have Demonstrated the Public Interest Benefits of the Proposed Transaction. ..................................................................................... 16 III. REQUEST FOR PUBLIC INTEREST DETERMINATION. ..................................... 17 IV. CONCLUSION ............................................................................................................ 18

SUMMARY Sprint Nextel Corporation (“Sprint”), SOFTBANK CORP. (“SoftBank”), a Japanese stock company, Starburst I, Inc. (“Starburst I”), and Starburst II, Inc. (“Starburst II”) (collectively the “Petitioners”) hereby petition the FCC for a declaratory ruling that it is in the public interest for SoftBank indirectly to hold foreign ownership and voting rights in Sprint and its post-transaction direct and indirect licensee subsidiaries in excess of the 25-percent foreign ownership benchmark in Section 310(b)(4). Specifically, the Petitioners request a declaratory ruling allowing up to 100 percent aggregate foreign ownership in Sprint upon consummation of the proposed transaction. Sprint’s foreign ownership after the transaction would consist of (1) an indirect foreign ownership interest of approximately 70 percent held by Softbank via its subsidiaries, and (2) an indirect foreign ownership interest of approximately 5.78 percent from the group of existing Sprint public shareholders that indirectly will own approximately 30 percent of Sprint following the transaction. Petitioners also request authority to accept an additional 25 percent aggregate equity and/or voting interest from foreign investors without seeking prior FCC approval under Section 310(b)(4), subject to standard conditions. In its Foreign Participation Order, the FCC determined that allowing indirect foreign ownership beyond the 25-percent benchmark established by Section 310(b)(4) would promote competition in the United States and serve the public interest. The FCC has adopted an open entry policy by which investment by foreign entities from World Trade Organization (“WTO”) member countries is presumed to be in the public interest. As set forth herein, SoftBank’s home country is Japan, a WTO country. More than 92 percent of SoftBank’s investors are from WTO countries. Investors from non-WTO countries or of indeterminate

nationality hold no more than 7.54 percent of SoftBank. Coupled with non-WTO ownership of only approximately 2.7 percent in Sprint today, the non-WTO ownership resulting from this transaction will be well below the FCC’s threshold. No governmental entities hold any interests in SoftBank. Given the level of direct and indirect ownership of the post-transaction Sprint held by entities from WTO countries, the FCC’s public interest presumption readily applies. There are no other countervailing concerns that could warrant any departure from the FCC’s well- established policy of encouraging entry by entities from WTO member countries. To the contrary, SoftBank’s investment in Sprint affirmatively serves the public interest by strengthening Sprint’s ability to compete in U.S. wireless markets. - ii -

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. ) In the Matter of: ) ) SPRINT NEXTEL CORPORATION ) IB Docket No. _____________ Petitioner/Transferor ) ) File No. ISP-PDR-2012-_____________ SOFTBANK CORP., ) STARBURST I, INC., and ) STARBURST II, INC. ) Petitioners/Transferees ) ) Petition for Declaratory Ruling Under ) Section 310(b)(4) of the Communications ) Act of 1934, as Amended ) To: International Bureau Federal Communications Commission PETITION FOR DECLARATORY RULING Pursuant to 47 U.S.C. § 310(b)(4) (“Section 310(b)(4)”) of the Communications Act of 1934, as amended (the “Communications Act”), and the implementing rules and policies of the Federal Communications Commission (“FCC”) thereunder, Sprint Nextel Corporation (“Sprint”), SOFTBANK CORP. (“SoftBank”), Starburst I, Inc. (“Starburst I”), and Starburst II, Inc. (“Starburst II”) (collectively the “Petitioners”), hereby petition the FCC for a declaratory ruling that it would not serve the public interest to prohibit SoftBank from indirectly holding, through Starburst I and Starburst II, foreign ownership and voting rights in Sprint and its post-transaction direct and indirect licensee subsidiaries in excess of the

25-percent foreign ownership benchmark in Section 310(b)(4).1 Upon consummation of the transaction described herein (the “Proposed Transaction”), SoftBank, through its newly formed U.S. subsidiary Starburst I, will indirectly own and vote approximately 70 percent of the equity of Starburst II, which, in turn, will directly own and vote all of the equity of Sprint. As set forth below, SoftBank’s indirect foreign investment is entitled to the public interest presumption established in the FCC’s Foreign Participation Order because SoftBank’s non-World Trade Organization (“WTO”) ownership coupled with the existing non-WTO ownership of Sprint is well below 25 percent.2 Pursuant to the FCC’s well-established presumption, the FCC will grant a request under Section 310(b)(4) except in the “exceptional” case where the foreign investment is shown to pose a “very high risk” to competition.3 This is not an exceptional case where such a showing could be made. To the contrary, SoftBank’s investment in Sprint serves the public interest by enhancing competition and is expected to bring substantial benefits to U.S. consumers. I. THE PROPOSED TRANSACTION AND FOREIGN OWNERSHIP. A. Description of Proposed Transaction. Concurrently with the filing of this Petition, applications are being submitted pursuant to Sections 214 and 310(d) of the Communications Act seeking the FCC’s approval for the 1 47 U.S.C. § 310(b)(4). The Sprint licensee subsidiaries subject to the instant Petition are identified on Attachment A hereto. 2 See Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, Report and Order and Order on Reconsideration, 12 FCC Rcd 23891, 23896, ¶ 9, 23913, ¶ 50, 23940, ¶¶ 111-12, (1997) (“Foreign Participation Order”); Order on Reconsideration, 15 FCC Rcd 18158 (2000). The Proposed Transaction raises no issues under Section 310(a) of the Communications Act relating to the holding of radio licenses by foreign governments or their representatives. Furthermore, because the foreign ownership and voting interests in post-transaction Sprint and its subsidiaries will be indirect, through U.S. parent corporations, the Proposed Transaction presents no issues under Section 310(b)(1)-(3). 3 Foreign Participation Order, 12 FCC Rcd at 23913-4, ¶ 51. -2-

transfer of control of Sprint to SoftBank.4 Following the transaction, Sprint will remain as a separate company wholly owned by Starburst II, with SoftBank holding approximately a 70 percent indirect interest therein. On October 15, 2012, Sprint and SoftBank announced that they had entered into agreements which will result in SoftBank investing over $20 billion in Sprint and acquiring approximately a 70 percent indirect interest in Sprint, with the remaining interest held by existing Sprint shareholders. Under the terms of the agreements, SoftBank formed a U.S. holding company, Starburst I, which is wholly owned by SoftBank. Starburst formed another new subsidiary, Starburst II, which directly owns a third subsidiary, Starburst III, Inc. (“Starburst III”). As part of the transaction, Sprint will merge with Starburst III, with Sprint being the surviving entity, and Starburst I will have approximately a 70 percent interest in Starburst II. After the transaction is consummated, Sprint will be a wholly-owned subsidiary of Starburst II, with SoftBank, through Starburst I, owning slightly less than 70 percent of the shares of Starburst II and existing Sprint shareholders owning the remaining shares of Starburst II.5 Starburst II will own 100 percent of the stock of Sprint and its subsidiaries, and Sprint and its subsidiaries will continue to hold all of the FCC authorizations that they 4 Although SoftBank’s acquisition of control of Sprint will include the transfer to SoftBank of Sprint’s interests in Clearwire Corporation, Clearwire Corporation is not implicated in this petition for declaratory ruling, because it does not hold common carrier, broadcast, aeronautical en route, or aeronautical fixed radio station licenses and thus is not subject to the foreign ownership restrictions of Section 310(b). See 47 U.S.C § 310(b). 5 See Attachment B for a diagram illustrating the structure of the transaction. Under terms of the Merger Agreement, Starburst I will hold 69.642 percent of Starburst II’s common stock, and Sprint’s current shareholders will hold the remaining 30.358 percent of Starburst II’s common stock. Those percentages may change by an immaterial amount based on adjustment provisions in the Merger Agreement. Upon exercise of the warrant discussed infra at note 6, SoftBank would own approximately 70 percent of Starburst II. -3-

currently hold. Upon consummation of the merger, Starburst II will be renamed “Sprint Corporation.” The merger agreement includes protections to ensure that Sprint will not have non-WTO share ownership in excess of the limits set by the FCC’s policies. As part of the transaction, Sprint shareholders will receive an aggregate of approximately $12.1 billion from SoftBank via its subsidiaries in exchange for approximately 1.7 billion shares of Sprint stock.6 Sprint shareholders will have the right to elect to exchange each of their existing shares of Sprint for (1) $7.30 in cash or (2) one share of Starburst II stock.7 In addition, SoftBank, via its subsidiaries, will contribute an aggregate of $8 billion to Starburst II’s balance sheet in conjunction with this transaction.8 The transaction does not involve any assignment of Sprint’s licenses, spectrum leases, or authorizations, or any change in the licensees that hold such licenses and authorizations, and those companies will continue to provide service to the public. Accordingly, the transaction will be seamless to Sprint’s 6 SoftBank also will receive a five year warrant to purchase 55 million shares of Starburst II (representing slightly less than one percent of Starburst II’s common stock) with an exercise price of $5.25 per share. 7 The elections by Sprint shareholders are subject to proration if shareholders in the aggregate elect more than the total amount of cash or stock consideration, which would result in the receipt of a mix of cash and stock. The proration is to ensure that approximately $12.1 billion in cash is paid in the merger to Sprint shareholders and only approximately 30.1 percent of Starburst II’s common stock. Holders of Sprint stock options and other employee incentive awards will receive options and similar awards in Starburst II. 8 SoftBank, via Starburst I, will contribute $4.9 billion to Starburst II in addition to the approximately $12.1 billion to be paid in the merger to Sprint shareholders. SoftBank already has invested $3.1 billion in Sprint, in the form of a newly-issued convertible bond. See Press Release, Sprint Nextel Corp., Sprint Announces Closing of $3.1 Billion Convertible Bond (Oct. 22, 2012), available at http://newsroom.sprint.com/article_display.cfm?article_id= 2436&view_id=3856 (reporting that Sprint announced the closing of a convertible bond sale to Starburst II, pursuant to which Starburst II agreed to purchase from Sprint a bond in the principal amount of $3.1 billion). Subject to all applicable regulatory approvals and subject to the provisions of the bond purchase agreement, the bond is convertible into an aggregate of 590,476,190 shares of Sprint common stock. If not earlier converted, principal and any accrued but unpaid interest under the bond will be due and payable on October 15, 2019. See id. -4-

subscribers. Sprint’s headquarters will continue to be located in Overland Park, Kansas and Sprint’s current Chief Executive Officer (“CEO”) Daniel Hesse, will be the CEO of Starburst II, which will be renamed Sprint Corporation.9 The parties intend to consummate the transaction as promptly as possible after the necessary FCC and other federal and state regulatory approvals have been received, Sprint’s shareholders have approved the transaction, and other preconditions have been met. B. Foreign Ownership of the Parties to the Proposed Transaction. 1. Sprint Nextel Corporation. Sprint is a publicly traded Kansas corporation with its principal executive and administrative offices in Overland Park, Kansas.10 Sprint is a global communications company that, through its subsidiaries, offers a comprehensive range of wireless and wireline voice and data products and services designed to meet the needs of residential consumers, businesses, government subscribers, and resellers throughout the country and around the globe. Sprint offers wireless and/or wireline voice and data services in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. 9 Six of Starburst II’s ten directors will be designated by SoftBank at the time the merger becomes effective. The remaining four directors will consist of the CEO and three other current directors of Sprint. 10 At present, two institutional investors – Capital Research Global Investors and Dodge & Cox – hold a greater than 10 percent ownership interest in Sprint. Capital Research Global Investors is a member company of Capital Group Companies, Inc., a private United States investment advisor company founded in Los Angeles, California in 1931 as Capital Research and Management Company. In a Schedule 13-G filed with the SEC, Capital Research Global Investors stated that it is deemed to be the beneficial owner of 10.7 percent of Sprint’s common stock. See Capital Research Global Investors, Schedule 13-G (April 9, 2012). Dodge & Cox is an investment advisor headquartered in San Francisco, California. In a Schedule 13-G filed with the SEC, Dodge & Cox stated that it is the beneficial owner on behalf of itself and its clients of 10.3 percent of Sprint’s common stock. See Dodge & Cox, Schedule 13-G (June 7, 2012). Both Capital Research Global Investors and Dodge & Cox are U.S. citizens. -5-


Document Created: 2012-12-20 16:10:16
Document Modified: 2012-12-20 16:10:16
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