Japanese operator Softbank is shelling out $20.1 billion to acquire a controlling 70 percent stake in Sprint, a transaction that will give Sprint much-needed cash to compete with AT&T and Verizon Wireless.

The buyout buoys Sprint's heavily indebted balance sheet with $8 billion in new capital. 

The operator won't get more spectrum or new subscribers out of the deal, the key benefits of T-Mobile USA’s recently announced merger with MetroPCS.

“This is a transformative transaction for Sprint that creates immediate value for our stockholders, while providing an opportunity to participate in the future growth of a stronger, better capitalized Sprint going forward," Sprint CEO Dan Hesse said in a statement. 

Softbank’s capital infusion will help Sprint finance its network overhaul and LTE deployment, key parts of Hesse’s plan to turn Sprint around after its ruinous 2005 merger with Nextel. The Nextel transaction resulted in years of heavy losses and customer defections, trends that Sprint has only recently begun to reverse. 

Softbank will pay $7.30 a share for about 55 percent of Sprint's current stock, and Sprint shareholders will receive the remaining $12.1 billion from the transaction. The remaining shares will become part of the new company, called New Sprint. 

When the transaction closes, Sprint's shareholders will hold 30 percent of New Sprint, with Softbank controlling the remaining 70 percent. 

The investment has already been approved by both companies' boards of directors. The transaction is expected to close in mid-2013 after it gains approval from the Justice Department and other regulators. 

Sprint will retain its current headquarters in Overland Park, Kan. after the deal is complete. Hesse will serve as CEO of New Sprint and the company's 10-member board of directors will retain at least three current members of Sprint's board. 

The announcement early this morning refuted analysts' predictions that Softbank was unlikely to go after a majority investment in Sprint because of potential government concerns over foreign ownership. 

The buyout does not include a deal for Clearwire, another source of analyst speculation. Softbank said in its announcement today that the deal "does not require Sprint to take any actions involving Clearwire" other than those hashed out under the two companies' previous agreements.

T-Mobile USA's merger with MetroPCS put pressure on Sprint by creating a stronger fourth-place competitor. The two companies will have a combined subscriber base of about 42.5 million customers, inching closer to Sprint's 56 million subscribers. 

Sprint's subscriber base remains far behind that of AT&T and Verizon, the country's two largest wireless providers. Verizon Wireless has about 111 million subscribers and AT&T has about 105 million customers.

Sprint’s LTE network lags behind Verizon but appears to be catching up to AT&T. Sprint is working to launch in 200 markets over the coming months. That could put it ahead of AT&T, which currently has its LTE network live in 77 markets. Even with that aggressive push, Sprint’s LTE footprint will still be dwarfed by Verizon’s LTE network in more than 400 markets.