Print 17 comment(s) - last by Ammohunt.. on Apr 18 at 1:22 PM

  (Source: Venture Beat)
Dish offers a 13 percent premium over Japanese telecom's bid for roughly same seven-tenths stake

Just when it appeared that Japan's fastest growing mobile carrier, Softbank Corp. (TYO:9984), had a deal wrapped up to partially acquire Sprint Nextel Corp. (S) -- America's third largest cellular network and largest prepaid provider -- satellite TV superpower Dish Network Corp. (DISH) has disrupted those plans with an aggressive offer of its own.

I Dish Sweetens the Pot

Like Softbank, Dish's deal would see Sprint shareholders retaining about a three-tenths (32 percent) of the company.  However, Dish is upping the ante, offering $25.2B USD in cash and stock -- a price of around $7 USD per share (1 Sprint share = $4.76 USD in cash and ~0.05953 DISH shares).

That deal represents roughly a 13 percent premium over Softbank's bid, though that number could float given the basis on DISH shares.  The offer is based on $8.2B USD in cash from Dish's stockpile and $2.3B in debt offerings.

Nick Brown, a telecommunications analyst with Espirito Santo investment bank, was bullish on the deal, telling Reuters, "The offer from Dish appears credible since it has the financing lined up and can justify a higher price than SoftBank's offer because of the synergies with its existing operations in the U.S."

Charlie Ergen v. Masayoshi Son
Charlie Ergen (Dish/Echostar) and Masayoshi Son (Softbank) both serve as joint chairman and CEOs of their firms.  Both have a penchant for driving a hard deal.  And both hate to lose. [Image Source: Sawyer Speaks (left); Bloomberg (right)]

The offer could bring billionaire telecom mogul and Dish Chairman Charlie Ergen's dreams of owning his own cellular network to fruition.  Amid a reported spectrum shortage, Mr. Ergen has been tucking away billions in lightly used spectrum.  While Softbank's financial funding of cash-strapped Sprint's LTE push has been viewed as a key upside of that deal, Mr. Ergen's surplus spectrum could offer an even more aggressive injection into Sprint's LTE push.

The combined company would have $50B USD in current revenues and 63.1m subscribers.  Dish said it hoped to leverage synergy from the potential deal to bundle its satellite TV and Sprint cellular services.  In its letter regarding the proposed deal, Dish claims these synergies would save the combined company $11B USD annually.

II. Analysts are Split -- Both Softbank and Dish are Great Matches, They Say

Vijay Jayant, an analyst at ISI Group, comments, "Forget the execution, next move is there a bidding war for Sprint and how big does it go and how expensive does it get? Dish has synergies SoftBank does not (have)."

Jennifer Fritzsche, a telecom analyst at Wells Fargo & Co. (WFC), says that Softbank is likely the preferred buyer by Sprint's management, due to its long-standing track record in the industry; however, the Dish deal is more lucrative.  She writes in a research note, "Ergen and his team clearly bring a better financial offer."

All eyes are now on Softbank for its response.  Softbank could potentially sweeten its offer.  Chief Executive Masayoshi Son is known as a ferocious negotiator.  So don't expect Softbank to necessarily go quietly into the night.

Sprint sign
Sprint has two attractive potential mates vying for its interest. [Image Source: Scott Lippincott]

Sprint had also tentatively agreed to Softbank's proposal; so there may be legal or financial repercussions should it back out.

Needless to say this one should be an interesting storyline to watch in coming months.  A carrier that has long been kicked around by the U.S. marketing and struggling has suddenly found itself in the relatively unusual role of having two large, highly attractive suitors vying for partial ownership in it.  

Whoever wins the battle for Sprint will likely play a key role in America's telecommunications future for at least the next decade.

(Sprint has issued a short response to the "unsolicited offer" saying it is going to review it carefully.)

Sources: Dish, Sprint, Reuters

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: ANYONE!!! Please just make a deal!!!
By Dr of crap on 4/15/2013 12:43:36 PM , Rating: 3
WHY does everyone bring this up?
I have Sprint and have no need to contact Customer Service for anything. So I really can't give any input about if it's good or bad just that fact that for 10 years I think I've called them once or twice and the last time was at least 8 years ago.

Do you really have a need for human interaction from your cell carrier?

By Cannyone on 4/15/2013 1:11:36 PM , Rating: 2
Sometimes "human interaction" is required. But you wouldn't really know this if you are one of the lucky few that's needed it in recent memory...

RE: ANYONE!!! Please just make a deal!!!
By BRB29 on 4/15/2013 1:24:19 PM , Rating: 2
you're just lucky you have good service. Never mind the spotty service, the constant mistakes in billing and bad customer service will make you angry.

There were plenty of people that signed up for unlimited bandwidth that soon found out it wasn't unlimited. Then Sprint canceled their contract abruptly so they don't have to deal with complaints lol.

RE: ANYONE!!! Please just make a deal!!!
By Dr of crap on 4/16/2013 12:41:11 PM , Rating: 2
In answer to your post - no, no, no, and no, haven't had any of those things you post and I've been with Sprint over 10 years.
As for the band width I can't say. I am not a bandwidth hog. BUT I have had no problem watching the occasional video or surfing the web. AND it's unlimited as far as I can tell.

By BRB29 on 4/17/2013 12:55:57 PM , Rating: 2
I am honestly glad you are getting good service with Sprint. But for millions of their customers, it is quite the opposite. The fact that Sprint is losing massive amounts of customers proves that. Just google and find out.

By superflex on 4/16/2013 1:20:24 PM , Rating: 2
Mistakes in billing? Never
Bad customer service? No
Spotty coverage? Sometimes

From an 11 year Sprint customer

By euclidean on 4/17/2013 11:16:43 AM , Rating: 2
As I posted above...very little issues when dealing with customer service over the last 3 years. Even when I have had the occasional billing issue, they've been nothing but pleasant and helpful in having the 3rd party charges removed from my bill.

Other than that, the only problems I have (besides slow speeds) is the occasional dropped call. Unlimited Data is accurate - if you're on 4G (WiMaxx or LTE). 3G is unlimited but they lower your bandwidth past 5GB...which I do agree is a drag, but if you're on 3G with Sprint, it really can't get any slower ;) hehe...

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki