Dish Network $25B Bid Aims to Grab Sprint From SoftBank's Embrace

By Wayne Rash  |  Posted 2013-04-15 Print this article Print

Dish has offered to pay the breakup fee if Sprint decides that it's going to abandon its deal with SoftBank. But SoftBank has a say in this, too. The most obvious option is that SoftBank can up the ante and outbid Dish.

I'm sure that one way or the other, lawyers would become involved, and that could perhaps postpone a deal longer—perhaps long enough for Clearwire and then Sprint to run out of money. If Sprint doesn't acquire Clearwire in the immediate future, then the company would have no choice but bankruptcy. Then, no matter what happens, any deal to buy Clearwire or its spectrum would be tied up for a long time, perhaps years.

With all of the wireless players dancing around Sprint, two scenarios seem realistic. One is that Softbank buys Sprint as planned. The other is that Dish buys Sprint. But as you'd expect, it's not that simple.

If Softbank ups the ante and buys Sprint and its newly acquired Clearwire, then Sprint becomes part of a much larger global telecom. The combined buying power of both companies means Sprint can get new devices faster and cheaper, which will help it grow its customer base. Clearwire will give it the spectrum it needs for LTE. Eventually Dish, finding no wireless partners, will sell its wireless spectrum to any of the wireless companies that want to spend the money.

If Dish is successful, then it pays the $25 billion to buy Sprint, the breakup fee (reportedly around $600 million), and contributes its spectrum to the mix. Whether the Clearwire spectrum stays with Sprint or gets sold to Verizon to raise money is an open question that only Sprint (or whoever owns Sprint) can answer. I suspect that unless Sprint's finances get a lot worse than they are now, Verizon won't get good news.

But what about T-Mobile? Eventually, the T-Mobile MetroPCS deal will be closed, after all. There, the question is money. AT&T already offered $39 billion for T-Mobile in its ill-fated acquisition bid, and that was before T-Mobile got its breakup fee, its new spectrum and MetroPCS. Dish reportedly has about $10 billion in the bank. It's hard to know what T-Mobile would be valued at, but given its increase in value, I'm guessing about $50 billion to $60 billion.

Will Dish be able to afford a red-hot property like T-Mobile after it's combined with MetroPCS? Despite the lust for a wireless company demonstrated by Dish, I think this game is too rich for its blood. Maybe it should look for a smaller carrier—or just sell its spectrum and buy something else instead.


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