Dish Plays National Security Card to Try to Trump Sprint-SoftBank Deal

By Wayne Rash  |  Posted 2013-05-28 Print this article Print

Dish has also made an offer to buy Clearwire out of the grasp of Sprint, but that bid looks unlikely, given the fact that Sprint has said that the company would never approve it. But of course, if Dish prevails in its purchase of Sprint, then it would get Clearwire anyway. Adding to the complexity is the fact that if Sprint successfully buys Clearwire, as seems likely, then that could change the value of Sprint in both mergers.

This lack of clarity in terms of the future helps explain why Dish has gone up against SoftBank as a threat to national security. Mergers are complex, but to suggest a lurking security threat is easy to understand. But as is the case in most telecom mergers, nothing is ever that simple.

During a hearing before the House Committee on Energy and Commerce on the national security threats related to the Sprint merger, Stewart Baker, the former head of the Committee on Foreign Investment in the United States, pointed out that the government would actually have more control over national security issues if Sprint were bought by SoftBank than if the company were to be bought by Dish.

The reason is the additional regulatory oversight that SoftBank accepted when it agreed to allow the U.S. to approve a director. That means, among other things that Chinese suppliers Huawei and ZTE would not be approved for use on the Sprint network.

Dish Network, on the other hand, would have would have no such restriction and no such oversight. It's worth noting that Baker is currently employed at the Washington law firm of Steptoe and Johnson, the same firm that represents Dish, although Baker is not on the Dish legal team.

So what happens next? Assuming the Sprint–Clearwire merger receives shareholder approval, which is expected since enough votes have already been pledged to Sprint, then Clearwire will become part of Sprint before the Softbank merger is completed. That merger must still make it through the FCC's review process. When that's done, the merger between Sprint and SoftBank can be consummated.

That is it will move forward unless Sprint's board decides as a result of a special committee report that it wants to go with Dish. If that happens, then the approval process goes back to square one. Normally if the Sprint sale didn't go to Dish, you expect that company to try to buy T-Mobile, but that can't happen anytime soon, because DT agreed as part of its purchase of MetroPCS to retain ownership of T-Mobile for at least another 18 months. After that who knows? Maybe Dish will try to buy that part of AT&T that's rumored to be up for sale.


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