Sprint-SoftBank Merger Approval by CFIUS Poses New Obstacle to Dish Bid

By Wayne Rash  |  Posted 2013-05-29 Print this article Print

While Dish could attempt to buy Clearwire out of bankruptcy, Sprint still owns more than half of the company, and there's no assurance that Dish could make that happen.

Because of the delays that would go along with the proposed acquisition of Sprint by Dish, as well as the significant financial complications that would accompany such an acquisition, it's hard to see how Sprint's Special Committee would return a favorable report. Even though Dish is offering more money for all of Sprint than SoftBank is offering for 70 percent, it's not clear that it's an offer that's too good for Sprint to refuse.

So what's going to happen? Dish Networks may be out of luck because the company waited too long to act. Had Dish moved nine months ago, it might have succeeded in acquiring Sprint by now. But now it's a case of too little, too late. It appears inevitable that the Special Committee will declare that Dish did not make a Superior Offer allowing the Sprint board grant final approval to SoftBank's offer. Then perhaps Dish will seek an injunction to delay the merger with SoftBank, but it's hard to see how that will stick.

Likewise, the efforts by Dish to buy T-Mobile from Deutsche Telekom appear to be doomed. DT has made a significant commitment to beef up T-Mobile. When T-Mobile negotiated the recent merger with MetroPCS, DT agreed to remain the majority owner of T-Mobile. With MetroPCS stockholders owning most of the rest, it's hard to see a place for Dish.

By the time summer comes to an end, Sprint will almost certainly be part of SoftBank, T-Mobile will remain independent and Dish will be out of luck at least as far as those companies are concerned. But Dish has other opportunities. AT&T has reportedly been looking for suitors to help shore up its financials and may welcome an overture from Dish. And of course, Dish could offer to buy any number of regional carriers in the United States, which in turn would give it a toehold into the wireless service provider market that it so much desires.

But in the telecom industry, what will actually happen isn't necessarily related to what makes sense. For an ego-driven company such as Dish, the trophy on the wall is at least as important as the financials behind it. So expect that Dish will make some last ditch effort to put up legal barriers to the Sprint merger, including pursuing its weak claims that the whole deal is a risk to national security.


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