Dish Outbids Sprint for Clearwire, but With 'Inferior' Offer

Dish Networks Chairman Charlie Ergen has $3 billion of spectrum but no network, so he is bidding to grab Clearwire from Sprint.

Sprint's future became a bit more uncertain Jan. 8 after satellite television company Dish Networks made an unsolicited bid to purchase the shares of 4G wireless company Clearwire that Sprint doesn't already own.

Sprint owns a majority share of Clearwire and in December 2012 entered an agreement with Clearwire to buy out the remaining shares for $2.97 a share, or roughly $2.2 billion.

Dish offered to purchase all Clearwire common shares at $3.30 a share.

"We look forward to working with Clearwire's Special Committee as it evaluates our proposal," Tom Cullen, Dish executive vice president of corporate development, said in a statement, adding that Dish doesn't intend to comment any further on the matter.

Clearwire, in its own Jan. 8 statement, said that a Special Committee of the Clearwire Board of Directions has determined that "fiduciary duties" require it to enter discussions with Dish, but that it hasn't changed its position in recommending the company move ahead with its Sprint agreement.

It added that Dish's proposal is "only a preliminary indication of interest and is subject to numerous, material uncertainties and conditions, including the negotiation of multiple contractual arrangements being requested by Dish."

Sprint officials sent Clearwire a letter responding to the Dish proposal and stating, among other things, that the proposal is "illusory" and "inferior" to Sprint's offer.

In a public statement, Sprint called its agreement with Clearwire "superior to the highly conditional Dish proposal."

Sprint said Dish's stipulations, which include debt and equity purchases and spectrum sales, further make the proposal "not viable."

"Sprint does not intend to waive any of its rights and looks forward to closing the transaction with Clearwire and helping consumers across the country realize the benefits of this combination," it added.

Debt-saddled Sprint was slower to begin selling the popular Apple iPhone than rivals AT&T and Verizon Wireless, and both those carriers now boast larger 4G Long Term Evolution (LTE) footprints than Sprint. To help it attract and retain subscribers, Sprint continues to pair its smartphones with unlimited data plans, which Verizon and AT&T abandoned years ago. Verizon and AT&T have since begun offering shared data plans, which executives say have been even more lucrative than they expected.

In October 2012, Sprint made a deal to sell 70 percent of the carrier to Japan-based wireless carrier Softbank for $20.1 billion, needing the cash to build out its LTE network and get it out of the red. Sprint soon afterward purchased additional shares of Clearwire, giving it the majority share, and then made the bid to buy the company outright.

Analysts have said that Sprint's having control of Clearwire and its considerable spectrum holdings was a not-insignificant factor in Sprint's deal with Softbank. (Clearwire has a notoriously tangled power structure, and so even with its majority share, Sprint was unable to enforce its will.)

The Wall Street Journal, in a Jan. 8 report, described Charlie Ergen, the Dish chairman behind the offer, as a "veteran corporate brawler" and seasoned poker player who has spent roughly $3 billion amassing spectrum and now would like to partner with an established network rather than build his own.

Ergen, The Journal added, "has made a career of squeezing his rivals."