With its advances being rebuffed by Clearwire, DISH Network has turned its attention to Sprint Nextel with an unsolicited $25.5 billion proposal to acquire the company. The bid competes with a previous $20.1 billion bid made by Softbank for 70 percent of the company.
DISH said its proposal is superior to the Softbank deal for Sprint shareholders because they would gain greater ownership in the combined company, which is better positioned with more spectrum, products, subscribers and financial scale, according to DISH officials.
The DISH proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal,” said Charlie Ergen, chairman of DISH Network. “Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined DISH/Sprint with a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal.”
Christopher Larsen, research analyst, Piper Jaffray, wrote that DISH-Sprint may be a formidable wireless competitor because of cost and revenue synergies between the companies. “The Dish Network deal would help solve Sprint’s spectrum needs … and would give Sprint a differentiated product,” Larsen said.
Is the deal good for towers? Larsen noted that the resulting DISH-Sprint company would be highly leveraged and would have less cash available for network builds.
Jonathan Atkin, analyst, RBC Capital Markets, concurred that Softbank would have superior financial chops to fund a sustained multi-year build out of the network. Additionally, DISH Network’s spectrum holdings may require fewer towers.
“If DISH Network prevails, this would entail a less dense network build out because it would use more mid-band spectrum (2 GHz) and less higher-band spectrum (2.5 GHz), and therefore would not be as favorable for towers,” Atkin wrote in a research note.
Jennifer M. Fritsche, senior analyst, Wells Fargo, was bullish on the prospect of a DISH-Sprint combination, saying it would be well positioned for broadband communications in the future.
“This transaction will create a company with a strong spectrum portfolio, a critical mass of subscribers in video and broadband, and modern satellite and terrestrial networks to enable delivery of an integrated mobile and fixed video, voice and data experience,” Fritsche said. “The combined company will have a robust spectrum footprint including DISH’s 45 megahertz of spectrum and a combined 63 million retail subscribers.”
A combo of Sprint and DISH and conceivably Clearwire would also sport a mix of low-band spectrum, Sprint’s 850 MHz; mid-band spectrum, Sprint’s 1.9 GHz and Dish’s 2 GHz; and high-band spectrum with Clearwire’s 2.5 GHz, according to Fritsche.