Dish Network looks to have bowed out of the Sprint Nextel sweepstake, announcing late yesterday that it would not put in a new offer to acquire the nation’s No. 3 mobile operator.
The satellite-television provider that also has control over 30 megahertz of wireless spectrum, noted that recent changes made by Softbank in its $21.6 billion acquisition attempt and Sprint Nextel’s termination of its due diligence process with Dish led to the move.
“While Dish continues to see strategic value in a merger with Sprint, the decisions made by Sprint to prematurely terminate our due diligence process and accept extreme deal protections in its revised agreement with SoftBank, among other things, have made it impracticable for Dish to submit a revised offer by the June 18 deadline imposed by Sprint,” Dish Network noted in a statement.
Dish Network added that it was continuing to evaluate its next move in regards to Sprint Nextel, but in the meantime it was continuing to focus on its attempt to acquire a stake in Clearwire. Sprint Nextel is attempting to thrawt that move, having filed a lawsuit this week seeking to prevent Dish Network from purchasing a stake in Clearwire claiming the proposed deal violates state law and the rights of Clearwire stakeholders. Analysts have noted that part of Sprint Nextel’s appeal to Softbank is getting its hands on Clearwire’s vast 2.5 GHz spectrum holdings that align with Softbank’s network plans in Japan.
Analysts were for the most part not surprised by Dish Network’s move in regards to Sprint Nextel, as the recent updated offer by Softbank seemed to temper investor concerns and Sprint Nextel has been in favor of the Softbank offer. However, many analysts have since downgraded their rating on Sprint Nextel’s stock (S) noting that with Dish Network basically out of the way, there was no short-term catalyst for Sprint Nextel’s stock price.
Softbank earlier this month put in an increased bid for Sprint Nextel, bolstering its original offer of $20.1 billion for a 70% stake in the carrier to $21.6 billion for a 78% stake. As part of that update, Sprint Nextel also put in a June 18 deadline for Dish Network to put in a new bid, adding that it would hold a shareholder vote on the proposals June 25. Sprint Nextel has been sticking by its claims that it expects the Softbank deal to close in early July.
Dish Network put in its initial counter-bid for Sprint Nextel in mid-April, offering to purchase a 68% stake in the carrier for $25.5 billion. That set off a bitter feud between Softbank and Dish Network regarding the efficacy of their competing offers.
Prior to putting in its bid for Sprint Nextel, Dish Network put in a bid to acquire Clearwire, which followed Sprint Nextel putting in its own bid to acquire the remaining minority interest in Clearwire it did not already own. Sprint Nextel and Dish Network have since both increased their offers to acquire Clearwire, with Dish Network having garnered the support of Clearwire’s “special committee” tasked with reviewing the offers. However, Sprint Nextel has since countered with a lawsuit claiming the Dish Network offer was “not actionable” and violated Clearwire’s original charter.
Clearwire shareholders are set to vote June 24 on the proposals.
Dish Network last week looked to further its interest in the 2.5 GHz spectrum band, announcing a network trial with regional telecommunications provider Ntelos to deploy a fixed wireless broadband service using LTE technology in that spectrum band to provide broadband services to customers in parts of Virginia.
Dish Network’s attempts to push into the wireless space centers on its gaining access to spectrum in the 2 GHz band to support a ground-based telecommunications network. In gaining access to that spectrum, Dish Network would have to cover 40% of the population in those markets within four years and 70% of the market within 10 years. Such a build out would require billions of dollars and could be a daunting proposition for a company looking to garner market share in a very competitive wireless market dominated by entrenched players. Thus, Dish Network’s interest in gaining an established partner in which to enter the space.
In addition to its own spectrum assets, Dish Network has reportedly put in a $2 billion offer to acquire spectrum in the 1.6 GHz band from Lightsquared that has been at the center of interference concerns with some ground-based GPS systems. Dish Network also owns a handful of licenses in the 700 MHz band that it picked up during the 2008 government auction.
Dish Network Chairman Charlie Ergen told attendees at last year’s PCIA trade show that the company’s wireless ambitions would likely involve a partnership with an established carrier, adding that the company was not “suicidal” and would not enter into a venture with no chance of survival. That could mean an eventual sale of its spectrum holdings should that outcome be most beneficial to its investors.
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