Dish: SoftBank Is Not American Enough for Sprint

  Google+  Twitter | + More Articles
  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

Dish Network (NASDAQ:DISH) is proving to be a greater obstacle than expected for SoftBank in its bid to buy Sprint-Nextel (NYSE:S), or at least Dish is trying to be.

One fact that is immediately clear is that Dish Network has outbid SoftBank for the American mobile carrier. SoftBank — one of Japan’s biggest mobile carriers — offered $20.1 billion, while Dish offered $25.5 billion. Sprint shareholders Paulson & Co and Omega Advisors claim that Dish’s offer looks best, but it’s not apparent if there’s more to the offer than just a bit of extra money.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

The president of SoftBank, billionaire Masayoshi Son, has essentially ignored the fact that Dish’s offer is higher, saying that the proposal is “incomplete and illusory.” Son suggested that a buyout by Dish would load Sprint with debt and that Dish wasn’t prepared to run a wireless carrier.

There may be more to Dish’s bid than a simple interest in Sprint as a wireless carrier. A big reason for the company interfering with¬†SoftBank’s acquisition could have to do with a fear of future competition. Sprint is already one of the biggest carriers in the U.S., plus it has a wide range of spectrum licenses after its purchase of ClearWire (NASDAQ:CLWR). On top of that, SoftBank also has a bit of wavelength in the U.S. available for roaming customers, but it could repurpose that if it won the bid.

It’s been suggested that Dish could be looking to merge with DirecTV (NASDAQ:DTV), which would quickly boost its prominence in television programming. Then it could follow that up with a deal with T-Mobile (NYSE:TMUS) to spread its broadcasting to mobile devices as well. However, a combined SoftBank and Sprint could get in the way of those goals.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

In March, Dish requested that the Federal Communications Commission step in to clear up some points on the SoftBank-Sprint deal — particularly, how much spectrum the combined company would hold, and how the company intended to use it.

Since March, Dish seems to have become interested in actually acquiring Sprint to meet its goals. In an interview with USA Today Wednesday, the company’s chairman, Charlie Ergen, boasted the American-ness of the company as one strong reason why Sprint should choose Dish’s bid over SoftBank’s, and he also noted the higher monetary value of the bid.

Ergen was quoted saying “We are an American company and the modernization of Sprint’s network will have to be done in the U.S. … and you’ll have to have U.S. employees who speak English. Operations command control will be in America. That’s good for jobs. It doesn’t mean that the other guys [SoftBank] are bad. It’s just that we have an advantage.”

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Due to the Japanese Golden Week holiday and potentially the large time difference, there was no immediate response to the interview Wednesday morning. Though considering Son’s high school and university education in California, as well as his response to Sprint’s higher bid, it seems likely that he could once again try to quickly dismiss the validity of Dish’s claims. Currently, there is a special committee at Sprint that is considering Dish’s bid, and it could be pivotal in deciding how the company proceeds.

Investing Insights: Where Will EMC Go Next?

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business