Dish Formally Scraps Bid to Buy Sprint, Clearing Way for Carrier’s Sale
Dish Network formally scrapped efforts to buy Sprint Friday, clearing the way for the wireless carrier to complete its $21.6 billion sale to SoftBank. Sprint shareholders are scheduled to vote on the proposed sale Tuesday. Dish will redeem $2.6 billion in senior notes it was going to use to fund the potential acquisition, including $1.35 billion in 6.25 percent notes due 2023 and $1.25 billion in 5 percent notes due 2017. The notes will be redeemed Monday, Dish said.
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Having ended efforts to buy Sprint, Dish will review a range of options, including a potential sale of the company, Wells Fargo analyst Marci Ryvicker said. Among the possible acquirers of Dish could be AT&T and DirecTV, analysts have said. “We can pretty much count out” Dish’s separate bids for Sprint and Clearwire, Ryvicker said.
Dish Chairman Charles Ergen said as recently as last fall that a merger with DirecTV was a “doable deal” (CD Nov 7 p5), but talk of combining the satellite operators dates back to at least 2001, when Dish was known as EchoStar. AT&T also once resold the Dish service before returning to DirecTV in 2008. Ergen has said Dish needs a partner to enter the mobile broadband business and some analysts have speculated the company might shift its sights to T-Mobile.
Dish early last week also said it was focused on Clearwire, but that was before Sprint raised its offer Thursday for the portion of the company it doesn’t already own to $5 per share from $3.40. Dish bid $4.40 per share for at least 25 percent of Clearwire. Sprint owns 50 percent of Clearwire and its new offer values the company at $14 billion. Any new move by Dish to buy a stake in Clearwire will likely be rejected, BTIG analyst Walter Piecyk said. Clearwire shareholders “will approve the $5 offer from Sprint regardless of any new overtures from Dish,” Piecyk said.
Dish has wireless spectrum valued at $10 billion and Sprint’s new bid for Clearwire likely further increased that figure, Ryvicker said. Dish built up wireless spectrum in the 2 GHz band with the acquisitions of TerreStar and DBSD. Dish also bought for $80 million, as part of a settlement of a breach of contract suit with Cablevision, the cable operator’s multichannel video distribution and data service spectrum licenses in the 12.2-12.7 GHz band that could be used for microwave backhaul to build out a network. The Clearwire bidding war for Sprint might foretell additional higher bids, Janco analyst Gerard Hallaren said.
At SoftBank’s annual meeting Friday, SoftBank CEO Masayoshi Son said reversing the fortunes of struggling Sprint will be less of a challenge than turning around Vodafone’s Japan unit, according to local news reports. SoftBank bought the Vodafone business in 2006 and Sprint has a much larger lineup of smartphones and high-speed networks, Son said. A combined Sprint and SoftBank will be the third largest wireless carrier in terms of subscribers, he said. Sprint had 47.24 million prepaid and postpaid subscribers as of March 31, while SoftBank had 33 million in Japan as of May, according to the Telecommunications Carriers Association in Japan.