Dish says with Sprint it will be the only company to offer a bundle of video, broadband and voice services, challenging AT&T and Verizon.
Given recent developments in the telecom sector, Dish and Ergen may appear late in making their play into the wireless industry.
As recently as Friday, Dish was considered a bidder for T-Mobile, according to a Bloomberg report. Indeed, T-Mobile may have been a more logical partner for Dish. However, given the company's increasingly probable merger with MetroPCS, Ergen appears to have set his sights on Sprint as the next-best option, according to Jennifer M. Fritzsche, a Wells Fargo telecoms analyst.
"[We] believe Sprint management still likely favors dynamics of the [Softbank] transaction given Masayoshi Son's experience with wireless and strong record in Japan," wrote Fritzsche, in a Monday client note.Ergen, however, believes the company's emergence as a disruptor to a telecom sector reshuffle that's likely to reinvigorate competition in the wireless industry has been careful and well planned. "It has been a long-time coming," Ergen said on a conference call with investors. "This is the culmination of a lot of years of work," he added. To be seen is whether Ergen's most ambitious move into the wireless world will prove too risky, however, given overall debt levels and a lack of equity financing attached to Monday's proposal. Sprint already carries among the highest debt levels in the telecom sector, while Dish's proposed deal would put its leverage above the industry average, according to Bloomberg data. Combining the third largest paid TV operator and the nation's third largest wireless carrier might allow the combined company to grab a number one or two position in the wireless industry, Ergen said on the investor call. In comments made to TheStreet some large Sprint shareholders also see the prospect of a bidding war that may further elevate takeover offers. "We think it's possible that this is not the best and final bid by DISH," wrote Piper Jaffray analyst Christopher Larsen, in a client note. Bob Toews, a Dish spokesperson, wasn't immediately available to answer e-mailed queries about Dish's offer. Follow @antoineGara -- Written by Antoine Gara in New York
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV