This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Evaluating Dish's Offer for Sprint

NEW YORK ( TheStreet) -- Dish Network (Dish) CEO Charlie Ergen continues to play the potential spoiler role in wireless operator consolidation moves.

Dish first tried first to disrupt the deal between Sprint (S) and Clearwire (CLWR) by offering $3.30 a share for Clearwire's outstanding stock instead of the $2.97 price offered by Sprint. Since Sprint owns more than half of Clearwire, and the latter has already accepted financing from the carrier, there is only a small chance that Ergen's bid would be successful in that instance.

Today, Dish topped a Softbank Corp. offer for Sprint by offering to buy 68% of Sprint for $25.5 billion, countering the Japanese carrier's bid of $20.1 billion for 70% of Sprint. The strategy is clear as Dish wants to embark on a transformational play as a quad-play provider, offering nationwide bundles of in and out-of-home voice, video and data services via an extended broadband network that would leverage its combined cable and wireless assets.

Frost & Sullivan's research clearly indicates a positive correlation between subscriber stickiness and the amount of services offered in a bundle: The higher that number is, the less likely a user is to move away from that service provider. But one of the key elements of that bundle is wireless service, with subscribers being more likely to switch bundles in order to obtain the mobile service they desire.

Based on this, Dish's offer for Sprint makes perfect sense, as it will be able to offer a quad play of video, high speed data, wireless and voice (as a VoIP, over-the-top type service).


Dish has amassed a significant cash reserve to the tune of $10 billion, which would be used to make about roughly 68% of its $7-per-share offer for Sprint. The other 32% would come in Dish stock, with the company also assuming some debt. The total represents a 13% premium on Softbank's bid.

Ramifications:

The Dish bid for Sprint is not conditional on the Clearwire acceptance of the Sprint offer, so there shouldn't be any hurdles to be faced on that particular aspect. That said Clearwire's 2.5 GHz spectrum holdings can play an instrumental role in the new Dish/Sprint company.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
DISH $68.29 -0.34%
S $5.15 -1.34%
AAPL $128.70 -0.19%
FB $78.81 -0.23%
GOOG $540.78 0.54%

Markets

DOW 18,070.40 +46.34 0.26%
S&P 500 2,114.49 +6.20 0.29%
NASDAQ 5,016.9290 +11.5380 0.23%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs