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Intel Backs SoftBank Offer for Sprint Over Dish

NEW YORK ( TheStreet) -- Outgoing Intel (INTC - Get Report) chief executive Paul Otellini is casting a vote in support of Japanese telecom SoftBank's proposal to buy Sprint (S) after Dish Network (DISH - Get Report) entered the takeover fray with a debt-laden, $25.5 billion proposal for the nation's third leading wireless carrier.

In a letter sent to Federal Communications Commission chairman Julius Genachowski, Otellini said he wanted to add his name to a list of companies supporting SoftBank's offer for Sprint.

Ottelini didn't outline specifics on why SoftBank's offer is better than the one proposed by Dish and its chairman Charlie Ergen. However, Otellini said the company's plan to build a third national high-speed network is "compelling" and important to wireless industry competition.

"I met with Son-san of Softbank yesterday. I simply wanted to add my name to the list of companies hoping that Softbank will be able to acquire Sprint, rather than Dish," Otellini wrote in the letter.

"Son-san's vision to build a high speed competitive third national network is very compelling. We need this competition in the wireless space as the ATT/Verizon model is not giving that to consumers at this time. I just wanted you to know where I and Intel stand on this important matter," Otellini concluded.

Intel is a supplier to smartphone handset makers such as Apple and it also makes equipment and software for wireless networks.

Sprint's hedge fund investors may see differently than Otellini, who is set to depart Intel this year.

Both Paulson & Co. and Omega Advisors have stated they see Dish's $25.5 billion proposal for Sprint as superior to one offered by SoftBank in October.

They, nevertheless, await a response from a special committee set up by Sprint's board of directors and any potential counteroffers from SoftBank before making any formal recommendations on merger efforts.

On Monday, Softbank and Sprint waived some terms of their merger agreement to allow Dish further information in its proposal.

"SoftBank remains highly confident that its fully executed merger agreement with Sprint, under which it has already provided Sprint with $3.1 billion of capital, provides the shareholders of Sprint significantly more value than the highly leveraged approach made by Dish on April 15th," the company said on Monday.

Dish said in a press release on Monday it has received a non-disclosure agreement from Sprint on the company's takeover proposal. Dish said in the press release it has provided information to Sprint's special committee regarding financial details, material legal terms, regulatory aspects, and financing commitments in its proposal.

"DISH is confident it has exceeded the standards required in the proposed agreement between Sprint and SoftBank Corp. in terms of providing a bona fide written proposal that is reasonably likely to lead to a superior offer," the company said.

Dish is offering $7 a share for Sprint, $4.76 in cash and about $2.24 in Dish stock.

Japan-based SoftBank is offering to make an $8 billion equity capital infusion into Sprint at $5.25 a share -- and a tender offer for 70% of company's existing shares at $7.30 -- in a move it said would revitalize the carrier's finances.

Dish chairman Charlie Ergen said the company's proposal is a 13% premium to SoftBank's offer. He also said a merged Dish and Sprint could supplant the likes of AT&T and Verizon with a competitive offering of bundled TV, wireless and broadband service.

While SoftBank is offering to recapitalize Sprint and help it complete a so-called Network Vision upgrade of its high-speed wireless service, Dish is offering a far more leveraged deal that will seek to combine the company's satellite TV business and its significant spectrum assets with Sprint's wireless business, which remains the third largest in the U.S.

Hedge fund investors, most notably, Paulson & Co., have recently staked large bets on consolidating wireless providers such as MetroPCS (PCS), Sprint, Clearwire (CLWR) and Leap Wireless (LEAP), which isn't currently engaged in merger efforts but is the subject of takeover speculation.

Sprint shares were unchanged in early Monday trading at $7.12 a share, while Dish rose less than 1% to $40.18.
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