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TheStreet Open House

Sprint Caves In Clearwire Battle at $5 a Share

Stocks in this article: CLWR S DISH T

Earlier in June, Dish withdrew from bidding for Sprint, after the satellite TV provider had proposed to buy the telecom for $25.5 billion.

While the Charlie Ergen-chaired satellite TV company is no longer interested in acquiring Sprint, it has succeeded in making Sprint's consolidation efforts far more costly.

Sprint's increased offer for Clearwire likely further undermines the company's recapitalization efforts. The telecom now is offering well over $1 billion more for Clearwire shares than its previous bid.

Meanwhile, in SoftBank's attempt to trump Dish's bid for Sprint, a revised offer contemplated that it would only pump a total of $5 billion into the nation's third leading wireless carrier, a 37% reduction in the recapitalization of the cash-strapped telecom. Dish Network even pointed out to regulators overseeing the deal a reduction in capital going to Sprint as part of SoftBank's revised offer, in a somewhat ironic statement.

SoftBank's initial $20.1 billion proposal for Sprint sought to inject $8 billion into the telecom and put its leverage ratios in line with financially healthy competitors such as AT&T and Verizon. The reduction in capital in SoftBank's revised offer reflected stronger financial performance by Sprint and rising synergy, the company said.

After negotiating with Dish in earnest on its takeover proposal and due diligence, sources close to Sprint said Ergen was increasingly viewed as frustrating the company's merger efforts. According to a proxy filed by Sprint with the Securities and Exchange Commission, Dish never submitted what the company considered to be a formal, fully-financed offer for the company.

Charlie Ergen-chaired Dish isn't abandoning a strategy to enter the U.S. wireless market by leveraging the company's TV business and spectrum assets to bring a new nationwide "triple play" service bundle to market.

Without Sprint or Clearwire, however, Dish may yet have options to steer into the wireless market. Those include an acquisition of T-Mobile, network access agreements with carriers such as Sprint and spectrum sales to telecoms as large as AT&T, according to industry analysts.

An e-mail seeking comment from Dish Network spokesperson Bob Toews wasn't immediately returned.

Clearwire shares rose over 7% to $5.05 in Thursday trading, closing above Sprint's revised offer. Sprint shares rose 1% to $7.07. Dish Network shares fell less than 1% to $39.18.

Wireless Goes Wild as Consumer Is Given Shakedown

Sprint Takes Game 7 Lead in Dish Battle

-- Written by Antoine Gara in New York

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