Ergen gets tough with Sprint suitors
May 24, 2013
Charlie Ergen’s Dish Network might be making steady progress in its bid to acquire cellular giant Sprint, but Dish is not alone in the bidding stakes. China’s SoftBank is also a would-be buyer, and has created a web-page to publicise its offer, which includes creating a special Board structure.
A statement from Dish says: “Dish’s proposal will deliver nearly all the key benefits of the SoftBank-Sprint transaction and more, including 40 MHz of additional mid-band spectrum and cable-quality broadband access to approximately 40 million unserved and underserved consumers in rural America — all built on a foundation of an American company investing cash from an American balance sheet to make another American company more competitive for the benefit of all American consumers.”
The statement continued: “In fact, a DISH/Sprint merger is superior in several important areas:
Dish’s $25.5 billion offer is better for shareholders, offering more cash and stock in a strategically superior company than the SoftBank proposal provides for Sprint shareholders.
The SoftBank investment to control Sprint is a financial transaction, not a commercial merger, given that SoftBank has no US operations to combine with Sprint. DISH/Sprint creates the only company that offers convenient, fully integrated nationwide bundle of in- and out-of-home video, broadband and voice services. The combination also provides substantial synergies and a significantly enhanced strategic position.
With the largest spectrum portfolio and as the only telecommunications company to deliver voice, video and data in- and out-of-the home, DISH/Sprint would be better positioned to challenge AT&T and Verizon than SoftBank-Sprint. SoftBank brings no spectrum to the merger. Dish brings 45 MHz of low- and mid-band spectrum with an estimated value of $10 billion, plus robust cash flows.
A Dish-Sprint will be better for national security by preserving domestic ownership, control and accountability over Sprint’s national wireless network and fiber backbone network, which
Dish went further: “SoftBank’s agreement to an extraordinary board structure and the concerns of the Committee on Foreign Investment in the US (CFIUS) with respect to the use of Chinese-manufactured equipment on a foreign-controlled Clearwire network, which reportedly could add as much as $1 billion to the cost of the proposed SoftBank-Sprint transaction, confirm the serious national security risks of SoftBank acquiring Sprint and its wireless and wireline assets of national strategic importance,” said Stanton Dodge, Dish EVP and general counsel.
“We remain concerned, however, that these reported steps do not adequately protect our national security interests, especially with respect to Sprint’s critical fiber backbone network and Sprint’s extensive contracts to provide important telecommunications services for government, law enforcement and defense customers,” said Dodge.