Looks like the companies have buried the hatchet after Dish Network’s failed challenge this year to bids by Japan’s SoftBank for Sprint Nextel and Clearwire. Dish and Sprint said today that they will jointly test a fixed wireless broadband service in Corpus Christi, Texas that they expect to make available in mid-2014 “with a plan to expand into additional markets in the future.” Dish will offer customers an outdoor router or “an indoor solution” with high-gain antennas that can access the Internet via the 4G TDD-LTE signal on Sprint’s 2.5 GHz spectrum. Dish-watchers will be eager to see how well the companies get along. The No. 2 satellite provider has yet to fully explain what it will do with the wireless spectrum rights it has been amassing — and has said that it probably would need a partner to help fulfill its plans. Dish has spent about $3B on spectrum, and wants to acquire more. Wells Fargo Securities’ Marci Ryvicker says it’s a good business opportunity since as many as 20M homes are “underserved by wired broadband.” But she adds that “the biggest takeaway” is the partnership itself, which signals “a potential start to a new relationship.”
The wireless broadband company is down 2.2% in after hours trading following Dish Network‘s announcement that it has taken its $4.40 a share offer off the table. Dish says that it made its decision after Clearwire’s board recommended that investors accept a $5 offer from Sprint, which already owns about half of Clearwire‘s stock. Sprint’s offer valued Clearwire at more than $14B. The developments pose a dilemma for Dish Chairman Charlie Ergen as he tries to create a national wireless broadband service. He has been amassing airwave spectrum rights but has said that he needs additional licenses. He had hoped to secure that by acquiring a large minority stake in Clearwire – and by acquiring Sprint. But Japan’s SoftBank is poised to win the mobile phone provider after it outbid Dish.
The tug of war over wireless broadband provider Clearwire just became more interesting, and precarious for Dish Network. Sprint has raised its offer for the 50% of Clearwire it doesn’t already own to $5 a share — valuing the wireless broadband company at more than $14B — which tops Dish Network’s $4.40 a share bid. That led Clearwire’s board today to switch sides: It now recommends that shareholders support Sprint instead of Dish. They’ll have a chance to vote on July 8 following the company’s decision to postpone a June 24 special meeting. “The amended agreement with Sprint clearly acknowledges the significant value present in Clearwire – from our deep portfolio of wireless spectrum to the tremendous amount of progress the Clearwire team has made in improving our operations and beginning the construction of our next-generation 4G LTE network,” CEO Erik Prusch says. In addition, shareholders owning about 9% of Clearwire have said that they’ll support Sprint. Between these investors — and others including Comcast and Intel who’ve supported the wireless phone company — Sprint believes that a majority of independent shareholders will support it over Dish. If they don’t, then Clearwire must pay Sprint a $115M break-up fee.
It’s a small step, but in the right direction as far as Dish Network is concerned. The satellite company says that it received a non-disclosure agreement from Sprint Nextel, which makes it easier for the companies to share private information that might strengthen Dish Network’s offer. The Sprint board’s Special Committee examining the unsolicited $25.5B offer – designed to top SoftBank’s $20B acquisition proposal — says that it is “reviewing this offer in good faith,” according to Dish. Company Chairman Charlie Ergen adds that he’s “confident that the Sprint board will share our view that this proposal is superior.” A combination with Sprint “will benefit from synergies and growth opportunities estimated at $37 billion in net present value that are not attainable through the pending SoftBank proposal.” The company’s financial adviser Barclays says that it’s confident it can raise the cash. Dish shares are down 1.4% in after hours trading, potentially wiping out the gain it made during the trading day.
In a move that could potentially thwart SoftBank’s proposed $20B acquisition of 70% of Sprint Nextel, Dish Network has made an unsolicited $25.5B offer for the U.S. number three mobile services provider. Dish chairman Charlie Ergen said today that his company’s cash and stock bid is “a superior alternative to the pending SoftBank proposal.” Ergen, who has been amassing spectrum rights to launch his own wireless broadband network, also addressed the Clearwire situation. In October 2012, Sprint had begun negotiating to gain control of the portion of Clearwire it does not alredy own, in a deal that was seen as crucial to Softbank’s planned acquisition of Sprint. In January, Dish made an unsolicited bid for the wireless communications company. In a statement today, Ergen said, “Though not a condition of our proposal, we anticipate that the pending transaction with Clearwire would be completed.” Sprint shares were up in pre-market trading. The full Dish announcement is below:
DISH Network Corporation (NASDAQ: DISH) today announced that it has submitted a merger proposal to the Board of Directors of Sprint Nextel Corporation (NYSE: S) for a total cash and stock consideration of $25.5 billion. The DISH proposal clearly represents superior value to Sprint shareholders, including greater ownership in a combined company that is better positioned for the future with more spectrum, products, subscribers, financial scale and new opportunities.
Dish‘s unsolicited and non-binding offer values Clearwire at $3.30 a share totaling $5.15 billion for all of Clearwire. The per-share price tops a previous bid by Clearwire’s majority shareholder Sprint Nextel by around 11%, according to the Wall Street Journal. Clearwire told the Journal that its ability to enter negotiations with Dish is “significantly limited” by its agreement with Sprint and with its shareholders. The wireless carrier owns around 50% of Clearwire already and has made a bid to buy the stake it does not currently own for $2.97 a share, or $2.2B. The company said Dish Network’s bid “is only a preliminary indication of interest and is subject to numerous, material uncertainties and conditions. Clearwire said it received a letter from Sprint stating it had reviewed Dish’s offer and “believes that it is illusory, inferior to the Sprint transaction and not viable…”, according to Reuters and The New York Times. Both Dish and Sprint are vying for access to viable spectrum. Last month, Dish won a critical regulatory ruling, gaining the right to convert some satellite airwaves for cellphone service. Whatever the case, Wall Street seemed unmoved by the news: Dish shares dropped just a tick — down 1.3 percent to $35.50 in after-hours trading.
The public still doesn’t know much about what Dish Network plans to do with the wireless spectrum it has spent about $3B to amass. But a proposed order circulating at the FCC could introduce “serious limitations that impair its utility,” the satellite company’s general counsel R. Stanton Dodge says. The good news for Dish is that the order would allow the company to use its spectrum for a terrestrial service, something it wants so it can offer wireless phone or broadband. But there’s a hassle involving Sprint. It owns some spectrum that’s adjacent to the swath that Dish bought. The wireless phone company says that it can use its airwaves for LTE broadband if regulators move the Dish frequencies and control the company’s transmission power. But that “could cripple our ability to enter the business,” Dodge says. The company might petition the FCC to reopen a rulemaking proceeding for its spectrum and “may have to put on hold activities like radio design and network build out.” Dish says that a more lenient approach to its airwaves “will lead to more investment, more jobs, more competition and more spectrum for wireless consumers.”
Sprint Nextel is negotiating to gain control of Clearwire via agreements with its wireless broadband partner’s other investors, the Wall Street Journal reports. The talks would allow Sprint to gain control of Clearwire’s board without acquiring it. Gaining control of Clearwire is seen as crucial to Softbank’s planned $20 billion acquisition of Sprint. Clearwire investors include Craig McCaw’s Eagle River Holdings and Comcast Corp. Sprint owns 48% of Clearwire but doesn’t control the board. Sprint needs access to Clearwire’s significant spectrum rights, and Softbank lenders want assurance that Sprint will be able to control Clearwire.
UPDATE, 4:58 PM SUNDAY: CNBC is reporting that Softbank will pay $20 billion for a 70% stake in Sprint, citing sources close to the deal. Although details are still being worked out, the deal is expected to be announced tomorrow morning after the boards of both companies ratify the agreement this evening. Terms of the deal call for Softbank to buy $8 billion worth of shares directly from Sprint at a price of $5.25 each plus tender for another $12 billion worth of shares from existing holders at a price of $7.30 per share. Sprint’s current price is $5.73. While a related Sprint purchase of Clearwire is not likely to be announced tomorrow, sources say the company is working on it and needs to insure Clearwire is under its control prior to closing the Softbank deal.
PREVIOUSLY, THURSDAY PM: Backfield’s in motion among the wireless and wireless broadband companies that have become so important to the infotainment industry.
There goes the $4B break-up fee that AT&T promised to pay T-Mobile owner Deutsche Telekom if the merger went awry. Meanwhile, shares of Sprint Nextel — which risked being marginalized by the AT&T/T-Mobile combo — are up 7.9% in after-hours trading, after falling 4% during the day. AT&T’s dream deal effectively was cooked after the Justice Department and FCC said that a merger would result in less competition and higher consumer prices. Justice said it would sue to block the deal, and the FCC began a process that promised to drag things out even more. But AT&T says that its decision to scrap the plan doesn’t change the fact that wireless carriers need more spectrum. “The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage,” the company said. “In the absence of such steps, customers will be harmed and needed investment will be stifled.” CEO Randall Stephenson added that his company “will continue to invest” in wireless. He urged lawmakers to approve AT&T’s bid to buy spectrum controlled by Qualcomm, and ”enact legislation to meet our nation’s longer-term spectrum needs.” That’s code for: Let’s pry spectrum away from TV broadcasters.
Cable and telecom execs are buzzing this morning about the possibility of a major deal involving Sprint Nextel that could help cable operators offer wireless services along with the standard “triple play” options: TV, wired broadband, and wired phone. Comcast and other operators are talking with Sprint about a buyout of struggling wireless firm Clearwire. Its shares are up more than 30% in mid-morning trading following a Bloomberg story about the possible deal. Here’s how it might work: Comcast and other operators – perhaps Time Warner Cable, Cox, Cablevision, and Bright House Networks – would make an investment in Sprint. The telecom company then would buy all or most of the 46% of Clearwire that it doesn’t already own. (It’s unclear whether that might include the 15% stake owned by Comcast, Time Warner Cable and Bright House Networks.) Presumably, cable companies then would offer Sprint’s wireless phone and broadband services.
Sprint could use some help: It has been in the red for 15 consecutive quarters. And if federal officials allow AT&T to buy T-Mobile, then Sprint could become an also-ran behind the newly merged company and Verizon. Clearwire’s also in trouble. It’s in the red and needs at least $600M to build and upgrade its speedy 4G network which is available to 130M households and has about 7.7M customers.
The big question is whether the deal would be worth the trouble for cable companies. Most have promised to return cash to shareholders — not to make big …
Robot Chicken creators Seth Green and Matthew Senreich have teamed with Ford Motor Co. and Sprint Nextel for ControlTV, an interactive reality show. The series, which will follow six weeks in the life of a guy in his twenties, enables the audience to vote, in real time, on every aspect of his life—from what he wears and eats, to where he works, to who he dates. Given the partners, there obviously will be product placement: the guy will drive a 2011 Ford Fiesta, and Sprint’s new HTC EVO 4G phone will also be featured. Creators Green and Senreich will exec produce with former Dimension Films president Richard Saperstein, The Bachelor director Ken Fuchs, commercial director Stephen Kessler and interactive technology expert Craig Ullman. The show will also be executive produced and distributed by video network DBG. Production will begin in Los Angeles this fall.