DISH Network Proposes Merger with Sprint Nextel Corporation

Today, DISH Network submitted a proposed merger with Sprint Nextel Corporation. This $25.5 billion offer composed of cash and DISH stock is larger than the $20.1 billion offer for Sprint Nextel recently proposed by the Japanese company SoftBank.

According to the offer letter from DISH Chairman Charlie Ergen, a merger with DISH Network would create a combined DISH/Sprint more financially beneficial to existing Sprint shareholders which would also allow for more meaningful participation from shareholders.

DISH Network Proposal Superior to SoftBank Bid

Ergen also stressed the resources possessed by DISH Network that Softbank lacks: “our combined national footprints and scale will allow us to efficiently develop our joint spectrum assets to provide advanced services to the millions of homes with inferior or no access to competitive broadband services.” (DISH/Sprint offer letter) In other words, a combined DISH/Sprint would have strong assets and capabilities in several different markets: cellular technology, satellite media and internet. DISH recently unveiled a satellite-based internet service called dishNET, aimed primarily at rural and remote areas underserved by cable providers.

Significance of Clearwire to DISH’s Bid for Sprint Nextel

At issue in this proposed merger is Sprint’s planned acquisition of Clearwire spectrum, for which DISH has also made an offer. Clearwire has been a bone of contention between Sprint and DISH. Sprint presently owns 51 percent of Clearwire and was attempting to acquire the rest of its spectrum. DISH Network made a competing offer opposed by Sprint, but favored by Clearwire investors who believed that the Sprint offer undervalued the spectrum. (Source) As reported today in the Washington Post, DISH plans to defer to Sprint’s offer for Clearwire if the DISH/Sprint merger moves forward.