No one is going to have a better pipe than Dish-Sprint, according to Dish chairman

Dish Network has made a US$25.5 billion bid to acquire wireless operator Sprint Nextel, hoping to edge out a rival bid from Japanese operator SoftBank.

The satellite service provider’s merger proposal to Sprint’s board of directors offers $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7 per share, based upon Dish’s closing price on April 12, the company said in a statement issued on Monday.

This isn’t the first time Dish has gotten involved with Sprint. In January it presented a bid on Clearwire, throwing a wrench into Sprint Nextel’s deal to buy its mobile broadband partner. As part of today’s deal, Dish will consult with Spring and Clearwire on how they want to proceed.

Dish said its proposal is a superior alternative to the pending SoftBank proposal.

“Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined Dish/Sprint with a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal.” said Charlie Ergen, Chairman of Dish.

A key benefit of the deal is the combined spectrum resources, which will help the offer higher speeds and handle growing data volumes, according to Dish.

“If you are going to have a lot of data you better have a big pipe, and no one is going to have a better pipe than Dish-Sprint,” Ergen said during a conference call presenting the deal.

Dish is adding 45MHz of spectrum to the assets that Sprint already has, and said that combined with Clearwire it would lay the groundwork for a network that takes advantage of what different frequencies offer. Sprint’s spectrum at 850MHz offers the coverage, while combined mid-band spectrum covers more densely populated areas such as cities, which can get offloaded by Clearwire’s 2.5GHz network in places with very large numbers of users, according to Ergen.

Integrating satellite and mobile subscriptions would also bring benefits to users.

“You want to be able to be connected where ever you are, and you want to be able to watch your television no matter where you are, and you don’t want to pay for it twice,” Ergen said.

Ergen envisions using Dish’s army of installers to bring fixed broadband based on LTE to under-served parts of the U.S.

“This isn’t something that we thought of yesterday,” Ergen said. “This is the culmination of a lot of years of work where we have been putting a lot of things in place, whether it be the purchase of spectrum, entering auctions, the acquisition of Sling Media. All those things come together now with the merger with Sprint.”

SoftBank announced in October last year that it had it has reached a deal to acquire a 70 percent stake in Sprint for $20 billion.

“There is a $600 million breakup fee that we are more than willing to pay. So they are going to do pretty well,” Ergen said and added that Softbank would own about 5 percent of the combined Dish-Sprint.

Sprint said it has received the “unsolicited proposal from Dish Network to acquire the Company”, and its board will now evaluate the proposal carefully. The company does not plan to comment further until the time is right, it said.

Joseph Forbes (691)

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