Dish Network continues on its quest to offer mobile services. Shortly after ruling out Sprint as a partner, the satellite television provider entered a bid of $5.15 billion to acquire Clearwire, which is more than double the $2.2-billion offer Clearwire accepted from Sprint in December.
According to the Associated Press, Clearwire is prepared to consider Dish’s unsolicited offer, but actually getting a deal done will prove difficult. That’s because Sprint already holds a 51 percent in Clearwire and would have to sign off on any such deal with Dish—which it said it does not intend to do.
Terms of Dish’s offer include purchasing 24 percent of Clearwire’s spectrum for $2.2 billion and allowing Clearwire to build and manage a mobile network for Dish. Dish would add in an additional $800 million in financing.
Yankee Group Senior Analyst Rich Karpinski comments
“If nothing else, Dish’s unsolicited bid for all or part of Clearwire disrupts a U.S. operator market that at the end of 2012 seemed to have settled into a nice sort of equilibrium: Verizon with its LTE lead and (cable spectrum); AT&T closing a slew of spectrum deals; Sprint touting its new owner in SoftBank and gobbling up Clearwire and its spectrum; and T-Mobile picking up valuable AT&T/Verizon scraps while rounding its story out with its MetroPCS deal.
That relatively clear path forward has now been significantly muddled—at least for now. Dish’s valuable and now FCC-approved spectrum was the wild card as the year closed. But Dish’s bid for Clearwire is perhaps the most disruptive ‘use’ of that spectrum that one might imagine. Dish is looking for a network partner, and right now it doesn’t have a lot of options. Keeping Clearwire as an industry wholesaler/spectrum hoster is one path forward—but Sprint (post-Nextel debacle) is looking to simplify how it operates, not make things even more complex. That said, Dish’s bid certainly puts Sprint in a tough spot. The carrier can’t afford to be left without Clearwire’s spectrum and it (as well as its new parent SoftBank) probably can’t afford to take on Dish as an expensive and unwieldy tag-along to that deal. So what happens next? Clearly, Sprint will do all it can (including stating the fact that it already owns a majority of Clearwire shares) to keep its acquisition alive. Dish could force Sprint to sweeten its bid for Clearwire a bit, which Clearwire shareholders clearly are clamoring for. But that’s something Sprint owner Softbank has said it won’t do.
Here’s how we’d handicap this outcome right now: Sprint fends off Dish’s bid, leaving Clearwire in Sprint’s arms and Dish looking for another partner (most likely spectrum acquirer: AT&T; most likely network sharing partner: T-Mobile; most likely wild card partner: Google). Dish’s spectrum will find a home; its bid for Clearwire is just the first move in a likely lengthy and convoluted end game.”
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