Dish Network may face a bidding war for Sprint Nextel as Japanese telecom giant SoftBank reiterated Tuesday its interest in purchasing the No. 3 U.S. wireless carrier.
Douglas County-based Dish should have a couple of fallback options, including a potential merger with T-Mobile, if its falls through.
In October, SoftBank agreed to purchase 70 percent of Sprint for $20 billion in cash and investment capital. Softbank said in a that the deal provides “Sprint shareholders superior short- and long-term benefits to Dish’s highly conditional preliminary proposal.” Despite the competing cash-and-stock bid from Dish, SoftBank still expects its deal to close July 1.
Dish chairman Charlie Ergen hedged a bit when asked this week whether the satellite-TV company is prepared for a bidding war.
“We’ll have to see how this plays out,” Ergen said. “I think we see the same thing that SoftBank sees. … We thought it was undervalued from their offer, so we were willing to offer more money.”
Wells Fargo analyst Marci Ryvicker said in a research note Tuesday that she expects SoftBank “to come back to the table with a sweetened offer for Sprint.”
Another hurdle facing Dish is the high debt load the company would have to assume to acquire the larger Sprint, she said. Overland Park, Kan.-based Sprint ended 2012 with $24.3 billion in debt, while Dish had nearly $12 billion.
T-Mobile, which Dish may have already about a merger, could be a more ideal dance partner for Dish because of its smaller size and complementary spectrum position, Ryvicker said.
T-Mobile parent Deutsche Telekom reportedly said it would wait until after completing a reverse merger with regional carrier MetroPCS before considering Dish’s offer.
Another option for Dish would be to partner with a deep-pocketed third-party company on the Sprint deal, should a bidding war ensue. Ryvicker noted that Google could be a potential partner.
A third option, which Ryvicker believes would be the most likely scenario, is a buyout of Dish.
“While Charlie seems to have every intention of entering the wireless business, he has said he can’t do so alone — which, to us, means a sale may be the ultimate end to this fairy tale,” she said.
Potential suitors could include long-rumored Dish partners AT&T and DirecTV.
Andy Vuong : 303-954-1209, avuong@denverpost.com or fb.com/byandyvuong
