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DISH's Clearwire Bid Puts Sprint 'In a Tough Spot'

By Craig Galbraith
January 10, 2013 - News

**Editor's Note: Please click here for a recap of the biggest channel-impacting mergers in Q4 2012 or here for the biggest M&A during that time in the service provider-BSS/OSS spaces.**

DISH Network, which wants to offer its customers wireless phone service, threw a wrench into Sprint's spectrum grab this week when the satellite provider outbid America's third-largest carrier for Clearwire, the spectrum-rich broadband provider. When it's all said and done, one analyst says, Sprint will get Clearwire – but not without some headaches.

DISH is offering Clearwire a little more than $5 billion. Sprint, which already owns 51 percent of the company, has offered $2.2 billion for the remaining 49 percent. The problem for DISH is obvious — as a majority owner, Sprint says it would have to sign off on a DISH-Clearwire merger, something that seems unlikely since it wants Clearwire all to itself.

At the least, this is a hassle for Overland Park, Kan.-based Sprint, which wants Clearwire's spectrum to further build out its next-generation network to better compete with rivals AT&T and Verizon.

"Dish’s bid certainly puts Sprint in a tough spot," noted Yankee Group senior analyst Rich Karpinski, commenting on an Associated Press article. "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."

Sprint already has a lot on its plate. The company is waiting on regulatory approval that would allow it to sell 70 percent of its company to SoftBank of Japan. It's the $20 billion cash infusion from SoftBank that, in part, is making the Clearwire buy possible.

"Here’s how we’d handicap this outcome right now," Karpinski added. "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."

Follow editor @Craig_Galbraith on Twitter.

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