Is DISH Giving Up on Sprint -- Or Just Regrouping?
Is DISH Network really throwing in the towel in its battle with SoftBank for Sprint Nextel ?
Knocked back on its heels by SoftBank's offer of an additional $4.5 billion in cash to Sprint stockholders, DISH released a statement late Tuesday saying, "While DISH continues to see strategic value in a merger with Sprint ... [Sprint's] revised agreement with SoftBank ... [has] made it impracticable for DISH to submit a revised offer by the June 18th deadline imposed by Sprint. We will consider our options with respect to Sprint, and focus our efforts and resources on completing the Clearwire tender offer."
From that statement, DISH seems to be totally giving up on acquiring Sprint. But wait, we have to remember that only two months ago DISH seemed to be stepping back from its original proposed buyout of Clearwire and instead made its shocking counteroffer for Sprint.
We also have to remember who's running the show at DISH. Chairman and founder Charlie Ergen does not give up what he wants without a fight -- he once likened his company to "a dog with a bone" -- and it is clear that he desperately wants DISH to be a player in the wireless communication industry.
He has called his company a "one-trick pony" in the slow-growth business of pay TV. Mobile video and data as well as wireless voice communications is where the future dollars will be, and Ergen does not want DISH to be left behind.
To that end, DISH has been amassing spectrum over the last few years but does not have the infrastructure or the expertise to use those frequencies. To build a wireless network from scratch would be prohibitively expensive. DISH's best strategy, then, is to buy -- or at least get access to -- an existing wireless network.
That is why Sprint and Clearwire have been the flames to DISH's moth. Their 4G infrastructures -- and additional spectrum licenses -- are too essential to future DISH growth, if not survival, for DISH to give up on totally.
In April of last year, Ergen told a Silicon Valley audience that doing nothing could be fatal. "For us, not taking a risk is the bigger risk," he said.
Even though it seems like DISH now has the edge in its bid to buy Clearwire -- with the Clearwire board of directors unanimously recommending stockholders vote to accept DISH's $4.40-a-share offer over Sprint's $3.40 -- Sprint has thrown a lawsuit at DISH, which could cause problems. And if legal action doesn't work, Sprint, with SoftBank's financial help, could raise its per-share bid for Clearwire.
What then? Remembering what he said about risk, Ergen may then reconsider giving up on Sprint and indeed make a revised offer. I don't think the fight for Sprint is over yet.
The article Is DISH Giving Up on Sprint -- Or Just Regrouping? originally appeared on Fool.com.Fool contributor Dan Radovsky has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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