Sprint and Softbank Forced into Tactical Warfare

Agenda-Setting Financial Insight.
Jan. 9 2013 7:29 PM

Sprint and Softbank Forced into Tactical Warfare

154229984
Sprint and Softbank are being forced into tactical warfare

Photo by Joe Raedle/Getty Images

Sprint and Softbank are being forced into tactical warfare. U.S. satellite-TV company Dish Network, run by the enigmatic Charlie Ergen, put forward a highly conditional $2.3 billion offer for Clearwire, a spectrum owner integral to the ambitions of Sprint and its Japanese buyer. Though the bid is unlikely to go far, it could pressure Sprint to pay more - or strike a deal with Dish.

The offer trumps Sprint’s $2.2 billion agreed deal for Clearwire. Though a board committee is considering the rival offer, it’s hard to imagine how it could possibly succeed. Sprint controls just over half of Clearwire’s votes and says it won’t accept. Part of Dish’s offer is to buy 24 percent of Clearwire’s spectrum outright for $2.2 billion, a proposal Clearwire has rejected before. What’s more, Clearwire can’t sell the spectrum without Sprint’s consent.

Advertisement

The Potemkin offer will nevertheless have consequences. Uppity investors already have come out against Sprint’s bid, which followed Softbank’s $20 billion deal to buy 70 percent of Sprint last October. Dish’s interloping at the very least lends intellectual credence to the idea that Sprint is trying to grab Clearwire on the cheap. That could tangle up Sprint’s deal in legal knots. Further, Sprint needs three-quarters of Clearwire shares for approval. Activists hold under 15 percent, but Dish’s offer could help them woo more investors to their plight.

Sprint may consider a sweetener, even if its bid is the only realistic one on the table for troubled Clearwire. Softbank is eager to tackle the U.S. market and to do that it needs additional bandwidth. Clearwire is the obvious source. Increasing the bid could clear the path for Sprint and Softbank to get down to business.

With the Clearwire shareholder vote months away, there’s plenty of time for Dish to make trouble. The company is sitting on a whopping 40 megahertz of spectrum it bought from two bankrupt firms. It’s probably worth three times the $3 billion Dish paid, after regulators allowed it to be repurposed from satellite use to cellular. That means Ergen could now be a seller and might explain why he’s positioning himself as a spoiler with Sprint. Until he explains himself, deal watchers will have to consult Sun Tzu instead. 

Read more at Reuters Breakingviews.

Robert Cyran moved from the London office to New York, where he covers global technology, pharmaceuticals and special situations. Rob began his career at Forbes magazine, where he assisted in the start-up of the international version of the magazine.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Why Time Is on Our Side in the Fight Against Ebola

The Religious Right Is Not Happy With Republicans  

The XX Factor
Oct. 1 2014 4:58 PM The Religious Right Is Not Happy With Republicans  

Catacombs Where You Can Stroll Down Hallways Lined With Corpses

Homeland Is Good Again! For Now.

Crime

Operation Backbone

How White Boy Rick, a legendary Detroit cocaine dealer, helped the FBI uncover brazen police corruption.

Music

How Even an Old Hipster Can Age Gracefully

On their new albums, Leonard Cohen, Robert Plant, and Loudon Wainwright III show three ways.

The U.S. Has a New Problem in Syria: The Moderate Rebels Feel Like We’ve Betrayed Them

Piper Kerman on Why She Dressed Like a Hitchcock Heroine for Her Prison Sentencing

Trending News Channel
Oct. 1 2014 1:25 PM Japanese Cheerleader Robots Balance and Roll Around on Balls
  News & Politics
Crime
Oct. 1 2014 4:15 PM The Trials of White Boy Rick A Detroit crime legend, the FBI, and the ugliness of the war on drugs.
  Business
Moneybox
Oct. 1 2014 2:16 PM Wall Street Tackles Chat Services, Shies Away From Diversity Issues 
  Life
Gentleman Scholar
Oct. 1 2014 4:55 PM Blood Before Bud? Must a gentleman’s brother always be the best man at his wedding?
  Double X
The XX Factor
Oct. 1 2014 5:11 PM Celebrity Feminist Identification Has Reached Peak Meaninglessness
  Slate Plus
Behind the Scenes
Oct. 1 2014 3:24 PM Revelry (and Business) at Mohonk Photos and highlights from Slate’s annual retreat.
  Arts
Brow Beat
Oct. 1 2014 3:02 PM The Best Show of the Summer Is Getting a Second Season
  Technology
Future Tense
Oct. 1 2014 4:46 PM Ebola Is No Measles. That’s a Good Thing. Comparing this virus to scourges of the past gives us hope that we can slow it down.
  Health & Science
Science
Oct. 1 2014 4:03 PM Does the Earth Really Have a “Hum”? Yes, but probably not the one you’re thinking.
  Sports
Sports Nut
Oct. 1 2014 5:19 PM Bunt-a-Palooza! How bad was the Kansas City Royals’ bunt-all-the-time strategy in the American League wild-card game?