Following yesterday’s shock $25 billion offer for Sprint made by Dish Network, SoftBank has officially responded to the satellite TV provider with a firm rebuttal and declaration that its current deal to purchase 70% of Sprint will be completed as expected in July. as the deal has received all necessary regulatory approvals.
“SoftBank believes that the agreed terms of our transaction with Sprint offer Sprint shareholders superior short and long term benefits to Dish’s highly conditional preliminary proposal. The SoftBank-Sprint transaction is in the advanced stages of receiving the necessary approvals, and we expect to consummate the transaction on July 1, 2013.”
With Dish Network making its case to purchase Sprint in an attempt to become a triple play service provider, it still faces major hurdles that it has yet to address, such as the need for a $9 billion loan to complete its purchase of Sprint and how it will face regulators, as its offer would need to be accepted first by the board of directors and shareholders and then face regulator scrutiny, two elements already settled with the SoftBank deal within the past year.
Since Dish Network is looking for a wireless carrier partner to make the best use of its sizable wireless spectrum holdings, the fact that it was looking to purchase Sprint yesterday came as a complete shock, as Sprint currently holds an equally sizable stake in increasingly popular industry darling Clearwire, due to its own deep spectrum holdings for mobile broadband that are being planned for use in its own LTE network; carriers are now going after the ISP since it’s currently drawing cash from Sprint just to stay afloat with potential repercussions for Sprint and Clearwire, outside of Sprint’s attempts to purchase the rest of the struggling company.
However, as Sprint is only now beginning to shake off the last vestiges of its failed merger of equals with Nextel, it has past history to look at when it and if it considers Dish’s offer, as the failure of the merger was due equally in part to the culture clashes between both companies as well as the lack of a coherent plan to integrate and transition networks. As Dish Network is a much smaller company in terms of revenue and is in desperation mode in order to reach its goal of becoming a player in mobile, it’s recent actions should make those in the industry think twice about how Dish Network is going about reaching its goals.
Running interference on deals that are all but completed not only makes things more difficult for the respective boards of directors and shareholders, it runs the risk of landing Dish Network in trouble financially due to its smaller size as it would have to pay SoftBank $600 million for having its bid accepted by Sprint while SoftBank could sell its $1 billion convertible bonds in Sprint for a profit, leaving SoftBank in a much better position should the merger not be completed as planned while Dish Network would have to take out a loan besides offering cash and stock, leaving it in a much worse position.