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Dish abandons Sprint bid to focus on Clearwire

Leaves path open for Softbank to gain 78% of Sprint, but Japanese firm will not want to lose Clearwire either

By CAROLINE GABRIEL

Published: 19 June, 2013

READ MORE: M&A | US | LTE

Dish has abandoned its battle with Softbank for control of Sprint, and hopes that will clear the way for its acquisition of Clearwire.

The Dish/Sprint battle has gone through as many twists as a bad soap opera over recent months, culminating this week in a lawsuit, brought by Sprint to block the pay-TV firm's offer for Clearwire. That was always going to be a tough fight for Dish, since Sprint has just over 50% of the mobile broadband joint venture, and its plentiful TDD spectrum is regarded as a key attraction for Softbank of Japan. However, Dish has now dropped its rival $25.5bn bid for 68% of the US's third cellco and said it will now focus on "completing the Clearwire tender offer".


Softbank recently increased the amount of cash it was offering in its own bid for Sprint, though it also increased the stake it wanted from 70% to 78%. Some analysts believed Dish's chairman Charlie Ergen, well known as a poker player in business terms, would increase his own bid for Sprint, but instead he is going after Clearwire, whose spectrum would improve the viability of Dish's plans to create a national LTE network. It already owns 40MHz in the former mobile satellite band, now called AWS-4, and has gained FCC approval to run terrestrial-only services in that spectrum.

However, it has acknowledged that, on its own, these frequencies would not support a viable business model, and it would either seek additional capacity, or probably sell on its existing assets. That would leave it seeking a partner or acquisition to add wireless services and a quad play to its satellite-TV offerings, and Ergen has reportedly held exploratory talks with Deutsche Telekom over the potential to buy its stake in the merged T-Mobile/MetroPCS.

Although Clearwire brings plenty of capacity, it would still land Dish with increased debt and the cost of building out an LTE-Advanced network, which could then support quad play services and a wholesale business. The Sprint deal would have given Ergen's firm the ability to run its network on the cellco's multi-technology, multiband Network Vision infrastructure, significantly reducing cost and risk as well as tapping into the operator's existing customer base. Dish would also have brought the mobile firm strategic assets in the form of content alliances and the potential to look beyond cellular-only models. However, it would also have saddled the firm with increased debt, and Softbank brings more immediate injections of cash into the 4G roll-out, as well as more assured ability to finance its offer.

"While Dish continues to see strategic value in a merger with Sprint, the decisions made by Sprint to prematurely terminate our due diligence process and accept extreme deal protections in its revised agreement with SoftBank, among other things, have made it impracticable for Dish to submit a revised offer by the June 18 deadline imposed by Sprint," Dish said in its statement on Tuesday. "We will consider our options with respect to Sprint, and focus our efforts and resources on completing the Clearwire tender offer."

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