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Dish could still win in 4G, despite losing Sprint and Clearwire

Sprint increases offer for Clearwire and is likely to prevail, removing last obstacle to its own deal with Softbank


Published: 21 June, 2013

READ MORE: M&A | US | Clearwire | LTE

Softbank of Japan looks set to achieve the double whammy, gaining control of both Sprint and Clearwire in the teeth of counterbids from Dish. Dish abandoned its bid for 68% of the third US cellco earlier this week, though was still after Clearwire. Sprint has now raised its own offer for control of Clearwire to $5 a share, which has gained almost the level of shareholder support it requires to win through.

Dish could make another offer of its own, but this seems unlikely. However, the outcome for the TV company could be preferable to engaging in acquisitions which would have saddled it with high levels of debt - if it can manoeuvre the new-look Sprint into agreeing to spectrum and network sharing deals.

Dish does not need to own a cellco, it just needs sufficient spectrum to make its LTE plan viable - not the case with its existing 40MHz of AWS-4 frequencies alone - and a way to reduce the cost and time to build out. An MVNO or spectrum exchange deal for Clearwire's plentiful 2.5GHz airwaves, and a contract to run its LTE on Sprint's Network Vision infrastructure, would meet the bill - and be similar to the pact the US's third cellco once sought with now-bankrupt LightSquared.

This may still be an option for Dish, then, depending on Softbank's willingness, but in the short term, the pay-TV firm has abandoned its Sprint bid and been defeated over Clearwire, after Sprint raised its offer on Thursday to gain full ownership of its mobile broadband joint venture. Losing control of Clearwire could have been a sticking point for Softbank, which holds similar TDD spectrum in Japan and sees former WiMAX unit as a jewel in Sprint's crown.

At Softbank's annual shareholder meeting, CEO Masayoshi Son was in triumphal mood, saying: "Everyone accused me of being full of hot air when I promised I would achieve trillions of yen in sales... They laughed when I said unapologetically in the year we made our biggest loss that I would soon earn trillions of yen in profits. I now say, we will become the world's biggest company-- by all measures, whether by sales, profit, or market cap."

Son is known for such inflated statements, but while Softbank is unlikely to become the "world's biggest company", it is investing heavily to expand its business beyond its saturated home market and establish alliances and influence worldwide, especially with partners on similar technology paths, like Sprint/Clearwire. It founded its mobile business on the purchase of the then-struggling Vodafone Japan and Son said the process of turning Sprint around would be less challenging than transforming Vodafone KK, which it bought in 2006. It has also consolidated its domestic presence in recent years, acquiring Willcom's 2.5GHz spectrum for TD-LTE and fellow Japanese cellco Emobile. It also has stakes in web-focused groups like Alibaba and Yahoo Japan and will bring to Sprint some advanced expertise in 'telco over-the-top' services.

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