Dish Network has launched a $25.5 billion cash and stock bid to snag carrier Sprint from Japan’s communications giant Softbank, according to reports Monday morning. Should Sprint accept the offer and regulators approve the deal, consumers will get a new service that could combine mobile, broadband and television.
Dish is the nation’s second-largest direct-broadcast satellite service provider which serves just over fourteen million Americans. Sprint Nextel with its 47.5 million subscribers files as the third-largest wireless carrier in the United States. The proposed merger comes at an interesting time, just as Softbank’s proposed acquisition of 70 percent of Sprint for $20.1 billion is nearing its completion in the second quarter of 2013…
A media release notes Dish would pay seven bucks per share for Sprint stock, $4.76 in cash and $2.24 in Dish stock - a twelve percent to Sprint’s close on Friday. Sprint said its board would evaluate the deal.
Dish is headquartered in Meridian, Colorado.
Shares of Sprint jumped a whopping 17.8 percent on the news, their highest level since August 2008, and slightly topped the value of the Dish bid.
Reuters points at a Dish filing stating the merger would create a new entity with 63.1 million retail subscribers and $50 billion in annual revenues. Both Dish and Sprint competed earlier in the year over acquiring Clearwire.
Benefits for the consumer would include bundled pricing for video, phone and Internet and further access to unlimited data. In other words, the merger could create a single network for mobile, broadband and television.
The Wall Street Journal reminds us that Softbank’s Sprint merger entails a $600 million break up fee. Here’s a CES 2013 video revealing some of the new features coming to Dish’s service this year.
Softbank first announced intentions to acquire Sprint, which runs a CDMA wireless network, in October of 2012. The Japanese giant has stated that it will run Sprint as a separate entity, confirming plans to continue executing Sprint’s plan to become an all-LTE carrier by 2017.
Sprint has little choice: the company must merge with a financially sound buyer, either Softbank or Dish.
Sprint should then immediately use any such cash investment and additional spectrum towards accelerating its LTE deployment and fighting off T-Mobile. Deutsche Telekom-owned T-Mobile, the #4 US carrier, now has the iPhone and is coming behind to steal Sprint’s customers, especially prepaid ones.
Last October, T-Mobile said it will combine US operations with MetroPCS, the #5 carrier. Richardson, Texas-headquartered MetroPCS, which had 9.5 million subscribers as of January 2012, operates 3G network that uses CDMA technology, but is also deploying 4G LTE.
Wow, talk about market consolidation.
The question is, will us – the consumers – benefit from these acquisitions by gaining a better service at lower prices?