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Dish Network Corp. Message Board

  • longpickuptruck longpickuptruck Apr 22, 2013 2:55 PM Flag

    Dish's only way to expand

    Ergin knows that Dish has reached its limit by being only a TV viewer provider. Ergin must expand. His cheapest way to expand into the wireless is to take over S. If Ergin can get financial assistance, he will be on the right road to profitable expansion by taking over S even at $40+ billion dollar bid. He has a penny ante bid in for half of CLWR that supposedly owns about $30 billion dollars of spectrum. If he takes over S he acquires the first half of CLWR free.
    IMO I believe Ergin will make every effort to take over S even if he has to hock everything.

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    • That possible but unlikely: DISH cannot improve the pace at which Sprint can build new networks and does not contribute wireless device or network technology to the mix. The combination with Sprint-CW likely would delay roll out of Sprint's network and use of the 2.6GHz spectrum.. it might also force delays on DISH's plans to deploy into their own spectrum. That is a critical factor: while DISH-Sprint-CW wait for a fresh round of approvals of the newly concocted deal, including likely more time spent scrutinizing the larger amassing of spectrum, Verizon, AT&T, T-Mobile-PCS romp on with LTE/LTE-Advanced to take away marketshare.

      That places Sprint-CW at a take-out price premium which becomes too dear a price for DISH to pay. While the combination makes sense at the present price, it falls apart if DISH has to raise it to the 'take out' price level needed.

      It has been likely to happen. The odds look dimmer each passing day.

      However, DISH can continue to try to press the FCC to place rules on Sprint-Softbank that requires broadband roaming and wholesale access. That is a measure the FCC can take that won't require a major change in licensing or administration and would give ISH some of the benefits of having mobile 3G and 4G mobile coverage. DISH might partner with American Movil or other US MVNO operator. If they can get that, then building D can build their network using capital otherwise needed to buy S.. and grow share from the ground up... it could be done.

    • Why do you say that acquiring Sprint is the cheapest way to expand into mobile? I think that is far wrong. Acquiring Sprint against the company's will would be very costly. DISH's offer as is will not likely be accepted.. it is hardly getting a hearing. I think it would take a 30% increase to be assured of acquiring Sprint and then it might need to be restructured to be accepted. At the current price, financial analysts and rating agencies question the deal as being over-leveraged. Ergen is a good gambler but he must pay with real chips, not bluffing that he will come up with a larger stake.

      Acquiring marketshare of a mobile operator is the expensive way to enter the market. It may seem more certain but so much of that depends on timing which is to a significant extent outside of DISH's direct control. If the deal wen forward it would cause the FCC to rule on the new combination of spectrum that would be greater than any other operator or any prior approval by the FCC and DOJ. That would likely cause an additional one to two year delay in building of joint networks and may tie up building DISH's own network and obtaining additional financing as the outcome would remain uncertain.

      Acquiring Sprint-CW has several strategic, technical, and operational merits. However, don't ignore the difficulties - that type of shorthand analysis is why 2/3rd or more of acquisitions end up showing much lower results than expected and some lead to a downturn in prospects for both companies. Acquisition of Sprint would take time, be costly, and is very unlikely.

      • 1 Reply to teamrep
      • teamrep, you say that "Acquisition of Sprint would take time, be costly, and is very unlikely." For DISH what other option is there than an acquisition? Sure it it costly but that is the fastest and cheapest way to build a network. I think Charley has the right approach. There does not appear to be a higher offer from Softbank and no other competing offers on the horizon. DISH with Sprint is a win win for both companies.
        jmho
        rustie

 
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