DISH Network Abandons Clearwire Bid

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Within a week, the satellite TV operator, DISH Network Corp. (DISH), suffered two consecutive setbacks with respect to its plan of entering the U.S. wireless market. On Jun 19, the company decided not to pursue the acquisition of Sprint Nextel Corp. (S). In Apr 2013, DISH had made a counter bid of $25.5 billion to acquire Sprint, the third-largest telecom operator in the U.S. In Oct 2012, Softbank of Japan made a $20.1 billion bid for Sprint. Later, Softbank increased its offer price to $21.6 billion.

Yesterday, DISH withdrew its offer to acquire the remaining 49% stake of the wireless wholesaler, Clearwire Corp. (CLWR). Sprint is the 51% shareholder of Clearwire. The battle for Clearwire started in Dec 2012, when Sprint proposed a $2.97 per share bid to acquire the remaining 49%. In Jan 2013, DISH offered a counter bid of $3.30 per share.On May 21, 2013, Sprint hiked its bid to $3.40 per share. DISH further raised its bid to a substantial $4.40 per share of Clearwire. However, recently, Sprint hiked its offer price from $3.40 to $5 per share, which forced DISH to abandon its Clearwire venture.

During the last couple of years, DISH has constructed a huge wireless/satellite spectrum base. These precious airwaves are much coveted by wireless operators. DISH estimated its portfolio of wireless spectrums can be monetized for around $10 billion.

However, the deployment of a nationwide wireless network is a very expensive and time consuming affair. Thus, DISH is trying to acquire or merge with an existing wireless operator to avail a readymade wireless infrastructure and an established subscriber base. This network can be improved significantly after integrating DISH’s own airwaves.

Several analysts believe that DISH may now pursue T-Mobile US Inc. (TMUS) for this purpose. T-Mobile is the fourth-largest wireless operator in the U.S. and its majority is controlled by Deutsch Telekom. Earlier this year, T-Mobile expanded its scale of operation after acquiring MetroPCS. Deutsch Telekom has expressed its desire to divest its U.S. operations. DISH Network currently has a Zacks Rank #3 (Hold).

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