Dish Network offers to buy Sprint for $25.5 billion cash and stock; DT/T-Mobile rumored to be interested too!

Satellite-TV provider Dish Network Corp. is making a $25.5 billion bid for Sprint Corp. in an effort to derail the No. 3 U.S. wireless carrier’s acquisition by Softbank Corp. of Japan.  Dish said Monday it is offering to pay $4.76 in cash and about $2.24 in Dish stock, based on Friday’s closing price, for every share of Sprint.  Dish argues that the deal represents a 13% premium to Softbank’s complicated proposal to buy 70% of Sprint for $20.1 billion.

Charlie Ergen, Dish’s Executive Chairman, has been looking for a way into the wireless world for years. Dish has been buying space on the airwaves for cellphone service or wireless broadband. The Englewood, Colo., company has tried to partner with cellphone companies to put its spectrum rights to use, but has been repeatedly rebuffed.

A Dish spokesman said it’s too early in the process to know a number of specifics including who would lead the company and whether Mr. Ergen will serve as chairman of the board.  Sprint said its board of directors will evaluate the proposal carefully. Softbank had no immediate comment on the bid by Dish.

“Sprint is in play,” Mr. Ergen said in an interview with the Wall Street Journal in New York. “We think we’ve made an offer that’s much more compelling than the Softbank transaction.”   Control of the combined company would rest with Dish shareholders, and Mr. Ergen would be its largest shareholder.

Buying Sprint would allow Dish to offer video, high-speed Internet and voice service across the country in one package whether people are at home or out and about, Mr. Ergen said. People who don’t have access to broadband from a cable company would be able to sign up for Internet service delivered wirelessly from Sprint cellphone towers to an antenna installed on their roof, Mr. Ergen said.

“You want to be in your home with video, broadband, and data, and voice, and you want to be outside your home with those same things,” Ergen said on a conference call. “And while the cable industry does a really good job in your home, and the current wireless industry does a really good job outside your home, there’s really no one company on a national scale that puts it all together. The new Dish-Sprint will do that.”

Earlier this year, Dish made an informal offer to buy Clearwire Corp. -a wireless carrier that is half-owned by Sprint and that has agreed to sell Sprint the other half. Dish has yet to move forward with a formal bid. Mr. Ergen said the “deck was stacked against us” with Clearwire due to a
tangle of contractual obligations. With Sprint, the only obstacle is a $600 million breakup fee that would be due Softbank. He said he is willing to pay that.

Sprint had $35.3 billion in revenue last year, compared with $14.3 billion for Dish. The combined company would carry more than $36 billion in debt, according to CapitalIQ, even before loading on the $9 billion Dish indicated it would borrow to do the deal.  It will now be up to the Sprint board to decide whether Dish’s bid is superior to Softbank’s. If the board decides it is, Softbank will have an opportunity to increase its own offer.

Rethink Wireless reports that Deutsche Telekom is considering a separate deal with Sprint Nextel, which would improve its capex position for expanding its own LTE roll-out.  DT owns T-Mobile, which is the 4th largest U.S. wireless carrier.

Dish and Sprint both held talks with MetroPCS before the T-Mobile deal was agreed, the sources say. DT last week improved the terms of its offer for MetroPCS to reassure major shareholders in the flat rate carrier, notably by reducing the debt burden on the combined entity, and the leading opponent of the proposal did reverse its position, raising hopes that the deal will be approved at a delayed shareholder meeting on April 24.

Not to be outdone, Telegeography weighed in with this rumor:  “Charlie Ergen, chairman of US satellite TV giant DISH Network, reportedly approached Germany’s Deutsche Telekom (DT) regarding a possible merger with T-Mobile USA, albeit informally. According to Bloomberg, citing sources familiar with the situation, DISH made the proposal sometime before 10 April, when DT unveiled a ‘sweetened’ bid for merger target MetroPCS Communications. The sources, who wished to remain anonymous, added that DT might consider DISH’s proposal, although only after the transaction with MetroPCS closes, and after verifying that a separate deal with Sprint Nextel is not feasible.”

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