Sprint and Dish: A match made in heaven?

Dish Network has spectrum, an asset Sprint Nextel (NYSE:S) greatly needs, and Dish wants to operate an LTE network, something Sprint just happens to be building out, and that is why a partnership between the two companies is emerging as a logical possibility.

Sprint CFO Joseph Euteneuer fueled the flames of speculation this week when he told investors that Sprint might consider buying spectrum from Dish or signing a spectrum-hosting deal with the satellite TV company, which would allow Dish to eventually offer wireless services via a combination of Sprint's network and the 40 MHz of S-band spectrum that Dish holds.

Referring to Dish Chairman Charlie Ergen, Euteneuer said, "Charlie has to decide what he wants to do with his spectrum, etc., but obviously we would be a great hosting partner for him if he needed one, if he didn't to build it out himself."

Euteneuer acknowledged that Sprint's financial condition precludes it from engaging in any major M&A activity as a buyer right now but said the company is hopeful of gaining more spectrum in the future and specifically cited "this stuff that Charlie has" as a possibility.

"We will be out there looking for additional spectrum," Euteneuer said.

Sprint intends to begin introducing FDD LTE service in a 5x5 MHz configuration on its 1900 MHz PCS spectrum in six initial markets this summer as part of its Network Vision infrastructure upgrade. Atlanta, Dallas, Houston, San Antonio, Baltimore and Kansas City will be the first LTE markets launched. Euteneuer said Sprint hopes to finalize $3 billion in vendor financing next quarter to support Sprint's network upgrade.

Dish specifically intends to deploy LTE-Advanced in its 2 GHz S-band spectrum if, and when, the FCC grants the company the necessary waivers. However, Ergen said in February that Dish might be forced to sell the frequencies if the FCC did not immediately grant Dish's requested waivers. Numerous analysts have suggested Ergen was bluffing.

On March 2 the FCC rejected Dish's request for a necessary waiver that would allow it to use its spectrum for terrestrial mobile broadband use. Instead, the agency initiated a rulemaking proceeding through which it will set guidelines for the terrestrial use of Mobile Satellite Service (MSS) spectrum, a broad spectrum swath that includes frequencies Dish and also LightSquared had hoped to use for mobile broadband services.

Dish has signaled in the past that it might be open to a deal with Sprint. For example, in September 2011 Dish's CEO Joseph Clayton said in an interview with Bloomberg that the company would consider partnering with or buying a wireless carrier. When asked whether that could include buying or partnering with Clearwire or Sprint, Clayton responded: "Could be."

For more:
- listen to the Barlcays webcast
- see this Reuters article
- see this Bloomberg article

Related articles:
U.S. operators opening the floodgates for LTE capex surge
Euteneuer: If Verizon and AT&T get an LTE iPhone, so will Sprint
Analysts: FCC's rulemaking favors Dish's LTE network plans
Sprint's stock falters on warning of bankruptcy risks
Dish won't face LightSquared's GPS issues, but spectrum's fate still uncertain
Analysts: Dish may be bluffing about LTE Advanced network buildout
Dish's LTE network to sit on the launch pad till year-end
Dish's Ergen: We may sell spectrum if FCC doesn't approve waiver

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