Dish Network (NASDAQ: DISH) Chairman Charlie Ergen said that the company has multiple backup options for its wireless plans if its $25.5 billion bid for Sprint Nextel (NYSE:S) does not succeed against SoftBank's $20.1 billion proposal to buy 70 percent of Sprint.
Ergen, speaking to analysts and media on Dish's first-quarter earnings conference call, said those options included selling Dish's spectrum, selling the whole company, partnering with another wireless carrier or wholesaling capacity on its network, as Light Squared had planned to do. He said building a greenfield network and competing as a fifth national wireless player was low on his priority list.
"We have to be prepared to win, and we have to be prepared to lose," he said.
Ergen and SoftBank CEO Masayoshi Son have been engaged in a war of words over which company's offer for Sprint is better, and Ergen reiterated that Dish's offer is superior. He said the "vast majority of the synergies they're [SoftBank] talking about would also be available to us," and that Dish's spectrum position should not be held against it as a negative cost.
In a recent presentation to investors, Son said it would take $6 billion to properly build out Dish's 40 MHz of 2 GHz AWS-4 spectrum (Dish also owns a small portion of 700 MHz spectrum). Ergen said "we're bringing $10 billion of spectrum and we got no credit for that in their presentation." He said such spectrum would be complementary to Sprint's existing spectrum holdings and that Dish could help Sprint expand its network capacity more efficiently than SoftBank.
Ergen said SoftBank is truly confident in its calculation of synergies, "they would look at paying quite a bit more for Sprint than we have offered so far."
"Realistically, the curtain is now up on Sprint, both Dish and Softbank see tremendous value there. Shareholders are going to be the winners, and who knows where this goes," Ergen said.
Interestingly, Ergen disparaged Sprint's existing wireless service and said Sprint "still has a coverage problem." He said Dish's spectrum and positioning in the market would help Sprint in this regard. He also said that Sprint would not want to see Dish's spectrum sold to a competitor because it would make that company stronger.
Son has argued that the Dish/Sprint combination would have prohibitively high debt but Ergen said he was not concerned with the debt situation and that the company would be asset-rich and could always sell non-core assets to reduce its debt, though he said that was not his preference.
"I like where we are strategically," Ergen said. "We're going to work our darndest to get Sprint. We're going to bid as much as we can to get it." He called SoftBank a "formidable competitor" but said the cultural differences between Japan's SoftBank and Sprint could make a combination of the two difficult. He said that, as an American company, Dish has a "home field advantage."
According to a Bloomberg report, which cited unnamed sources familiar with the matter, Dish has pressed the special committee of Sprint's board that is examining Dish's offer to declare that it is superior so that Dish can get access to Sprint's confidential financial information before committing around $9.3 billion in financing. The report said Sprint is balking at that right now because of questions over funding and cost savings. Bloomberg also reported Dish has lined up Jefferies Group to help it finance the deal and win over Sprint's board.
Meanwhile, Son is in the United States to meet with Sprint investors and sell them on SoftBank's bid. "It doesn't help to bring a football player to a baseball team," Son told Bloomberg in an interview, discounting Dish's bid. "There's no synergy between satellite and mobile."
Son also said a SoftBank-owned Sprint could bring a pricing advantage to the U.S. wireless market and let Sprint continue its unlimited data plans. "There are many, many ways to give excitement to the users," he told the Wall Street Journal.
Sprint has tentatively set June 12 as the day for a special shareholder meeting to vote on the SoftBank deal.
Ergen said he had given no thought as to what role he would play in a combined Dish/Sprint. "I think that I would play whatever role people need me in," he said. "And if that's washing the dishes or getting pizza, I'm going to do it. I just want to make the company successful and transform both our companies."
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this Reuters article
- see this separate Bloomberg article
- see this separate WSJ article (sub. req.)
- see this AP article
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