Sprint's plans in limbo thanks to Dish's $25.5B offer and Verizon's play for Clearwire

Sue Marek

What a difference a day makes in the wireless industry. Just last week it appeared that Japanese operator Softbank's plan to acquire 70 percent of Sprint Nextel (NYSE:S) for $20.1 billion was on track, as was Sprint's bid to take control of Clearwire (NASDAQ:CLWR). Both deals were expected to close by mid-year.

However, today all bets are off. This morning Dish Network (NASDAQ: DISH) announced a $25.5 billion unsolicited offer to buy Sprint Nextel, which was followed shortly by the revelation that Verizon Wireless (NYSE:VZ) made an unsolicited offer to purchase Clearwire's (NASDAQ:CLWR) spectrum license leases in major markets for up to $1.5 billion.

Certainly there are pros and cons to all these scenarios but what seems apparent to me is that Dish's bid for Sprint and Verizon's bid for Clearwire will likely put Sprint's future plans in limbo while these deals are evaluated by shareholders, the FCC and the Department of Justice.

And Sprint, which is already behind the curve in terms of deploying LTE, can't really afford more delays and turmoil. "For Sprint this just adds confusion," said Roger Entner, analyst and founder of Recon Analytics. "Sprint shareholders get more money from Dish's proposed deal, but how is Charlie [Ergen, Dish's chairman] going to invest in Sprint?" asked Entner. "Will he improve the network? It's going to slow everything down."

Sprint is in the midst of a major overhaul to its network. As of February, Sprint had launched LTE in 58 cities and the company said it now expects to cover 200 million POPs with LTE by the end of the year. That 200 million POP figure is significantly lower than Sprint's original goal of having 250 million POPs covered with LTE by year-end. Currently, Sprint is on the same pace as T-Mobile USA, which plans to have 200 million POPs covered with LTE by year-end.

Will Dish's offer throw a wrench into Sprint's plan? Not immediately, according to industry analyst Bill Ho. Ho believes that in the short-term Sprint's LTE plans will progress as planned for the rest of 2013 and possibly into 2014 because that capital has already been allocated. However, what happens next is clearly uncertain--something that Sprint's competitors will likely try to exploit. "This creates months of uncertainty for Sprint," Entner said. "They can't do anything strategic."

Turmoil creates opportunity and that's exactly what Sprint's competitors are banking on. --Sue


Like this story? Subscribe to FierceWireless!

The Wireless industry is an ever-changing world where big ideas come along daily. Our subscribers rely on FierceWireless as their must-read source for the latest news, analysis and data on this increasingly competitive marketplace. Sign up today to get wireless news and updates delivered to your inbox and read on the go.

Suggested Articles

AT&T has shifted its Cricket prepaid brand to a 100% authorized retailer model, according to Wave7 Research.

The FCC decided to extend the timeline for responding to Huawei's application for review until December 11.

All operators are trying to understand the intersection between their networks and hyperscale networks. But who gets the lion's share of the revenue?