Dish Network Submits $25.5 Billion Bid for Sprint Nextel

Pay TV operator Dish Network announced yesterday that it has placed a $25.5 billion bid for wireless carrier Sprint Nextel, which is presently ranked third in the U.S. behind Verizon Wireless and AT&T. Dish Network’s chairman and former CEO Charlie Ergen is hoping to bridge the gap of current wireless models by offering customers faster and more affordable television, high-speed Internet and cellphone services in a single package.

“It really means that we’re going to give consumers what every consumer wants,” said Ergen. “They want broadband and video and voice in their home and want the exact same thing outside the home. And they want it to look and feel and priced outside the same as it is inside.”

“Dish Network’s bid is an effort to scuttle the planned takeover of Sprint Nextel by the Japanese telecommunications company SoftBank, which agreed in October to acquire a 70 percent stake in the American cellphone operator in a complex deal worth about $20 billion,” reports The New York Times. “Under the terms of its proposed bid, Dish Network said it was offering a cash-and-stock deal worth about 13 percent more than SoftBank’s bid.”

“Dish Network’s effort to take over Sprint is the latest of many moves toward consolidation in the highly competitive broadband industry,” notes the article. “In 2011, AT&T tried to buy its rival T-Mobile USA, a move that was blocked by the Justice Department because of antitrust concerns. Last year, Verizon scored a deal with a group of cable companies that agreed to sell it spectrum licenses to build its wireless network in exchange for allowing them to sell their cable services inside Verizon stores.”

Are partnerships and mergers good for wireless customers? “Opponents of mergers say they lead to fewer jobs, less competition and higher prices,” explains the article. “But analysts on Monday said that a potential Dish-Sprint merger may pose a greater challenge to AT&T and Verizon, which dominate the wireless industry and charge higher prices for their phone plans.”

While the Sprint Nextel bidding war moves forward, there has also been interest in wireless operator Clearwire. Sprint, the majority owner, was looking to take over Clearwire following a cash infusion from SoftBank. However, a few months ago Dish submitted a bid of $2.2 billion for a portion of the company.

“And on the heels of Monday’s news, Verizon offered $1.5 billion to buy spectrum from Clearwire, according to a person briefed on the company’s plans, who was not authorized to speak publicly because the plans were not yet official,” reports NYT. “If Dish Networks succeeded in a takeover of Sprint, it would be in a position to acquire Clearwire more quickly than Sprint/SoftBank, because a foreign company that tries to buy more than 25 percent of a telecom company must undergo regulatory review.”

In an interview with the Wall Street Journal, Ergen explained that the Sprint Nextel bid is part of a larger vision, one in which the future of mobile video is more affordable to consumers. He hopes that Dish will be able to beam live TV to mobile devices without concern regarding mobile data caps.

“There is also a large percentage of Americans — as much as a third, Mr. Ergen estimated — who in the future will find it more efficient to get their home Internet over a wireless connection than through a wired one because they don’t have access to a superfast fiber-optic link,” reports WSJ. “For them, Mr. Ergen said, using a plastic bottle of Schweppes seltzer water as a stand-in for a cellphone tower, a combined Dish/Sprint could beam Internet service from towers to special antennas mounted on the roofs of people’s homes.”

While mobile video is currently expensive due to the high price of data packages, Ergen is planning for a future that involves transmitting live video more efficiently over airwaves that Dish controls.

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