Sprint Nextel sure has a lot of suitors these days. Earlier in the year, it was being courted by Japanese company SoftBank to the tune of $20.1-billion. Satellite television provider Dish Network has trumped the offer, proposing a $25.5-billion merger. The deal would have huge ramifications for the mobile communications, telecommunications, and television industries, and is indicative of where these businesses are possibly heading. Here’s a clip from Dish’s press release:
DISH is offering Sprint shareholders a total consideration of $25.5 billion, consisting of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7.00 per share, based upon DISH’s closing price on Friday, April 12, 2013. This consists of $4.76 per share in cash and 0.05953 DISH shares per Sprint share. The cash portion of DISH’s proposal represents an 18% premium over the $4.03 per share implied by the SoftBank proposal, and the equity portion represents approximately 32% ownership in the combined DISH/Sprint versus SoftBank’s proposal of a 30% interest in Sprint alone. Together this represents a 13% premium to the value of the existing SoftBank proposal.
Thanks to advances with mobile phones, tablets, and mobile broadband, mobile video demand has been surging for the last few years. The video quality and content choices are getting better and better all the time. For companies that are primarily in the video content businesses, owning and controlling mobile broadband services is a potentially powerful thing. Dish is known for giving its customers a nice selection of commercial-free content for phones and tablets.
Then there’s the matter of spectrum. Dish has acquired large chunks of mobile broadband spectrum at an estimated $9-billion. While many telecom companies sit on spectrum purchases, they eventually become use-it-or-lose-it assets. Sprint’s service is…clunky in several areas of America and the spectrum could be used to improve the network over the long haul.
Are any of you Dish or Sprint customers? How do you feel about a proposed merger between the two companies?