Deals

Dish offers $25.5B for Sprint, outbidding Softbank by $5B to become a wireless player

In a bold and surprising move this morning, Dish Network made a $25.5 billion offer to purchase Sprint — a takeover that would satisfy the satellite TV company’s wireless ambitions, while also squashing takeover efforts by Japan’s Softbank.

Dish’s offer is 13 percent more than the $20.1 billion Softbank offered for a 70 percent share of Sprint last year. The big difference: Dish’s deal would be a complete takeover, while Softbank’s would leave Sprint as a separate public company, the Wall Street Journal reports.

The move follows an informal bid by Dish for Clearwire earlier this year. Sprint offered to buy out Clearwire for $2.2 billion back in December, but Dish jumped in with its own $5.5 billion offer. It seemed like Clearwire shareholders were leaning towards Dish’s higher offer, but then Clearwire ended up taking $80 million from Sprint to stay afloat, which indicated that they were back to considering  Sprint’s deal.

By buying Sprint, Dish would have access to both Sprint and Clearwire’s precious wireless spectrum, and it would have the country’s third-largest cellular network. Dish already has more than $9 billion worth of wireless spectrum, and it won approval from regulators last December to use it. But building a network of its own would take forever and likely cost more than what it’s offering for Sprint.

The deal would enable Dish to offer a similar variety of services as competing cables companies: TV, home phone, and Internet service. Charles Ergen, Dish’s chairman, says customers would be able to get Internet access from Sprint’s network via antennas on their roof.

If Dish successfully kills Softbank’s deal with Sprint, Ergen says that it would pay off the $600 million breakup fee owed to the Japanese company.

The real question for Sprint’s shareholders: Are they willing to go with a suitor unproven in the wireless industry? Dish may have a bunch of useful spectrum, but it doesn’t yet have any experience in the mobile world. Softbank, on the other hand, has 32 million mobile subscribers in Japan.

Illustration: Tom Cheredar/VentureBeat