Does This Sprint Suitor Have a New Gameplan?
Both Softbank Corp. and Dish Network Corp. (NASDAQ:DISH) continue to spar for bragging rights in Sprint Nextel Corp’s (NYSE:S) bidding race. Reuters reported on Tuesday that the two companies are still competing for a potential Sprint takeover, each offering different incentives for the U.S. wireless carrier. While Softbank proposes a $20 billion deal for a 70 percent stake in Sprint with an emphasis on the speed of the close of the deal, Dish Network offers a $25 billion bid and a promise that a Dish deal would be good for American jobs.
Though Sprint’s major shareholders have agreed to meet with SoftBank President Masayoshi Son this week to discuss negotiations, there is skepticism over whether Softbank will be able to sell its deal. Many believe Softbank will have to raise its bid. Two big Sprint shareholders have publicly voiced their doubt. However, the Japanese mobile operator also has some significant support on their side. Reuters reported on April 29 that Intel Corp (NASDAQ:INTC) Chief Paul Otellini penned a letter to the Federal Communications Commission, expressing his support for Softbank’s bid. Otellini explains, “We need this competition in the wireless space as the ATT/Verizon model is not giving that to consumers at this time,” and an addition of a third competitor to the market would be beneficial to consumers.
Nevertheless, Softbank still has its fair share of obstacles to face. Though President Son promises a July 1 close to the deal warning that Dish Network could take as long as 2014 to close, many still argue that Dish has a better deal on the table, including Robert Lynch, the director of research for Westchester Capital Management. Dish Network Chairman Charlie Ergen also put forth a compelling argument last week that a Dish deal would be better for U.S. jobs, which Son later dismissed.
One significant advantage Softbank has over Dish is its expertise in the latest mobile technology, an important asset as Sprint is currently “spending billions of dollars upgrading its network with high-speed wireless service,” Reuters reports. It is hard to deny that while Dish’s deal may be more money up front, Softbank is ultimately better equipped to use its experience of introducing high-speed technology in Japan and help Sprint with its upgrade. The nearing June 12 shareholder meeting promises to provide more answers.
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