US DTH provider Dish Network has launched a fresh bid to buy Clearwire on the eve of when the wireless wholesaler’s shareholders had been set to vote on a rival offer from Sprint.
Dish’s new US$4.40 bid trumps the latest US$3.40 proposal from…
US DTH provider Dish Network has launched a fresh bid to buy Clearwire on the eve of when the wireless wholesaler’s shareholders had been set to vote on a rival offer from Sprint.
Dish’s new US$4.40 bid trumps the latest US$3.40 proposal from Sprint, which was compelled to boost its offer by 14% last week following pressure from activist investors.
Clearwire’s shareholders were set to vote on Sprint’s offer on 31 May. However, this was pushed to 13 June as Dish commenced its tender offer with Jefferies as deal manager.
The satellite broadcaster has also lodged a US$25.5bn bid for Sprint as it looks to rival Japan’s Softbank for the third largest mobile operator in the US.
“The Clearwire spectrum portfolio has always been a key component to implementing our wireless plans of delivering a superior product and service offering to customers,” said Charlie Ergen, chairman and co-founder of Dish; the Denver-based company had already bid for Clearwire in January.
Dish has offered to buy all of Clearwire’s outstanding shares, but has said it would be satisfied with acquiring a minimum of 25%. As part of its offer, it wants Clearwire to terminate its funding arrangement with Sprint whereby the carrier is purchasing US$80m in exchangeable notes from the wireless internet provider every month.
In return, Dish has offered to provide funding to Clearwire on a similar basis to Sprint. The DTH provider is also looking to gain seats on Clearwire’s board.
Analysts at New Street Research said in a memo that Dish’s last minute move “seriously complicates” Sprint’s bid for Clearwire. The analyst firm speculated that, rather than acquiring Clearwire or Sprint, Dish is more interested in buying 40MHz of spectrum from Clearwire.
Dish has previously said it will need more than its current spectrum holdings to provide nationwide wireless services.
“We know they want 40MHz of spectrum and this revised bid could provide them with the leverage to get it,” said New Street. “The least bad option for Sprint / Softbank may be to allow Dish to acquire the spectrum they want.”
Clearwire’s share price has leapt by more than 20% overnight following Dish’s new offer. At 9:30am EDT, it was trading at US$4.25 – more than 21% higher than the previous close of US$3.51 – suggesting that the market does not expect Sprint’s US$3.40 offer to be approved tomorrow.
BTIG Research analyst Walter Piecyk believes the operator would have to raise its offer considerably higher.
He said: “Sprint could get the Clearwire deal done at US$5 but that might have just risen. Investors are still scratching their heads on why Sprint chose to randomly raise their bid for Clearwire to US$3.40 last week based on what appears to be technical reasons without actually talking to investors on whether that price would lead to a yes vote.”
“They would be wise to call [activist investor] Mount Kellett tonight and agree on a price for Clearwire.”
Dish and nTelos strike network deal
Last week Dish struck a deal with regional telco nTelos in its first partnership agreement to help deploy a terrestrial LTE network.
The two companies will co-develop a fixed-mobile broadband service within nTelos’ coverage areas, serving Virginia, West Virginia and portions of Maryland, North Carolina, Pennsylvania, Ohio and Kentucky.
The deal brings Dish closer to meeting strict regulatory milestones that govern the deployment of its network, as the satellite TV broadcaster becomes embroiled in a fierce bidding war for Clearwire and Sprint.
Dish was given regulatory permission to repurpose its satellite spectrum for pure terrestrial LTE back in December, but only on the condition that it constructs at least 70% of its new network within seven years.
Since then the company has been in talks with various US carriers while amassing a multibillion dollar war chest through the bond markets. Following months of speculation, it launched a US$25.5bn offer for Sprint in April in an attempt to scupper a takeover offer from Softbank.
Dish has been seeking to derail Softbank’s offer with claims that the foreign takeover would pose a risk to national security, particularly because of alleged ties with Chinese equipment manufacturers. However, after Softbank agreed to a number of concessions, the Committee on Foreign Investment in the United States (CFIUS) cleared the takeover on 29 May.
With the green light from CFIUS, Softbank has cleared one of its biggest hurdles to completing the deal, which still requires FCC approval and a shareholder vote on 12 June.
It has also recently emerged that Ergen has placed a US$2bn offer for spectrum held by satellite/terrestrial venture LightSquared, which is under Chapter 11 bankruptcy protection.
Financial details of Dish’s “Letter of Intent to pursue a strategic relationship” with nTelos were not disclosed.
Ergen said the deal will help deliver services to rural areas in the US, where the FCC estimates almost a fifth of households lack access to broadband.
“By working with nTelos, we believe we can create a service that simultaneously addresses the mobile and in-home requirements of rural residents, with the potential to serve as a model for how we can utilise spectrum more effectively while creating differentiated consumer offerings,” he said.
James Hyde, nTelos’ CEO, said the agreement demonstrated his company’s commitment to finding innovative ways to serve customers.
“Our relationship with Dish puts us at the forefront of that convergence and creates an opportunity for nTelos to establish itself as a thought leader among wireless service providers,” said Hyde.
The regional operator is headquartered in Waynesboro, Virginia, and provides voice and data coverage to around 451,000 subscribers. Its licensed territories have a total population of approximately 7.9 million residents, of which its network is able to cover around six million.
The company also provides exclusive wholesale services to Sprint in Virginia and West Virginia.
Whether it is acquired by Softbank or Dish, industry observers have suggested a better capitalised Sprint could look to acquire nTelos – or other regional players – to lessen its reliance on roaming agreements.
