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Dish Bids $25.5 Billion For Sprint

Dish Bids $25.5 Billion For Sprint

On Monday, Dish Network placed an unsolicited offer to buy Sprint for $25.5 billion which tops the current bid of $20.1 billion for a 70% stake from Japanese mobile company Softbank. This move is not necessarily a surprise given Dish made an unsolicited offer to purchase Clearwire. The main goal for Dish seems to be acquiring Clearwire's spectrum to compete against more effectively with the likes of AT&T and Verizon.

"Spectrum is crucial to the transaction, as it has been in the US wireless market recently, as DISH hopes to combine its current holdings with those of Sprint and Clearwire, and create a carrier whose spectrum depth of 230MHz will dwarf its rivals in the market," IHS Global Insight analyst Dexter Thillien wrote in an investor's note on Monday.

"The pay-TV company owns 45MHz of frequencies, split between 40MHz in the satellite 2GHz band and 5MHz in the unpaired E-block in the 700MHz band, which it acquired during the 2008 auction for $711 million. Coverage requirements means has to cover 35 percent of the population by mid-June, a condition it is likely to try to amend as part of its deal for Sprint. This would give the company spectrum in low, medium and high frequencies, with the 700MHz spectrum of special interest to DISH for differentiation, as it sees three segments with strong growth potential."

Dish Chairman Charlie Ergen seems confident the move offers the best possible combination for consumers. "The pipes are fairly clogged," Ergen said. "If you're going to have a lot of data, you better have a big pipe -- no one is going to have a bigger pipe than Dish Sprint."

"The Dish proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal," Ergen said in a statement. "Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined Dish/Sprint with a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal."

There has been a significant amount of consolidation in the wireless space in recent years as consumers continue to buy more smartphones. Wireless spectrum is a finite resource and regardless of which company successfully completes the bidding process, Sprint will ultimately come out on top.