The battle of Sprint Nextel’s future continues unabated between initial suitor Softbank and late-comer Dish Network, with both again pushing their offers as superior, while taking swipes at their rival.
Softbank this week again bolstered its online support for the deal, with a new website touting the benefits of its proposed $20.1 billion acquisition of a 70% stake in Sprint Nextel to the United States. Highlights included stimulating the U.S. economy; creating U.S. jobs; and benefitting consumers through greater competition and innovation.
Softbank also looked to assuage concerns regarding claims over both foreign ownership of a nationwide telecommunications provider and ties to Chinese infrastructure vendors. Softbank has reportedly told government regulators that it would allow them to approve one of the 10 board members set to oversee the operations in an attempt to provide transperancy. This was seen as specifically placating concerns over Softbank’s use of Chinese vendors for its Japanese-based network as well as its ownership stake in Chinese e-commerce site Alibaba.
Those concerns were highlighted by Dish Network, which attempted to downplay Softbank’s newest benefit claims.
“The contrast is clear: Dish does not operate infrastructure dependent on Chinese equipment; Dish does not own nearly a third of the Chinese e-commerce giant, Alibaba; Dish was not affiliated with a company that admitted bribing Chinese officials for telecommunications contracts,” said Stanton Dodge, EVP and general counsel at Dish in a statement.
In that statement, Dish also called into question the role Clearwire will have with Softbank, as the U.S. carrier does have some equipment from Chinese vendor Huawei deployed on its network. Sprint Nextel is currently looking at acquiring the remaining stake in Clearwire.
The U.S. government has raised questions in the past regarding the use of network equipment from Chinese vendors citing their close ties to China’s military and concerns over the potential for spying. It was reported that Sprint Nextel was forced to bypass Huawei as a vendor for its $5 billion Network Vision program because of pressure from the U.S. government.
For its part, Dish has also put in a bid to acquire Clearwire, though Clearwire has thrown its support behind a recently bolstered acquisition price from Sprint Nextel. However, should Dish eventually win out in acquiring Sprint Nextel, it would also have to juggle the Clearwire/Huawei issue.
Analysts also looked to downplay Dish’s efforts, noting momentum in the deal continued to head in the direction of Softbank.
“We regard Dish’s animated behavior on national security issues related to Softbank/Sprint/Clearwire as confirmation that government action is nearing and as representative of a company desperately trying keep its $25.5 billion counteroffer for Sprint in play,” said Jeff Silva, senior policy director of telecommunications, media and technology at Medley Global Advisors. “[The Department of Justice] already has cleared Softbank/Sprint/Clearwire on antitrust grounds.”
For its part, Sprint Nextel looks to be managing both sides effectively, moving forward on the Softbank plans that are set for a shareholder vote on June 12 and potential closing on July 1, while also further engaging in talks with Dish.
This week, Sprint Nextel said it had received all “necessary state regulatory approvals” for the Softbank deal, one of many steps needed to close on the transaction. The California Public Utilities Commission was the final state to approve the proposal, with a total of 23 states and the District of Columbia all having given their approval.
While not favoring one side over the other, the Sprint Nextel noted that the CPUC found the Softbank investment “will benefit consumers and the telecommunications marketplace.” Sprint Nextel added that the “companies remain committed to completing their transaction on the terms previously disclosed,” though a special committee set up by Sprint Nextel to go over the proposals has yet to officially endorse either offer.
The Softbank proposal is at day 175 of the non-binding 180 day timeline from the Federal Communications Commission in reviewing the deal.
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