Softbank continued its push to convince Sprint Nextel shareholders that its proposed $20.1 billion acquisition of a 70% stake in the carrier is superior than a competing offer from Dish Network, with the latest salvo involving a sponsored report undercutting the proposed value of the Dish bid.
The sponsored report, prepared by Franklin Court Partners managing director Scott Chandler, claims that Dish Network’s $25.5 billion offer to acquire a 68% stake in Sprint Nextel provides unreasonable assumptions in proclaiming its true value. Most of the findings target Dish Network’s cost savings based on operational synergies, which has been core to Softbank’s claim that it is a better suitor for Sprint Nextel as it already operates in the mobile telecommunications industry.
The report notes that Dish’s “projected cost synergies are predominately non-network based and are far higher than non-network synergies projected by acquirers in other large wireless transactions.” Chandler also found that the claimed synergies will be harder to achieve as Dish and Sprint Nextel would bring together two companies currently operating in different industry segments.
Specifically, the report claims Dish Network’s projection of 70% cost synergies in the first year are “more than twice the rate in other wireless mergers;” that Dish Network fails to account for up to $3.5 billion in integration costs; that Dish Network’s claimed revenue synergies are “unreasonably large, far exceeding claims made in prior wireless transactions; and fails to take into account the impact of saturation in the pay-TV and wireless market will have on claimed synergies.
To further support its claims, Softbank also set up a website highlighting its claims: softbanksprinttransaction.com. Late last month, Softbank Chairman and CEO Masayoshi Son held a press conference where he laid out the superiority of the Softbank offer as well as took time to jab at Dish Network’s offer.
Softbank said it continues to anticipate the closing of the Sprint Nextel deal by July 1.
Not to be outdone in the website department, Dish Network has also set up a site bolstering its claim to offer superiority at: completedishsolution.com. Dish Network Chairman Charlie Ergen countered the digs by Softbank in an interview last week telling USA Today: “We are an American company, and the modernization of Sprint’s network will have to be done from the U.S. You have to climb the towers here, and you’ll have to have U.S. employees who speak English. Operations command control will be in America. That’s good for jobs. It doesn’t mean that the other guys are bad. It’s just that we have an advantage.”
Dish Network’s interest in Sprint Nextel followed approval for the company to use 30 megahertz of spectrum in the 2 GHz band to offer terrestrial wireless services. Many observers note that Dish Network is not likely to try to fund a deployment using those resources on its own. As part of its approval process, Dish Network will have to cover 40% of the country’s population within four years and 70% of the market within 10 years. Ergen told attendees at last year’s PCIA event that the company would be prudent in entering the mobile telecommunications space and that it would not be “suicidal” in its attempt.
The spat between Softbank and Dish Network is also impacting the future of Clearwire, which Sprint Nextel put a $2.2 billion bid to acquire the remaining stake in following the investment offer from Softbank. Dish Network offered up its own take-over offer for Clearwire shortly after, though Clearwire has recently thrown it support behind the Sprint Nextel offer.
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