As if we needed reminding what the argument is about between Sprint and Dish in the US, Dish has trumped the improved Sprint offer for the remaining Clearwire shares by an entire dollar, offering $4.40 for all and every share of Clearwire. It is all about the spectrum that ClearWire holds and its potential for building a cellular network far in excess of any that are out there in the US.
The Dish offer is 29% ahead of the $3.40 per share Sprint proposal that was supposed to see off the complaining minority shareholders. All it has done is focus the minds on the real reason for Softbank’s interest in Sprint and the offer that Dish has made for Sprint.
The problem is that Sprint and Clearwire spectrum are really part of a pair. Whoever ends up owning it, needs the spectrum and the existing customer base and revenue steam of Sprint in order to build the next major US cellular and broadband network ‘ one to rival AT&T and Verizon. So either someone like Dish has to buy Clearwire, and work with Sprint, or someone has to buy both.
Dish made this clear when it said , ‘Dish remains committed to a commercialization of Clearwire’s significant portfolio of wireless spectrum assets which will enable the combined company to provide a superior product and service offering to its customers.’
In pursuit of that Dish improved its offer, took some of the conditions off the table from its previous offer and added a few more in the event that it becomes a major minority shareholder, with Sprint owning the rest. Dish wanted to get this offer on the table prior to the Clearwire stockholders meeting tomorrow.
Dish has offered $800 million of funding as part of the deal, with an easy coupon if this is convertible into Class A shares, and a punitive one if Sprint blocks that. It also said it does not have to buy the spare spectrum assets it had previously identified. Dish says that all bets are off if it doesn’t get 25% or Sprint’s agreement to some further minority protection and governance rights and more seats on the board. Dish said that if it could get the protection it wants, it would take only 12.5% and still offer the cheap funding.
Dish has been the only company so far to put its money where its mouth is and back its discomfort at Sprint’s terms of bidding for the rest of Clearwire, with some cash. That doesn’t mean others won’t enter the fray as it develops. But clearly whomever ends up controlling the Clearwire assets is now set to build the third cellular major in the US, even if it is a combination of companies. The struggle between Vodafone and Verizon over the former’s stake in Verizon Wireless, shows how difficult it is to get rid of a partner in a major US cellular operation, once it starts to be successful, and that fight will be serving to remind everyone to push for as exclusive a deal as possible, before building out that Clearwire spectrum.