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Dish's Ergen on Sprint Deal: But We Speak English!
SoftBank Shoots Down Dish's Offer, Dish Takes Low Road
by Karl Bode 08:34AM Thursday May 02 2013
While Japanese carrier SoftBank this week allowed Sprint to get more detail from Dish in regards to their $25.5 billion acquisition offer, SoftBank obviously doesn't think too much of the idea. Speaking at a press conference this week in Tokyo, SoftBank CEO Masayoshi Son tried to argue that SoftBank shouldn't have to raise its bid for Sprint because Dish's bid for the company is "incomplete and illusory." The CEO argued that once you take into account Dish's share dilution, incremental debt, cash, outlay at the SoftBank/Sprint breakup fee, the Dish offer falls apart:
quote:
Click for full size
Son is "very confident" that SoftBank offers "superior value" with its bid, despite the fact that Dish's is larger on paper. Son claims that Dish's share dilution, incremental debt, and cash outlay haven't been taken into account in the $7 figure, and in total should reduce the bid's value by 25 cents a share. A further 9 cents, Son argues, should be taken off because of the $600 million breakup fee payable to SoftBank if Sprint cancels the deal, along with $400 million in transaction expenses.
As Such SoftBank is trying to argue that when you add all of this up, Dish's offer is actually worth $6.31 a share, next to SoftBank's $7.35 -- in addition to the fact that SoftBank plans to close their deal one year earlier than Dish would. SoftBank also chided Dish for having no experience in wireless, and "no understanding whatsoever about the real situation of Sprint." The company will still probably have to increase their offer, but at least they're interested in making it entertaining.

Meanwhile Dish's Charlie Ergen decided to take the low road when he responded to Son's comments, proclaiming that Dish was clearly the better choice for Sprint because they "speak English:"
quote:
"We're offering a higher price. That's just math," he said. "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."
The idea that with a 70% ownership stake SoftBank wouldn't use existing American workers on American towers is absurd, but the claim will help to stoke fears among the xenophobic -- a card AT&T has already tried to play.

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kapil
The Kapil

join:2000-04-26
Chicago, IL

Dish doesn't want Sprint.

It wants Clearwire. Or Clearwire spectrum to be precise. Softbank wants Sprint to enter the U.S. market and of course it wants Clearwire spectrum too. My money is on Softbank begrudgingly sweetening the deal slightly to fend off Dish.
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openbox9
Premium
join:2004-01-26
Germany
kudos:2

Re: Dish doesn't want Sprint.

said by kapil:

My money is on Softbank begrudgingly sweetening the deal slightly to fend off Dish.

We'll see a couple more bidding rounds before this dance is over.
whiteyonenh

join:2004-08-09
Keene, NH

Huh...

Is anyone else finding Dish's bid hilarious, especially this part: "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."

Firstly, Sprint has used Ericcson for a few years now in the running/upgrading/maintenance of the network, they've outsourced that for a while now. Why would SoftBank, or any other company for that matter, decide to bring it back in-house? Obviously Sprint's financial department has done the math, and has seen that it's much more economical to do this (outsource to Ericcson).

»news.cnet.com/8301-1035_3-10283799-94.html

Secondly, Dish has no business running a mobile network, what experience do they have? I'd be very nervous to see this go through, to the point of probably switching off of Sprint's network until they've proven they can actually not screw it up. (I'm currently on an MVNO called Ting)

So based on those two factors, in my mind, Dish is at a very serious disadvantage when compared to SoftBank, and I'd much prefer it if Charlie Ergen would keep his idiotic mouth shut, and his money grubbing hands off of Sprint. I have much more faith in SoftBank actually not screwing up, and making Sprint into a real competitor to the likes of AT&T and Verizon.
kem09030

join:2004-11-29
Rushville, IL

Re: Huh...

One more factor to consider is the huge amount of debt a combined Sprint/Dish would have. With the amount of debt they would have I don't think much would be done to the network for a few years. Waiting a few years to do anything in the wireless industry is disastrous as things are still evolving rapidly.

I do think a Softbank deal is better for the long-term survival of Sprint due to the debt equation. Softbank also has experience running a wireless network and will have economies of scale. Not saying Dish couldn't figure out running a wireless network but at this juncture with 4G being deployed it would likely slow things down a bit.

Hall
Premium,MVM
join:2000-04-28
Germantown, OH
kudos:2

1 recommendation

said by whiteyonenh:

Is anyone else finding Dish's bid hilarious, especially this part: "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."

Hmmm, next time I call Dish for account or technical support and "Mary" or "Jack" answer in Indian-accented, UK English, I'll tell them to transfer me to a "U.S. employee who speaks English".

asdfdfdfdf

@myvzw.com
I agree. Softbank is far more likely to make sprint/clearwire into a successful disruptive force in the market than dish.

jfleni

@bhn.net
This country (Belgium) has been of the very near verge of splitting in two (or even three) for more than a half-century, so the fevered dreams of copyright loot are not just a nightmare, but a sci-fi fantasy.
TBBroadband

join:2012-10-26
Fremont, OH
Reviews:
·AT&T U-Verse
·MegaPath
You don't need experience in running a company to own it. And you can always find someone that could and do a better job than the current CEO- especially with his latest comments on raising rates and fees. Raising rates and fees is something that is NOT going to help Spent nor Softbank in the long run. Lowering those prices and actually being a true player is the only thing that will help them.
kem09030

join:2004-11-29
Rushville, IL

Completely different topic

But just as important is Sprint is changing coverage in CO, KS, and OK. Just wanted to give a heads up to those that travel through those areas frequently. Pretty substantial reduction along I-70.

»support.sprint.com/support/artic···gechange

inteller
Sociopaths always win.

join:2003-12-08
Tulsa, OK

Re: Completely different topic

WHAT amount of insanity is that?

SrsBsns

join:2001-08-30
Oklahoma City, OK
said by kem09030:

But just as important is Sprint is changing coverage in CO, KS, and OK. Just wanted to give a heads up to those that travel through those areas frequently. Pretty substantial reduction along I-70.

»support.sprint.com/support/artic···gechange

That's just Sprint getting rid or losing partner coverage that was once considered home coverage. You will still get service in that area its just considered roaming now.

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

Re: Completely different topic

Wow.. Talk about getting screwed over.

There is a limit to the number of minutes (800 minutes of use) and megabytes of data (300MB) that can be used in roaming areas for postpaid customers and 400 voice minutes and 100 megabytes of data for Sprint As You Go customers.

Most people could care less about the voice minutes, but WTH is up with the data?
kem09030

join:2004-11-29
Rushville, IL

Re: Completely different topic

I would guess voice is fairly popular across that area. It can be pretty boring going across that area and sometimes you need to talk to someone to break up the monotony.
rahvin112

join:2002-05-24
Sandy, UT
Given the area they might be lucky to have 1 person per 10 square miles. Besides I-70, there is probably less than 5000 people living in that entire region.

It's very sparsely populated and it's probably some sub-carrier region that a local carrier owns and sold their tower access to both sprint and verizion at an annual fee. Sprint probably punched the numbers and realized it would just be cheaper to handle it with a roaming agreement rather than a flat network fee. I'm honestly surprised they carried that rural of an area that long. There are areas in my state with probably triple the population density that have never been part of sprint.

tc1uscg

join:2005-03-09
Clinton Township, MI
said by Simba7:

Wow.. Talk about getting screwed over.

There is a limit to the number of minutes (800 minutes of use) and megabytes of data (300MB) that can be used in roaming areas for postpaid customers and 400 voice minutes and 100 megabytes of data for Sprint As You Go customers.

Most people could care less about the voice minutes, but WTH is up with the data?

Doubt you would notice. It would take you a month to send/Rcv a 300mb file with the speedy speed Sprints 3G network is anyway.

skeechan
Ai Otsukaholic
Premium
join:2012-01-26
AA169|170
kudos:2

Ergen looks more and more like Cuban every day

...a media whore who needs to do the world a favor and set himself on fire.
--
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King P
Don't blame me. I voted for Ron Paul
Premium
join:2004-11-17
Murfreesboro, TN

Re: Ergen looks more and more like Cuban every day

I would watch that!

skeechan
Ai Otsukaholic
Premium
join:2012-01-26
AA169|170
kudos:2

Re: Ergen looks more and more like Cuban every day

But Dish would be late with the negotiation so the channel wouldn't come on the air until 15 minutes into the program.
--
Nocchi rules.

tc1uscg

join:2005-03-09
Clinton Township, MI
said by King P:

I would watch that!

DirectTV - Pay preview only. Intro pricing, $4.95

FerdZiffel

@cableone.net

Dish deal

Regarding debt, if Ergen scores Sprint he sells DISH to Direct TV.

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

Re: Dish deal

said by FerdZiffel :

Regarding debt, if Ergen scores Sprint he sells DISH to Direct TV.

Can't. That would create a monopoly. Unfortunately, that didn't stop XM and Sirius Satellite Radio from combining.

Hall
Premium,MVM
join:2000-04-28
Germantown, OH
kudos:2

Re: Dish deal

said by Simba7:

Can't. That would create a monopoly. Unfortunately, that didn't stop XM and Sirius Satellite Radio from combining.

Do you always contradict yourself like that ?

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

Re: Dish deal

said by Hall:

Do you always contradict yourself like that ?

Yep. *grin*

But, truthfully, if you have enough money, lobbyists, and senators/congressmen(women) in your pocket, you can pretty much write your own rules and laws.
rahvin112

join:2002-05-24
Sandy, UT
Though it appears that way on face value the XM/Sirrus thing was an exception, not the rule. They presented hard evidence to the government that if they weren't allowed to merge they'd both be out of business because neither could survive. They had to combine resources to compete against terrestrial radio (which has broad coverage and transmission ranges).

I don't think you will see the same concessions on Dish/DirectTV, they are both profitable companies with huge numbers of subscribers each. The competition they provide each other allows rural prices to stay low. If you allow them to merge they'll jack up prices in rural areas without competition to give price concessions in urban areas.

In summary I don't think he's wrong, the Fed's already poo-poo'd early discussions Dish/DTV had a few years back and basically said they'd never allow it.

Simba7
I Void Warranties

join:2003-03-24
Billings, MT

Re: Dish deal

said by rahvin112:

Though it appears that way on face value the XM/Sirrus thing was an exception, not the rule. They presented hard evidence to the government that if they weren't allowed to merge they'd both be out of business because neither could survive. They had to combine resources to compete against terrestrial radio (which has broad coverage and transmission ranges).

Ahh.. That would make sense.

Of course, the recording studios want how much in royalties to transmit "their" music? They also said, some years back, that terrestrial radio stations were "pirating their content".

Anyway, I wonder if Dish/DTV would try to push this argument if they were to merge.. and get laughed at.
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rahvin112

join:2002-05-24
Sandy, UT

Re: Dish deal

Terrestrial radio is exempt from royalties. That they make internet and satellite radio pay is IMO a travesty of justice. There is far too much lobbying power by big radio conglomerates, which ensures that terrestrial radio is never charged royalties. Because of that, along with the wide distribution of rebroadcast towers throughout the US the only people that subscribe to Satellite are those that can afford the luxury and people that are on the road constantly (usually both). XM/Sirius combined I don't think will ever get to even 1/10 the number of subscribers that Dish has. (I think it was around a million subscribers each when they combined).

Given that they are price constrained by terrestrial radio there is no competitive reason to have two sat providers. As I said, the provided some pretty stark numbers when they asked the Fed's for permission to merge (it was actually a strict requirement of their broadcast license that they were never allowed to merge). From what I read of the numbers they had basically exhausted their ability to compete with terrestrial radio. They figured without the merger the one that didn't shut down wouldn't survive the wind down period and the expenses of trying to capture the subscribers. They needed both subscriber pools with minimal loss to even have enough money to keep going. Particularly given the costs of putting a bird in orbit or renting space along with the royalties.

Much of the problem was due to the royalty rates they were forced by congress to pay for music. They might have survived as independent entities were it not for those ridiculous rates. When the FCC granted their licenses those rates didn't exist, and I don't think anyone could have predicted costs that excessive. When you have to pay 9% gross revenue in royalties you simply can't effectively compete against an entity paying nothing.
Happydude32
Premium
join:2005-07-16
kudos:1

Re: Dish deal

quote:
XM/Sirius combined I don't think will ever get to even 1/10 the number of subscribers that Dish has. (I think it was around a million subscribers each when they combined).

Sorry, but you are waaaaaaaaaaaaaaaayy off. XM hit one million subscribers in October of 2003. I remember the 'March to a million' campaign. Sirius broke one million subscribers a little over a year later in December of 2004. When Sirius and XM merged in July 2008 they had a combined 18 million subscribers. The latest count is 24.4 million subscribers for Sirius XM, which is almost twice as many as Dish Network and 4 or 5 million more than DirecTV.

All of the numbers I posted can be verified by going to the News Room portion of Sirius XMs website.
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amarryat
Verizon FiOS

join:2005-05-02
Marshfield, MA

Wireless phone co or ISP

I'd rather see Sprint competing with Verizon, AT&T, and T-Mobile than Dish competing with Comcast etc.

I hope Softbank sweetens the deal just a bit to make it a nobrainer.