Dish’s Clearwire bid may need to be upped


Dish NetworkDish’s last bid on the table for Clearwire was in December, offering $2.2 billion to buy 40 megahertz of prime wireless broadband spectrum from it and, separately, to buy Clearwire stock for $3.30 a share. The share price topped Overland Sprint’s $2.97 per share bid, which Sprint offered in a deal to buy the half of Clearwire stock that Sprint doesn’t already own.

Clearwire said on 2/27 it has tapped $80 million of monthly financing from Sprint Nextel, but said it’s still considering Dish’s bid to buy its frequencies and stock. The deal included financing arrangements for network construction that included $80 million in debt notes that Sprint would grant Clearwire each month.

The move does lessen the possibility of Dish reaching a partnership deal on wireless broadband service, at least without putting more money on the table.

Accessing the Sprint financing “is putting the Dish offer at risk, which suggests that the [Clearwire] special committee still considers the Sprint offer as the best offer on the table,” wrote Jonathan Chaplin, of New Street Telco, in a research note to clients Wednesday. “We would not be surprised to see a modified proposal from Dish.”

Clearwire’s board of directors has backed the deal, but a special committee is reviewing the unsolicited bid Dish made in December. Clearwire had previously avoided using the Sprint financing while the special committee reviewed Dish’s deal, reports The Denver Business Journal.

Charlie Ergen, Dish’s founder and chairman, wants to start a wireless network of its own to bundle with its satellite TV offering it has with 14 million U.S. subscribers. Ergen has said it wants a wireless industry partner to avoid the expense of building a network from scratch.

Sprint’s business is a candidate for a partnership. Its access to frequencies for high-speed wireless are limited unless it uses the spectrum Clearwire controls.

Ergen said recently that, if Sprint gains control of Clearwire’s 2.5 gigahertz spectrum, the prospects of partnering with Sprint lessen.

But if Dish wins control of the frequencies, Cleawire would get $2.5 billion or more investment from Dish, and Sprint would benefit by having its 4G network build costs defrayed by a partnership with Dish, Ergen said on a 2/20 conference call.

See The Denver Business Journal story here.

RBR-TVBR observation: At one point, Ergen was planning on selling that service at the Blockbuster brick-and-mortar stores Dish owns. In December, Blockbuster began selling mobile phones in its stores as a test for Dish’s planned entry into the wireless biz. “Blockbuster Mobile” works with carriers such as Verizon Wireless, Sprint Nextel and T-Mobile. The business is now limited to online via the Blockbuster website.