Dish Network's (Nasdaq: DISH) bid to acquire wireless broadband provider Clearwire (Nasdaq: CLWR) for a deal worth $3.3 billion is likely an attempt by CEO Charlie Ergen to forge a partnership with Sprint (NYSE: S), Wall Street analysts said Wednesday.
Ergen (Image source: Dish)
While the bid of $3.30 per share that Dish announced late Tuesday tops the offer of $2.97 per share that Sprint made for Clearwire in December, it's highly unlikely Dish's bid would win approval from Clearwire shareholders, since Sprint already owns a 51 percent stake in the WiMax provider and has said it would oppose the Dish offer.
"Dish could be looking to use this as a lever in a negotiation with Sprint, and thereby T-Mobile as well, on a network sharing agreement, though we believe Dish has been wary of dealing with Sprint in the past and this seems like a bad way to start a long term agreement," J.P. Morgan analyst Philip Cusick said in a research note.
In December, the FCC approved a plan from Dish to use wireless spectrum it acquired from TerreStar and DBSD North America to launch a wireless phone and high-speed Internet service. Dish announced after it won FCC approval that it would "consider its strategic options," and it floated the possibility of partnering with other wireless providers.
"It's hard for me to imagine that what Dish wants is Clearwire. It could be a chess move to get a partnership with Sprint," Sanford Bernstein analyst Craig Moffett told Bloomberg.
Time Warner Cable (NYSE: TWC) and Comcast (Nasdaq: CMCSA) invested in Clearwire in 2008, and previously marketed mobile hotspot devices to cable subscribers that delivered high-speed Internet access through Clearwire's WiMax network. But the companies stopped selling the mobile hotspot devices after striking spectrum, marketing and innovation deals with Clearwire rival Verizon (NYSE: VZ) Wireless in late 2011. Time Warner Cable sold its stake in Clearwire in October, and Comcast has also said it plans to sell its Clearwire shares.
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