Analyst View: Dish Network offers $25.5 billion for Sprint Nextel

Dish Network Corp on Monday offered to buy Sprint Nextel Corp for $25.5 billion in cash and stock, challenging Japan's SoftBank Corp for the No.3 U.S. wireless service provider.

Sprint shares jumped about 13 percent before the U.S. market open on Monday.



"We believe Dish has been trying to get into mobile for a while. There have been noises that it was interested in Metro and T-Mobile as well. The offer represents roughly five times Sprint's 2013 EBITDA based on consensus numbers. The offer from Dish appears credible since it has the financing lined up and can justify a higher price than Softbank's offer because of the synergies with its existing operations in the U.S."


"This is a surprise move. I didn't see this coming.

"Dish would get really good synergies from a deal with Sprint because of its existing satellite TV business and holdings of wireless spectrum.

"When the Softbank deal came to light last year, we felt it was mainly about injecting Sprint with more capital to invest in upgrading its network. Softbank also brought to the table its experience in 4G in Japan. We know Softbank is under management of an opportunistic and ambitious CEO so it will be interesting to see if he comes up with a counter offer.

"There is a realization among the smaller players in the U.S. market that they need to merge or partner to compete against Verizon and AT&T, which are both so strong commercially and in terms of network quality.

"For Sprint, they had been in the doldrums after their disastrous efforts to merge networks of Nextel. So I think any deal - Dish or Softbank - would lead to a stronger Sprint that is better positioned to take on the top two players. Sprint's strategy on unlimited data in its mobile plans would be helped by having more spectrum and Dish would bring that."

(Reporting by Leila Abboud in Paris; Compiled by Tiffany Wu)