Dish Network Corp (NASDAQ:DISH) threw a wrench into Softbank Corp’s plan to buy Sprint Nextel Corporation (NYSE:S) by offering a higher price for the company. Softbank had planned on taking over 70% of Sprint Nextel in a deal valued at $20 billion. The offer from Dish Network Corp (NASDAQ:DISH) values the entire company at $25.5 billion. Analysts and merger arbitrage traders are expecting Softbank to raise its offer and not walk away.
Dish Network Corp (NASDAQ:DISH)’s proposal is really a shot across the bow of Verizon Communications Inc (NYSE:VZ) and AT&T Inc. (NYSE:T). Sprint is the nation’s third-largest wireless carrier after these two. A combination of Dish Network Corp (NASDAQ:DISH) and Sprint would combine television, high-speed Internet and cellphone services into one package. This is something that Verizon Communications Inc (NYSE:VZ) and AT&T don’t offer and would give Dish Network Corp (NASDAQ:DISH)-Sprint a first-mover advantage.
Telecom industry shakedown
The other big news in the industry includes the proposed merger of Deutsche Telekom’s T-Mobile and MetroPCS Communications Inc (NYSE:PCS). If you’ll remember, AT&T Inc. (NYSE:T) tried purchasing T-Mobile back in 2011 but antitrust challenges led to the falling apart of such a deal.
Verizon Communications Inc (NYSE:VZ) could soon be tied up in its own buyout saga. There was previous speculation that that Verizon Communications Inc (NYSE:VZ) could team up with AT&T to buy Vodafone Group Plc (ADR) (NASDAQ:VOD), where Verizon Communications Inc (NYSE:VZ) would acquire the 45% stake Vodafone Group Plc (ADR) (NASDAQ:VOD) currently owns in its U.S. operations.
Billionaire David Einhorn, a Vodafone shareholder, has noted that “with Verizon Communications Inc (NYSE:VZ)’s increasing dependence on Verizon Wireless, it wouldn’t surprise us [Greenlight Capital] if Verizon decided to buy all of Vodafone to gain full ownership of Verizon Wireless.”
While Sprint might be the growth story of the industry, Verizon is one of the stable dividend-paying operators in wireless communications, with pretty impressive growth opportunities of its own. What’s more is that I love Verizon more than AT&T.
Verizon pays a 3.9% dividend yield and only has a beta of 0.45. The other big plus is that fact that analysts expect Verizon to grow EPS by an annualized 8% over the next five years, compared to AT&T’s 5.5%.
AT&T also fell behind Verizon when it failed to purchase T-Mobile. Verizon has been actively snatching up spectrum thanks to its purchases of cable spectrum from Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc (NYSE:TWC). The deals could easily double Verizon’s capacity and allow the company to provide services at a higher speed.