DISH Network Corp. (NASDAQ:DISH) reported its Q4 2012 results with a 33% decline in net income and also threw light on its wireless plan as the company looks to strike the Clearwire Corporation (NASDAQ:CLWR) deal. The company Chairman, Charles Ergen, stated that the next strategic move would depend on the regulators decision on the Sprint Nextel Corporation (NYSE:S) – Softbank deal. However, Ergen finally unravels the actual intention behind pursuing Clearwire in a counterbid, saying that satellite provider envisions to partner with Sprint which would assist it to offer mobile wireless service.
Clearwire has formed a special committee to assess the offers from both Sprint and Dish. The counterbid made by Dish raised doubts regarding the second largest satellite service provider’s intention on how it plans to use its spectrum.
The story unravels
DISH Network Corp. (NASDAQ:DISH) has plans to diversify from its existing pay-TV business which has been experiencing hard time with intensifying competition from other cable companies, internet and telecom providers. The satellite provider recorded a profit of $209.1 million in the last quarter, down 33% from last year’s comparable quarter as cost of acquiring new customers increased. The Colorado-based company’s revenue fell 1.1% to $3.59 billion. It saw a net TV-subscriber addition of 14,000, down 36% from last year and much below the analyst estimate of 48,000.
A part of its diversification strategy, the company has been looking to partner with an existing telecom operator which can help it in achieving its dream to enter the telecom arena and build a 4G network to provide mobile broadband service. So Dish made a counter proposal of $3.30 a share to Clearwire against Sprint Nextel Corporation (NYSE:S)’s offer of $2.97 a share. The company’s intension is to acquire Clearwire’s 2.5GHz-band spectrum to complement its own spectrum in 2GHz and 700MHz range and then ultimately partner with Sprint.
‘Sprint and Dish match up pretty well’
Ergen argues that if Dish’s bid is accepted, it would be best for all the three parties. The money losing regional carrier, which is in deep need of capital infusion, would get financial assistance. Sprint would also benefit from the additional fund to construct the required infrastructure and deploy the LTE network. On the other hand, Dish would get into partnership talks with the Kansas carrier to construct its own network, while Sprint could be benefited from Dish’s spectrum which can be best used to offer mobile service. Ergen seems very keen on joining forces with Sprint and says ‘Sprint and Dish match up pretty well with where our spectrum is’.