Chief Executive Dan Hesse is pretty pleased with the way things are improving for the long struggling carrier and believes this to be a ‘transformative year for Sprint’. It’s already ‘off to a good start’.
Looking ahead
While the company is running as per schedule to close its Sprint Nextel Corporation (NYSE:S) platform, it is also looking forward to concluding its pending transactions with U.S. CELLULAR CORP. DL 1 (FRA:US7), Clearwire Corporation (NASDAQ:CLWR) and Softbank Corp (TYO:9984) by July 1. Softbank made a $20.1 billion proposal last October for 70% ownership in the company, and now in early April DISH Network Corp (NASDAQ:DISH) made a counter-bid of $25.5 billion. Both the proposals have the same object of making the combined entity more challenging so that the third largest carrier can effectively contend the big two. The deep pocketed Japanese giant is expected to infuse the much needed cash into Sprint’s business and accelerate the Network Vision process. Simultaneously, the capital injection would also enable the carrier to conclude its Clearwire Corporation (NASDAQ:CLWR) deal.
However, the unexpected Dish offer has made investors hope for a higher offer from Softbank Corp (TYO:9984) in response to the satellite TV provider’s more attractive counteroffer. Chances are bleak that Softbank will sweeten its offer. Either way, whether with Softbank or with DISH Network Corp (NASDAQ:DISH), Sprint stands to gain.
My takeaway
I believe merging with Softbank would be a more sensible play for Sprint. Not only is Softbank more financially stable, but it also carries relevant wireless expertise that would benefit Sprint in the long run and boost the carrier’s core business. Dish, on the other hand, is a satellite TV provider aiming to venture into the telecom world with the support of an existing player. Agreed that it has amassed wireless spectrum in the recent past, but it is new to the telecom space and has no relevant knowhow. If Sprint plans to inch closer to AT&T and Verizon, it would need the support of a player established in the telecom business. Considering all this, Softbank would make a better suitor to Sprint.
2013 is indeed going to be a turnaround year for Sprint. Huge investments to expand its LTE coverage, completion of its Nextel network shutdown and the conclusion of its merger deal are going to keep Sprint really busy. The Nextel shutdown shall put pressure on the carrier’s second quarter result; but it will prove profitable in the future. Sprint looks like a decent play for the long run. What do you say?
The article Is Sprint Really ‘Off to a Good Start’? originally appeared on Fool.com.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
