The chairman of satellite broadcaster Dish Network Corp., which is trying to buy Sprint Nextel Corp., is daring Sprint's other suitor to raise its bid.
From staff and wire services
Dish's Charlie Ergen told investors and reporters Thursday that based on the benefits Japan's Softbank says it would get from buying Overland Park-based Sprint, it should be paying a higher price.
Last week, Softbank's CEO Masayoshi Son said Dish's $25.5 billion offer for Sprint is based on incomplete and illusory numbers, and argued that Softbank's $20.1 billion offer for 70 percent of the company is a better value.
Softbank can close the deal up to a year faster than Dish and brings industry expertise and cash to Sprint, he said. In addition, the combined Softbank and Sprint would be a huge purchaser of phones and network equipment, which should help it secure volume discounts, he said.
Ergen said Thursday that if Softbank is really confident in its calculations, they would look at paying quite a bit more for Sprint than we have offered so far.
Realistically, the curtain is now up on Sprint, both Dish and Softbank see tremendous value there. Shareholders are going to be the winners, and who knows where this goes, Ergen said.
However, he said it would be difficult for Softbank to outbid Dish in the end, given that Dish adds 14 million pay-TV subscribers who would generate cash for investments in Sprint's network and to pay off debt, plus it would provide more space on the airwaves for cellular broadband.
We bring so much to the party, Ergen said.
Wall Street analysts view Dish's bid as superior but risky, as it will result in a combined company with high debt.
Sprint shares rose 3 cents, or 0.5 percent, to $7.36 in afternoon trading. That's above the bids of either Dish or Softbank, indicating that investors expect a sweetened bid.
Ergen said Thursday that one of his priorities for a combined Dish-Sprint is to improve its cellular coverage. He doesn't use a Sprint phone now because it doesn't provide a signal in the smaller communities he visits.
Even if I was given Sprint (service) for free, I wouldn't use it because it doesn't work everywhere I go. Obviously Verizon, and to a lesser degree AT&T, work just about anywhere you go, Ergen said.
Meanwhile, Dish reported first-quarter sales that trailed estimates after adding fewer customers than analysts projected.
First-quarter net income fell to $216 million, or 47 cents a share, from $360 million, or 80 cents, a year earlier, the Englewood, Colo.-based company said. Sales fell 0.7 percent to $3.56 billion, lower than the $3.61 billion average analyst estimate.
Dish added about 36,000 customers in the quarter, compared with the 57,000 average estimate of 10 analysts surveyed by Bloomberg. The company raised prices for the first time in about two years, although average monthly revenue per pay-TV customer rose just 3 percent to $78.54, trailing the $79.59 average analyst estimate.
The first rate increase in two years could not fully offset programming expense and subscriber acquisition cost increases, Vijay Jayant, an analyst at ISI Group in New York, said in a note to clients. He has a buy rating on the shares.
Dishs stock fell 4 percent to $38.04 in late morning trading. The shares had climbed 8.8 percent this year through Wednesday.
Dish added 66,000 satellite broadband customers, almost all of which bundled the service with satellite-TV service, Chief Executive Officer Joseph Clayton said in the statement.
In a filing Thursday, Dish said it owned $341 million in Sprint derivative financial instruments as of March 31, compared with none three months earlier.