Telecom Lead Asia: Presence of Chinese telecom equipment vendors and security issues have taken a center seat in the fight between the U.S.-based Dish Network and Japanese SoftBank for Sprint.
Better cash to shareholders of Sprint seems to have taken the secondary position in the entire discussion.
SoftBank works with Huawei. The U.S. intelligence team does not want Huawei to work in their country due to its alleged military connection in China. Europe Union does not want both Huawei and ZTE because they believe that both companies are indulging in illegal trade practices.
Dish Networks wants to buy Sprint, at any cost. It does not want to offer too much money. Dish realized the potential of Sprint after SoftBank made the first move.
Dish says SoftBank committed to using network equipment that is acceptable to the U.S. Government, which Dish believes validates the national security concerns that it has raised with respect to SoftBank-Sprint.
“The question is about who should control and who will be accountable for assets – the Sprint national wireless and backbone fiber networks – that are vital to our national security,” said Stanton Dodge, Dish executive vice president and general counsel.
Dish does not operate infrastructure dependent on Chinese equipment. “We do not own nearly a third of the Chinese e-commerce giant, Alibaba. Dish was not affiliated with a company that admitted bribing Chinese officials for telecom contracts,” Dodge added.
In a Web content, SoftBank had defended foreign investment in the U.S. telecom sector, citing the presence of Vodafone, through Verizon Wireless, and Deutsche Telekom’s T-Mobile operation in the U.S.
“Vodafone and Deutsche Telekom are not relevant to the national security discussion surrounding the proposed acquisition of Sprint by SoftBank,” said Dodge.
“Times have changed and there can be no doubt that today, a nationwide wireless network is an asset of national strategic importance. Additionally, unlike Sprint, neither Verizon wireless nor T-Mobile control a national fiber backbone serving national security interests including defense, law enforcement and other sensitive governmental operations,” Dodge added.
Dish Network says its proposal will deliver nearly all the key benefits of the SoftBank-Sprint transaction and more, including 40 MHz of additional mid-band spectrum and cable-quality broadband access to approximately 40 million unserved consumers in rural America.
Dish says its $25.5 billion offer is better for Sprint shareholders, offering more cash and stock in a strategically superior company than the SoftBank proposal.
The SoftBank investment to control Sprint is a financial transaction, not a commercial merger, given that SoftBank has no U.S. operations to combine with Sprint.
The Dish-Sprint combined entity will offer integrated nationwide bundle of in- and out-of-home video, broadband and voice services. The combination also provides substantial synergies and a significantly enhanced strategic position.
Dish/Sprint will be able to challenge AT&T and Verizon than SoftBank-Sprint. SoftBank brings no spectrum to the merger. Dish brings 45 MHz of low- and mid-band spectrum with an estimated value of $10 billion, plus robust cash flows.
A Dish-Sprint will be better for security by preserving domestic ownership, control and accountability over Sprint’s national wireless network and fiber backbone network, which provides classified services to government, law enforcement and military customers.
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