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SoftBank turns up the heat on Dish over Sprint merger

The Japanese wireless carrier funds an industry study that concludes the claimed benefits of a Sprint merger with Dish are "unsubstantiated and unrealistic."

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
3 min read
Masayoshi Son, SoftBank's CEO. Stephen Shankland/CNET

As the bidding war between Dish and SoftBank for the merger of Sprint intensifies, SoftBank is pulling out all the stops to block Dish from getting in the way.

The Japanese wireless carrier launched a new Web site on Tuesday pointing out the reasons it believes it should be the company to acquire Sprint. It also funded a study (pdf) for an industry expert to question the benefits that Dish claims would come from its Sprint merger.

Sprint has been in talks with SoftBank since last October regarding a $20.1 billion offer, but as the closing date neared, Dish came in with a surprise counter offer of $25.5 billion. If Sprint were to accept SoftBank's bid, the deal would close on July 1.

When Dish first submitted its merger proposal for Sprint in April, Dish Chairman Charlie Ergen said: "Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined Dish/Sprint with a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal."

SoftBank is now claiming that these "substantial synergies" are "unsubstantiated and unrealistic." In the SoftBank-funded study, industry expert Scott C. Chandler, who is the managing director of Franklin Court Partners, disputed many of the benefits touted by Dish regarding a possible merger.

"Dish's $37 billion estimate of the NPV (net present value) of total synergies created in the proposed Dish/Sprint merger is unusually high and there are multiple reasons to believe that Dish's projections are neither achievable nor credible," Chandler writes.

Chandler further writes that Dish did not account for integration costs, which could be between $2.5 billion and $3.5 billion, and that Dish's claimed synergies would be hard to achieve because Dish and Sprint are "two dissimilar companies" that operate in "different sectors."

SoftBank CEO Masayoshi Son has referred publicly to Dish's unsolicited bid to buy Sprint as "incomplete and illusory
" and that SoftBank's use of and experience with TD-LTE, a variant of LTE, would dramatically improve Sprint's LTE efforts and give it a superior offering in the U.S. market.

For its part, Dish also has launched its Web site regarding the merger and ratcheted up the war of words with SoftBank. Ergen continually has said that a U.S. buyer would be best for the troubled wireless carrier.

"We are an American company and the modernization of Sprint's network will have to be done from the U.S.," Ergen said last week. "You have to climb the towers here, and you'll have to have U.S. employees who speak English. Operations command control will be in America. That's good for jobs."

When CNET contacted Dish regarding the study funded by SoftBank, a spokesperson said: "The study was paid for by SoftBank and lacks the credibility that comes from third-party objectivity. We remain confident Sprint shareholders are going to accept the offer from the company that brings the most to the table, including the best price and strategic plan going forward. Dish is offering more money, greater synergies, and we're bringing over $10 billion of spectrum."

(Editors' note: CBS, which owns CNET, is in active litigation against Dish over its Hopper digital video recorder.)