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SoftBank Slams Dish's Bid for Sprint

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04/30/2013 | 10:15am CEST

TOKYO--SoftBank Corp. (>> Softbank Corp) Chief Executive Masayoshi Son launched a blistering attack on Dish Network Corp.'s (>> DISH Network Corp) bid to acquire Sprint Nextel Corp. (S), saying Dish's competing offer would load the U.S. carrier with debt, delay its turnaround without bringing any telecommunications expertise to the company.

In an usually candid presentation aimed at winning over Sprint shareholders, Mr. Son said that Dish's assertion that its $25.5 billion offer presents a premium to SoftBank's proposal is "totally wrong" and "incomplete and illusory."

"Some people ask me: will SoftBank be increasing the price for the offer? Why should we? We are already providing a better deal than the Dish proposal," said Mr. Son.

Speaking for about 40 minutes straight in English, the Japanese entrepreneur also took shots at Dish Chairman and co-founder Charles Ergen, calling him a mobile industry "amateur" who is "desperate" to exercise the spectrum that Dish controls.

Mr. Son's presentation came after SoftBank gave Sprint approval to gather more information from Dish about the satellite-television company's takeover proposal, made earlier this month. Dish offered Sprint shareholders $4.76 in cash and about $2.24 in Dish stock for each Sprint share.

The SoftBank CEO bristled at the claims made by Dish that SoftBank's offer should be valued at $6.22 a share. He said this was not an apples-to-apples comparison, because the Dish figure includes the impact of positive synergies from the transaction while excluding those from SoftBank.

SoftBank said if it fully factors in all the synergies plus the possible delays and penalties should Sprint shareholders go with Dish's proposal, the Japanese company's offer comes up to $7.65 per share versus $6.31 for Dish, representing a 21% premium. Mr. Son also said that while SoftBank is injecting $8 billion into the company, Dish is adding "zero" capital in Sprint.

On Monday, a Dish spokesman reiterated that it believes Sprint's board will conclude its plan is superior. Dish has argued that its proposal, the first to combine a nationwide television provider with a wireless carrier, would be better financially and strategically for Sprint. By joining the satellite-television company's radio spectrum with Sprint's spectrum, the two would be able to offer consumers video, high-speed Internet and voice service both at home and on the go.

Mr. Son downplayed the potential benefits of Dish's "bundled" vision of offering, saying: "We don't need a satellite dish to have a better smartphone experience."

On the other hand, Mr. Son said SoftBank will deliver $2 billion in annual cost savings because the combined Sprint-SoftBank would gain leverage in procuring handsets and telecommunications equipment.

SoftBank's offer has three steps. In the first, already completed, SoftBank bought $3.1 billion of bonds that convert into Sprint stock at $5.25 a share. If the deal is completed, SoftBank will own 70% of Sprint for $20.1 billion.

SoftBank laid out 11 points under which its offer is superior to that of Dish. He said that Dish plans to finance part of the acquisition by loading up Sprint's balance sheet with debt. Once completed, Mr. Son said, the two companies would have a gross debt of $50 billion and it would become one of the most heavily leveraged companies in the world. Mr. Son called that amount of debt "a crazy number, an insane number."

He also said Dish did not factor in the capital cost and potential competitive problems from the delays that its proposal would bring, because it may not close for a year after SoftBank's expected closing date of July 1. Mr. Son said Dish has not even conducted due diligence yet on Sprint.

"They have no real understanding of Sprint," said Mr. Son, noting that this is a crucial period for Sprint to invest in its network to close the gap with industry leaders Verizon Wireless and AT&T Inc. Delays in closing the transaction would put Sprint in a cash crunch at a time when it is spending aggressively to build out its network, Mr. Son said.

Mr. Son also criticized how the deal will also give 85% of voting rights of the combined Dish-Sprint company to Mr. Ergen.

"It's not Dish acquiring Sprint. It's almost the other way around. Sprint is acquiring Dish, giving away the controlling power to one single person, Mr. Ergen. Many people tell me Masa Son is a one-man show at SoftBank, but I'm not that aggressive," said a smiling Mr. Son.

Part of SoftBank's case for being a better fit with Sprint is the turnaround of its own carrier business. SoftBank, Japan's No. 3 mobile carrier, said it expects its domestic operations to generate more than Y1 trillion ($10.2 billion) in operating profit in the current fiscal year, which ends next March 31. In the just-ended year, it showed a larger net gain in subscribers than rivals NTT DoCoMo Inc., the market leader, or No. 2 KDDI Corp. for the third year in an row.

However, SoftBank said that despite solid margins on Apple Inc.'s iPhone 5, its net profit for the year was down 7.8% from a year earlier, when it got a bump from the sale of Yahoo Inc. shares. It logged a net profit of Y289.40 billion, compared with the year-earlier Y313.75 billion and the Y334.59 billion forecast of 15 analysts polled by Thomson Reuters.

Its operating profit rose 10% to Y745 billion on a 5.5% rise in sales.

Write to Mayumi Negishi at Mayumi.Negishi@wsj.com and Daisuke Wakabayashi at daisuke.wakabayashi@wsj.com

Stocks mentioned in the article : Softbank Corp, DISH Network Corp
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