The cash and stock deal would give Sprint owners $7 per share — $4.76 in cash, with the remainder in Dish stock.

“We are confident that the Sprint Board will share our view that this proposed merger offers an excellent opportunity for the equity holders of Sprint to realize a superior value for their shares that is unavailable to them under the SoftBank proposal,” Dish Chairman Charlie Ergen said in a letter to Sprint’s board.

In addition to what it says are better financial terms, Dish also brings its own wireless spectrum holdings.

“The DISH proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal,” 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.”

Sprint acknowledged that it had received the Dish offer and said only that the company’s board would “evaluate this proposal carefully and consistent with its fiduciary and legal duties.”

For Dish, the move would allow it to offer a combination of wireless service, in-home and on-the-go video, as well as broadband and voice service.

Dish, which has set up a website to tout its offer, promised some $11 billion in cost savings through its deal.

The move comes amid consolidation efforts that have included AT&T’s failed bid for T-Mobile, as well as T-Mobile’s current effort to acquire MetroPCS, which is due for a rescheduled shareholder vote on April 24.

Ahead of its Sprint bid, Dish had offered to buy Clearwire, the wireless network operator that Sprint is itself in the process of trying to buy.

Ergen said at our D: Dive Into Media event in February that Dish had hoped to have its own wireless network up and running by now, but that, given the delays, it would probably need to partner with someone already in the business.

Here’s Ergen’s full letter to Sprint’s board:

On behalf of DISH Network Corporation (“DISH”), I am submitting this proposal for a merger between DISH and Sprint Nextel Corporation (“Sprint”). Our proposal provides Sprint shareholders with a superior alternative to the pending SoftBank Corporation (“SoftBank”) proposal. It provides more cash and affords your shareholders the opportunity to participate more meaningfully in a combined DISH/Sprint, which will benefit from a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal.

We are offering Sprint shareholders a total consideration of $25.5 billion, consisting of $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7.00 per share, based upon DISH’s closing price on Friday, April 12, 2013. This consists of $4.76 per share in cash and 0.05953 DISH shares per Sprint share. The cash portion of our proposal represents an 18% premium over the $4.03 per share implied by the SoftBank proposal, and the equity portion represents approximately 32% ownership in the combined DISH/Sprint versus SoftBank’s proposal of a 30% interest in Sprint alone. Together this represents a 13% premium to the value of the existing SoftBank proposal.

Our proposal provides a highly-compelling and unique opportunity for Sprint shareholders. We are offering an ownership interest in a combined company with a comprehensive product and services suite, a significantly enhanced subscriber base, considerable financial and operating scale, as well as a spectrum portfolio that would lead the industry. As a result, this merger creates sizable cost and CAPEX savings and promises extensive new revenue opportunities.
Leveraging both companies’ existing assets and expertise, we will be the only company able to offer a fully-integrated, nationwide bundle of in- and out-of-home video, broadband and voice services to meet rapidly evolving customer preferences. The new company’s assets will immediately establish national cross-platform leadership and will position the company to deliver innovative services while expanding our collective subscriber base.

The proposed combination will result in synergies and growth opportunities estimated at $37 billion in net present value. This includes an estimated $11 billion in cost savings, representing approximately $1.8 billion in annual run-rate cost synergies by the third year after closing.

Further, our combined national footprints and scale will allow us to efficiently develop our joint spectrum assets to provide advanced services to the millions of homes with inferior or no access to competitive broadband services.
I am proud of the company we have built and believe we will be an excellent partner to Sprint. Like Sprint, DISH possesses a strong tradition of innovation and industry leadership. We created the third largest pay-TV provider while competing with incumbent cable monopolies and other entrenched operators. DISH has consistently led our industry in service and technology delivery with award-winning innovations like Hopper with Sling. Our history of value creation is outstanding. Investors in our 1995 initial public offering have enjoyed a total return of 27 times their original investment, significantly outperforming the broader markets and our peers. We also have a proven track record of responsible capital management.
DISH has significant experience structuring and consummating strategic transactions and only needs to complete confirmatory due diligence, which we believe can be done quickly with your cooperation. We have examined your merger agreement with SoftBank and we would be prepared to execute a definitive merger agreement on substantially similar terms and conditions. Though not a condition of our proposal, we anticipate that the pending transaction with Clearwire would be completed. We are confident that we can obtain all necessary approvals within a reasonable timeframe.

We intend to fund the $17.3 billion cash portion of the transaction using $8.2 billion of our balance sheet cash and additional debt financing. We have a proven track record in raising capital to fund strategic initiatives and have received a Highly Confident Letter from our financial advisor, Barclays, confirming our ability to raise the required financing.

We would be pleased to discuss our plans for the combined company and we are available at any time to meet with the Sprint Board, management and advisors to answer any questions about our proposed merger. We are confident that the Sprint Board will share our view that this proposed merger offers an excellent opportunity for the equity holders of Sprint to realize a superior value for their shares that is unavailable to them under the SoftBank proposal.
While it would have been our preference to have confidential discussions regarding this proposed merger, your existing agreement with SoftBank and the impending deadlines associated with your shareholder vote, will compel us to confirm our intentions publicly.

We look forward to hearing from you.

Very Truly Yours,
DISH Network Corporation
Charlie Ergen
Chairman

Dish has proposed buying Clearwire for $3.30 a share amid opposition among Clearwire shareholders to a deal in which Sprint would acquire the roughly half of Clearwire it doesn’t own for $2.97 a share.

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In the quarter, Sprint lost 243,000 contract customers, which was more than the 229,000 decline expected by analysts, according to Canaccord Geniuty. Still, the Overland Park, Kan., carrier’s revenue and loss was better than expected by Wall Street.

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Mr. Ergen’s attempt to snatch wireless provider Clearwire Corp. out of the hands of its current merger partner, Sprint Nextel Corp., is just his latest move in a long chess match. The endgame: to get access to the spectrum and network assets needed to deliver wireless service and even video over the air.

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Clearwire shares immediately rose above the offer price Thursday, reinforcing expectations that any deal for the smaller wireless company will likely need to be higher. Although Sprint controls a majority of both Clearwire’s stock and board seats, any deal must be approved by a majority of non-Sprint directors and a majority of remaining shareholders.

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Shares of the pay-as-you-go wireless carrier have been volatile as speculation continues over whether Sprint will make an superior offer to MetroPCS’s acquisition by Deutsche Telekom AG’s T-Mobile USA.

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Sprint, of course, aims to convert as many of its Nextel customers over to its own push-to-talk services as it can. But AT&T says it hopes to woo on the order of 10 percent of the remaining customers over to its own push-to-talk products.

AT&T, which launched the Rugby Pro in September, and is announcing several new rugged devices on Tuesday, notes that its push-to-talk service, unlike its rivals, works on its latest-generation LTE network.

The company offers its enhanced push-to-talk service for $5 per month in addition to other rate plans, or $30 for only push-to-talk service.

“For workers in industries like construction, manufacturing and public safety, mobile devices that can withstand harsh conditions are essential,” AT&T senior vice president Chris Hill said in a statement. “We’re offering AT&T Enhanced PTT on a variety of rugged devices to give our customers the performance and durability they need to get in touch quickly on the job — no matter what conditions they face.”

Let’s start with the wireless networks. Anecdotally, I’ve been hearing about all sorts of difficulties with voice calling today. For the first half of the day, my Verizon iPhone didn’t display the 3G icon at the top of the screen, and the few voice calls I tried to make took longer to connect than usual if they connected at all, which about half of them didn’t. I also heard that people calling me were hearing “fast busy” signals indicating an overloaded network.

That’s not surprising because the storm zone is heavy Verizon territory. In a statement to Reuters, Verizon said it was still trying to get a full picture of the damage to its network. Sprint and T-Mobile are pretty much in the same boat, and customers of all three are seeing service disruptions. So for the time being my advice about texting and not calling remains in force.

Then there were the land lines and Internet services. Again, this is mostly Verizon territory. The company said in a statement that several of its central offices in Manhattan, Queens and Long Island had been hit with flooding and had also lost power. Normally there’s backup power, but generators don’t exactly respond well to water. So they’ve been running on battery power. The problem is when the batteries die, the equipment inside the hubs gets damaged and so Verizon has had to power it all down, thus hurting its capacity for service. This applies to things like FiOS, its DSL Internet services and old-school telephone service. A fellow named Jack is doing yeoman’s work on Verizon’s customer support Twitter account trying to help customers out.

On Long Island, where most of the people rely on Cablevision for their Internet, about 90 percent of residents have lost power. That’s affecting access to the Internet and phones on Cablevision’s Optimum Online service. Time-Warner Cable is suffering outages in parts of New York City and New Jersey, where people have also lost power. The company says that as power comes back, they’ll identify people whose service has been disrupted.

Personally I can report that RCN, the regional cable company, managed to keep its TV service running, but Internet service was disrupted for about 12 hours in Manhattan. Some lost TV service too, despite the power staying on in most of Upper Manhattan.

And the woes weren’t limited to consumers and their cable modems. This may come as a surprise, but data centers don’t like water very much, and lower Manhattan flooded pretty badly. One data center, operated by a hosting outfit called Datagram, whose most high-profile customer appears to be Gawker and its network of sites, saw its lower Manhattan facility flooded. Normally backup power would have kicked in but according to a terse statement, the basement where the generator’s fuel tanks are kept was totally inundated.

Here’s what Datagram said in full:

Official Statement

As of 5pm on October 29, 2012, Datagram had thoroughly tested its emergency systems at 33 Whitehall, NYC and was fully staffed awaiting the storm to hit Manhattan’s shores. Once ConEd lost power to Lower Manhattan, Datagram’s emergency systems kicked on maintaining power to Datagram’s datacenter. Unfortunately, within a couple hours of the storm hitting Manhattan’s shores, the building’s entire basement, which houses the building’s fuel tank pumps and sub pumps, was inundated with water taking the building generator system offline – essentially shutting down the entire building. No Datagram or customer infrastructure has been damaged by the storm.

We have been working intimately with the building’s engineers to clear the water from the building’s basement so that we may restore our emergency power systems. We are providing regular updates through our website at http://www.datagram.com.

A similar problem hit a huge co-location facility at 75 Broad Street. As Data Center Knowledge noted, flooding there destroyed critical fuel pumps needed to keep backup generators online, disrupting service to customers of hosting providers like Internap and Peer 1. An emergency letter posted as an image to Twitter warned customers that they should move their workloads elsewhere. At the time it was posted, the facility had about five to seven hours worth of fuel to keep the lights on and servers humming. It subsequently lost power before noon local time.

Internap Customers LGA11 Facility at 75 Broad Street (Downtown NYC) to shut down within hrs http://t.co/LD6taNth

October 29, 2012 8:37 pm via webReplyRetweetFavorite

@jose3030

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They weren’t alone. Renesys, a research firm that tracks the health of the Internet, posted on its corporate blog a graph showing a surge in network outages in New York and the surrounding area. (I borrowed the image from Renesys. Click to make it bigger.)

There’s also some interesting intelligence from a new site called Outages.org that has a really detailed report on conditions at 111 Eighth Ave., a.k.a. the site of Google’s New York operations.

It isn’t just a Google facility, but it is one of the most heavily connected buildings in New York. The detailed report on Outages.org lists lots of companies affected by flooding, including 8×8, the Internet phone service Voxel, cloud services and hosting company Equinix and XO Communications.

I’m keeping an eye on things and will report back on more situations as they develop. If you know of any other service disruptions involving data centers or any other service providers, drop me a line.

The end result is that SoftBank will inject $8.0 billion of new capital to strengthen Sprint’s balance sheet, and will pay a further $12.1 billion to buy existing Sprint shares.

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A person with knowledge of the negotiations said the value of the deal could exceed $12.8 billion.

Softbank would end up with roughly 70 percent of Sprint, with the remainder of the company being publicly traded, people familiar with the matter said, adding that negotiations are continuing and could fall apart.

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The acquisition, if agreed upon, will mark a massive gamble by Softbank, the country’s third-largest carrier by subscribers, to expand its business outside of Japan. Softbank Chief Executive Masayoshi Son has made big bets in the past including acquiring the Japanese arm of Vodafone Group PLC in 2006. It paid for the deal through a leveraged buyout, which vaulted the company in the mobile phone business.

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The cable company notified other major Clearwire investors, which have an option to buy part or all of the stake, of the move and disclosed its intention in a regulatory filing Friday. Clearwire, which is intertwined with network partner and largest shareholder Sprint Nextel Corp., is overhauling its network and seeking partnerships or asset sales to raise cash.

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The SEC’s investigation follows a suit filed against Sprint by New York’s attorney general in April, seeking $300 million for the carrier’s alleged failure to pay sales taxes due on some of its wireless plans over the past seven years.

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Shares were trading 6.8 percent higher at $3.60 premarket as the wireless carrier’s revenue grew more than expected. The stock has fallen 35 percent over the past year through Wednesday’s close.

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