Intel Chief Executive Paul Otellini has said in a letter to the Federal Communications Commission that the company supports SoftBank's bid for Sprint, on the basis that the U.S. needs additional competition in the wireless market.
The letter, addressed to the FCC Chairman Julius Genachowski, states that SoftBank Chairman and CEO Masayoshi Son's "vision to build a high-speed, competitive third national network is very compelling," and "we need this competition in the wireless space as the ATT/Verizon model is not giving that to consumers at this time."
Otellini did not elaborate further, but added that he "just wanted you to know where [he] and Intel stand on this important matter."
An Intel spokesperson told the Reuters news agency that SoftBank is one of the firm's business partners, and the message toreflects Intel's view that "the addition of a third competitor to the market will be beneficial to consumers and SoftBank has a reputation as being a market disrupter which can provide benefits as well."
Perhaps it is the existing business relationship which makes SoftBank the more palatable choice of competitor in the wireless space. Japanese company SoftBank made a bid to acquire a 70 percent stake in Sprint last year, offering $20.1 billion. In return for accepting the deal, Sprint would receive $8 billion in capital to invest within its networking infrastructure, preparing the company to expand and compete effectively in the 4G LTE market.
With this cash injection and save from financial ruin, Sprint wants to acquire the remaining 49 percent of shares in Clearwire it does not already own. Clearwire is the seventh largest cellular network in the U.S, and both its wireless spectrum resources and customer base mean that Sprint is willing to offer around $2.1 billion, or $2.90 per share.
However, satellite provider Dish Networks upset the apple cart by swooping in with a last-minute offer of $3.30 per share, or $5.15 billion. This unexpected competition was compounded by SoftBank, which has 70 percent ownership of Sprint pending, capping the Clearwire bid at $2.97 per share. While Clearwire said it would consider Dish's superior bid, it was "severely limited by its current contractual arrangements."
However, Dish wasn't finished. Perhaps sensing failure in terms of its Clearwire bid, the satellite provider then turned its attention to Sprint. Dish offered $25.5 billion for the third-largest U.S. carrier (which owns 51 percent of Clearwire), not only trumping SoftBank's bid, but ensuring it would gain shares in Clearwire.
The proposed merger would include $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive roughly $7 a share, going beyond SoftBank's bid by several billion dollars. However, SoftBank CEO Masayoshi Son is less than pleased over the Dish bid, stating at a press conference in Tokyo that Softbank does not see a need to raise its offer, and it is a better option, casting doubt on Dish's figures.
Son believes that the rival bid is "misleading," and the numbers are not only "totally wrong," but also "incomplete and illusory." Comparing the figures in the conference, Son says that while Dish's offer is not $7 a share, but instead $6.31, Softbank offers a "superior" bid at $7.65 a share, providing a 21 percent premium.
In addition, the SoftBank CEO said that Dish has "no understanding whatsoever about the real situation of Sprint," and while SoftBank has a "proven track record" in growth, Dish has no expertise in mobile networks and a history full of uncommitted financing and litigation.
June 12 is the tentative date for a meeting for Sprint shareholders to vote on its deal with SoftBank.