The big question surrounding the communications industry is whether partnerships and mergers are good not just for businesses, but also for the customers. Opponents of mergers say they lead to fewer jobs, less competition and higher prices. But analysts on Monday said that a potential Dish-Sprint merger may pose a greater challenge to AT&T and Verizon, which dominate the wireless industry and charge higher prices for their phone plans.
As the No. 3 cellphone service provider, with 56 million subscribers nationwide, Sprint Nextel has struggled to catch up with larger rivals. It is expected to face even more competition as the parent company of T-Mobile USA, Deutsche Telekom, moves closer to a multibillion-dollar agreement to buy MetroPCS.
Dish Network said it would finance the cash component of the takeover through a combination of $17.3 billion in cash and debt financing.
Sprint said in a statement that it would look at Dish’s proposal, but declined to comment further on its plans. “Sprint Nextel today confirmed it has received an unsolicited proposal from Dish Network to acquire the company,” said Roni Singleton, a Sprint spokeswoman. “The company said that its board of directors will evaluate this proposal carefully and consistent with its fiduciary and legal duties. The company does not plan to comment further until the appropriate time.”
Mr. Ergen said his company would be as a better fit for Sprint than SoftBank because it would bring greater benefits to consumers. Fourteen million Dish Network subscribers would get improved services on their cellphones, and shareholders would own 32 percent of the combined company, whereas Softbank’s merger is essentially a cash infusion to strengthen Sprint.