Lost in space: Satellite mogul Charlie Ergen is out in orbit with few options if SoftBank gets both Sprint and Clearwire. (REUTERS)
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Satellite guru Charlie Ergen appears to be on a mission to nowhere.
After he maneuvered for months, his plan to become a major wireless player is suddenly in danger — potentially saddling him with billions worth of wireless spectrum without a clear plan to put it to use.
Yesterday, the Dish Network chieftain closed the door on one option when he officially dropped his pursuit of Sprint, clearing the way for SoftBank’s $21.6 billion purchase of the No. 3 wireless carrier in the US.
Ergen is also poised to miss out on another major deal for Clearwire, which is majority-owned by Sprint. This week Sprint raised its offer to buy the rest of Clearwire for $5 a share, topping Dish’s bid.
Meanwhile, Dish has spent $3.5 billion buying up spectrum from various bankrupt satellite companies, believing that it will prove far more valuable.
Faced with the possibility of losing out on both wireless deals, however, Ergen is rapidly running out of options, industry insiders say.
“I firmly believe he is sitting with a blank slate, saying what do we do?” said a source familiar with Ergen’s thinking.
In a recent video presentation, Ergen said if he did not complete the purchase of Sprint, he could sell his spectrum, seek a partner to build out a wireless network, or simply sell Dish altogether.
However, none of his remaining options is straightforward.
While Ergen waited for regulators to approve his plan to convert his satellite spectrum into a cellphone network, his rivals were busy making deals.
No. 4 US carrier T-Mobile reached a deal to buy Metro PCS, while Japan’s SoftBank struck a deal with Sprint.
The wave of consolidation leaves fewer candidates to take all that unused spectrum off Ergen’s hands.
The most logical buyer now for Dish’s spectrum is AT&T. However, the No. 2 provider could be facing a regulatory cap on further spectrum acquisitions, according to sources.
Assuming it wasn’t constrained by regulators, AT&T is in a position to bargain for a lower price.
Analysts at New Street Research believe that the best option for Dish is a merger with satellite rival DirectTV.
“We continue to believe that Dish’s long-term objective is to acquire DirecTV; losing Sprint and Clearwire may actually increase the odds of a DirecTV deal being approved… We continue to believe that a Dish/DirecTV deal will create far more value than any of the wireless deals that Dish has attempted.”
New Street analyst Spencer Kurn told the Post that Dish might even use its failed wireless acquisition strategy to persuade regulators to approve such a merger.
The Federal Communications Commission has given Dish four years to develop 40 percent of its wireless network, and seven to hit 70 percent. If Dish fails, regulators can pull its licenses.