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Softbank chief says Dish wrong fit for Sprint

Son calls rival in acquisition bid a 'big mouth'

Bloomberg

Softbank Corp. President Masayoshi Son lashed out at fellow billionaire Charlie Ergen, saying he doesn’t have the expertise to run Sprint Nextel Corp., the U.S. mobile phone company both men are trying to take over.

Ergen, the chairman of Dish Network Corp., doesn’t have a wireless background, making him a poor fit to run Sprint, Son said Tuesday at an event in Tokyo. He questioned the wisdom of Ergen’s strategy to combine Sprint with a satellite TV company instead of another mobile phone carrier like his own.

“I just deliver the results, instead of big-mouthing about the future,” Son said. “Do you want to attach a satellite dish to your smartphone? It’s going to become much heavier. I don’t see any real meaningful value that he can offer to the smartphone customers.”

With the volley against Ergen, Son sought to cast doubt on Dish’s $25.5 billion offer to acquire Sprint, a proposal that investors such as Omega Advisors Inc. have called superior to Softbank’s $20 billion bid. Sprint may be able to turn a profit starting next year if shareholders accept Softbank’s offer, Son said.

“Starting in the second half of this year when our deal is closed, it will start showing early symptoms” of a turn toward profit, he said. “And by next year it will start having a real benefit of turning around. Net income will probably start being positive very soon.”

Dish, based in Englewood, Colorado, continues to believe its offer is better than Softbank’s, it said Tuesday in a statement.

“We remain confident that the Sprint board will share our view that the Dish proposal is superior by offering Sprint shareholders greater value with a higher price and more cash,” Dish said. “A combined Dish/Sprint will benefit from synergies and growth opportunities that are not attainable through the pending Softbank proposal.”

In the Softbank deal, Sprint would be fully profitable by 2015, in part because of $2 billion in annual savings as the two companies pool their phone and network-equipment purchasing to buy in bulk, Son said Tuesday in an interview after the presentation. The companies will together have a $20 billion budget for devices and network parts, he said.

Softbank has more experience in wireless phone networks than Dish, which gets most of its sales from satellite broadcasting, with the Japanese company’s offer giving the U.S. carrier more buying power and less debt to repay than Dish’s $25.5 billion proposal, Son said.

“People ask me, ‘Will Softbank be increasing the price for the offer?’ Why should we?” Son told reporters at the event in Tokyo. “We are already providing a better deal than the Dish proposal.”

In an hourlong presentation, he returned repeatedly to what he called Ergen’s shortcomings, saying the Dish chairman isn’t “behaving himself.” He criticized Ergen for making an unsolicited offer, while Softbank worked with Sprint management to develop a proposal. He noted that Dish is less profitable than its U.S. satellite competitor, DirecTV. And he said the Dish offer for Sprint would give Ergen too much control of the combined company.

“Many people tell me Masa Son is a one-man-show company, but I’m not that much aggressive to give 85 percent voting power to myself,” he said. “I am behaving a little bit better.”

Softbank’s bid for Sprint includes paying $12.1 billion to the U.S. company’s shareholders and $8 billion of new capital for a 70 percent stake, the companies said in an Oct. 15 statement.

Son said Softbank’s offer is worth $7.65 a share for Sprint after including the elimination of redundant parts of the businesses, compared with $6.31 for the Dish proposal, including the time delays and costs of Ergen’s offer.

Sprint has to pay Softbank $600 million if it recommends a rival offer to shareholders, according to terms of the deal. Softbank in October closed the purchase of $3.1 billion of convertible bonds that can be exchanged for more than 590 million Sprint shares.

Some Sprint shareholders, including Omega Advisors and billionaire John Paulson, said they preferred Dish’s offer.

Sprint has tentatively set June 12 as the date for a shareholder vote on Softbank’s offer, the U.S. wireless company said last week.

Raising the bid would make Son’s ambition to expand into the U.S. cost more, while the company’s credit ratings are already under review for a possible cut to junk.

Standard & Poor’s and Moody’s Investors Service Inc. have put Softbank’s credit ratings under review for possible downgrade on concern the Sprint acquisition may undermine its financial strength. A downgrade of one step would bring the rating to a speculative, or junk, ranking at Moody’s.

Son, Japan’s second-richest man, said in October he targeted Sprint because it can challenge Verizon Wireless and AT&T Inc.’s dominance of the U.S. mobile phone industry.

The 55-year-old’s stated goal is to create the largest mobile services provider in the world by revenue, surpassing Verizon, Vodafone and China Mobile. His strategy would ultimately benefit investors more than what Ergen can offer them, he said.

“He himself admits he’s an amateur to our mobile industry,” Son said at the Tokyo event. “He does not have any history in our industry. So he’s a newcomer — totally, totally a newcomer.”

DoCoMo eyes Galaxy S4

Bloomberg

NTT DoCoMo Inc., the only major Japanese wireless carrier not offering Apple Inc.’s iPhone, may include Samsung Electronics Co.’s Galaxy S4 among phones it will promote as it narrows the range of handsets to cut costs.

In its first attempt to recommend specific models to customers, DoCoMo will pick “one or two” phones for promotions at nationwide outlets and is considering Samsung’s latest flagship model, Chief Financial Officer Kazuto Tsubouchi said in an interview Tuesday in Tokyo.

Handsets made by Sony Corp. and Sharp Corp. will also be considered given the success of Sony’s Xperia Z and Sharp’s Aquos Phone Zeta, he said.

Japan’s biggest mobile carrier also plans to reduce the number of models it introduces by as much as half, from about 20 every six months, to cut procurement expenses by more than ¥50 billion as it places larger orders with fewer handset makers, Tsubouchi said.

The carrier is still considering adding the iPhone after losing market share to smaller Softbank Corp. and KDDI Corp., both of which offer Apple’s smartphone.

“As we now have some products that we feel confident about offering, we plan to focus more on those,” Tsubouchi said. “Previously, we didn’t have a model that could match the iPhone.”