A DISH Network Corp. (DISH) Best Served Short

4G and Cloud

The fast growth of handheld devices has increased data demand. As most handheld devices primarily rely on cloud, fast internet offerings have become a vital part of telecom deals. To compete with AT&T and Verizon, Sprint urgently needs to improve its 4G network. This is why the acquisition of Clearwire means so much to the company. Clearwire has a state of the art 4G network, and Sprint Nextel Corporation (NYSE:S) wants control over these airwaves. A ‘Sprint,’ which owns Clearwire Corporation (NASDAQ:CLWR), is much more valuable to Softbank. The Japanese telecom giant is known for its aggressive business ideology and wants to become the leading operator in the world. Softbank’s job of pushing Sprint to the top will become much easier with the 4G network of Clearwire.

Valuations

The U.S. telecom industry is the most lucrative in the entire world. This can be assessed from the reluctance of Vodafone in letting selling its 45% stake in Verizon. Control over the third largest telecom operator in the States would considerably improve the valuations of Softbank.

After the recent increase by Sprint Nextel Corporation (NYSE:S) in its bid for Clearwire Corporation (NASDAQ:CLWR), the deal is all but closed. The state of the art 4G network it will get from Clearwire also demands better valuations for Sprint. It is currently trading around $7 per share when Softbank has already offered $7.65 for the company. This gives a 10% return on the acquisition price alone.

Bottom-line

Softbank has emerged as the ultimate winner, in this latest struggle to control U.S. airwaves. DISH Network Corp. (NASDAQ:DISH) has been thwarted in its attempts to enter the wireless industry. It has not only lost to Softbank on its Sprint bid, but has also been outbid by Sprint Nextel Corporation (NYSE:S) for Clearwire Corporation (NASDAQ:CLWR). Shares of Dish have been rallying since April and can decline on these negative developments. This makes DISH Network Corp. (NASDAQ:DISH) a good short target in the short run.

Mohsin Saeed has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article A Dish Best Served Short originally appeared on Fool.com.

Mohsin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.