DISH Network Corp (DISH), Sprint Nextel Corporation (S): Charlie Ergen Goes for Broke

Of course, Dish still has an open offer to acquire Clearwire Corporation (NASDAQ:CLWR) for $2.4 billion, trumping Sprint’s December 2012 agreement to purchase the network operator for $2.2 billion. Sprint has already invested significant resources in the company, including paying $926 million for unlimited access to its network through the end of 2013. Sprint also accounts for the vast majority of Clearwire’s wholesale customer base, as other telecom providers have chosen to build their own 4G networks.

In FY2012, Clearwire Corporation (NASDAQ:CLWR) reported another year of heavy losses, as revenues from its predominantly wholesale customer base couldn’t cover the costs of expanding its 4G network across the country. The company continues to run at negative operating cash flow, relying on its partnership with Sprint Nextel Corporation (NYSE:S) to fund its capital needs. Obviously, Clearwire is more a collection of assets than an operating business and needs to be folded into a larger diversified telecommunications business.

DISH Network Corp (NASDAQ:DISH) has brought up national security concerns, in the hopes of finding sympathetic ears in Washington, as it tries to wrestle Sprint from the arms of Japan-based Softbank. Regardless, the company seems likely to prevail, given its superior offer and the potential cost synergies from the deal. However, investors might want to sit on the sidelines until the outcome of this corporate tussle becomes a little bit clearer.

The article Charlie Ergen Goes for Broke originally appeared on Fool.com and is written by Robert Hanley.

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