Plot Thickens as Dish Network Corp. (DISH) Trumps Sprint Nextel Corporation (S)

What it means for Sprint

The ball is actually in Sprint Nextel Corporation (NYSE:S)’s court as it is now required to decide if it wants to further revise its offer for Clearwire Corporation (NASDAQ:CLWR). Doing so would ensure that the acquisition of the other half of Clearwire goes smoothly. However, it would result in a higher payout and if Sprint decides not to sweeten its offer, it may be required to strike a spectrum sharing arrangement with DISH Network Corp. (NASDAQ:DISH).

This approach has a number of advantages including restricting the initial cash outgo. DISH is stretched to its limit and does not look in a position to invest in wireless services and as such, Sprint’s tactic would defer spectrum sharing to a later date with a fair chance of such situation not arriving at all. When compared to DISH, Sprint Nextel Corporation (NYSE:S) is still in a much better shape. Although its debt equity ratio of 3.8 is not exactly healthy, it is better than a comparable figure of 41 for DISH Network Corp. (NASDAQ:DISH).

Foolish bottom line

Overall, DISH Network Corp. (NASDAQ:DISH) appears to be playing a high risk game to win some of the spectrum. This makes Clearwire Corporation (NASDAQ:CLWR) a natural beneficiary, but Sprint also stands to gain if it plays its cards carefully.

Jacob Wolinsky has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Plot Thickens as DISH Trumps Sprint originally appeared on Fool.com.

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

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