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Dish May Seek Sprint Aid for Mobile Web, Credit Suisse Says

Aug. 24 (Bloomberg) -- Dish Network Corp., the second-largest U.S. satellite-television provider, may seek help from Sprint Nextel Corp. to offer wireless Internet service rather than build its own network, Credit Suisse Group AG said.

Dish sought government permission this week to use airwaves it has acquired to offer mobile high-speed Internet to millions of users. The Englewood, Colorado-based company could save billions of dollars by working with Sprint, said Jonathan Chaplin, a Credit Suisse analyst in New York.

“It makes the most sense for Dish to partner with Sprint,” Chaplin said yesterday in a telephone interview. “It gets Dish into the market at a much lower cost.”

Sprint is open to other mobile-Internet partnerships after signing a 15-year, $9 billion deal with LightSquared Inc. last month to share network expansion costs and equipment, said Scott Sloat, a spokesman for the third-biggest U.S. wireless carrier. Marc Lumpkin, a spokesman for Dish, declined to comment.

Dish would need $6.1 billion to build its own national high-speed Internet infrastructure, compared with $2 billion to pay Sprint to set up a network, Chaplin said. Operating a network would cost Dish $2.7 billion a year, compared with $1.1 billion a year to pay Sprint to do it, said the analyst, who expects Sprint to outperform the broader market and has no recommendation on Dish.

Chaplin has been at Credit Suisse for two years and previously covered telecommunications for seven years at JPMorgan Chase & Co.

Triple-Play

Dish rose 25 cents, or 1.1 percent, to $22.24 at 4 p.m. New York time in Nasdaq Stock Market trading. Overland Park, Kansas-based Sprint fell 14 cents to $3.45 in New York Stock Exchange composite trading.

Charlie Ergen, Dish’s chairman, is seeking to expand the company beyond pay-TV service to compete with Comcast Corp. and others that offer packages of video, Internet and phone service, the so-called “triple-play” offer.

While Dish may not rule out a deal eventually, it won’t cement an agreement with Sprint anytime soon, said Walter Piecyk, an analyst at BTIG LLC in New York.

Dish’s filings with the Federal Communications Commission say the company will use an Internet technology called Long Term Evolution Advanced, a newer version of the current LTE standard that will offer faster download speeds. LTE Advanced isn’t commercially available yet, and FCC negotiations and approval will take time, said Piecyk, who is neutral on Sprint.

‘Nothing Imminent’

“I wouldn’t expect anything in the near term,” Dish Chief Executive Officer Joseph Clayton said earlier this month on a conference call, referring to the company’s mobile Internet strategy. “There’s nothing imminent.”

Dish may also consider a partnership with wireless carrier MetroPCS Communications Inc., which needs more airwaves and has the financial resources to help build a network, Piecyk said. Jim Mathias, a spokesman for Dallas-based MetroPCS, didn’t return phone and e-mail messages.

Dish agreed to acquire satellite companies DBSD North America Inc. and TerreStar Networks Inc. out of bankruptcy this year, gaining access to wireless airwaves. It asked the FCC this week to clear the acquisitions of those assets and for license waivers to offer the mobile Internet service.

Dish trails DirecTV among U.S. satellite subscribers. Sprint is behind Verizon Wireless and AT&T Inc. in mobile-phone clients.

To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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