An Ignoble Experiment

2. Sprint, U.S. Cellular offer deals to goose Samsung Galaxy S4 sales

Dish Network's (NASDAQ: DISH) $25.5 billion bid for Sprint Nextel (NYSE:S) has drawn support now from two major Sprint investors who view it as a compelling alternative to Japanese operator SoftBank's plan to take control of 70 percent of Sprint for $20.1 billion.

Investor Omega Advisors has joined billionaire John Paulson in praising Dish's offer, which caught the wireless world by surprise Monday morning. "We like the Dish offer and think it is superior to SoftBank," Omega CEO Leon Cooperman said in an email to Bloomberg. Omega has a 1.9 percent stake in Sprint, according to data compiled by Bloomberg.

Under Dish's proposed offer, Sprint shareholders would receive $7 a share, consisting of $4.76 in cash and stock representing about 32 percent of the combined company, vs. 30 percent under the SoftBank deal, according to Dish. That equates to $17.3 billion cash and $8.2 billion stock, according to Bloomberg. Dish said the total offer represents a 13 percent premium on the SoftBank deal, which Sprint and SoftBank announced in October.

Dish "is contributing valuable spectrum, 14 million subscribers, cost synergies and revenue synergies," Paulson said Tuesday in a statement. "Dish needs to firm up the financing, but it's a compelling offer."

For its part, SoftBank said Dish's bid for Sprint won't derail its plans. "SoftBank believes that the agreed terms of our transaction with Sprint offer Sprint shareholders superior short and long term benefits to Dish's highly conditional preliminary proposal," SoftBank said on its website, adding that it continues to expect its deal with Sprint to close by July 1.

Sprint said on Monday its board will evaluate Dish's bid and declined to comment further.

"Dish and SoftBank are both successful companies with great track records led by strong leaders," Paulson said. "[Dish Chairman Charlie] Ergen seems fully committed. It will be interesting to see how the Sprint board and SoftBank respond."

Dish's proposal may spark a bidding war between Dish and SoftBank over the United States' third-largest wireless carrier, according to comments from shareholders and investment analysts.

The deal also scrambles the wireless M&A picture, and may create complications for other industry players, including Clearwire (NASDAQ:CLWR) and T-Mobile USA. Dish has not formally withdrawn its offer to Clearwire, which Sprint is in the process of trying to acquire control of. However, according to a Wall Street Journal report, which cited unnamed sources familiar with the matter, Dish stopped having meaningful communications with Clearwire a couple of months ago. Dish has said its offer to Sprint is not contingent on Clearwire accepting Sprint's offer.

Further, the Journal reported that Ergen has had informal talks with T-Mobile parent Deutsche Telekom in recent months. However, if Dish's bid for Sprint is successful, any future combination with T-Mobile is much less likely and necessary.

For more:
- see this Bloomberg article
- see this WSJ article (sub. req.)

Related Articles:
Dish, SoftBank poised for bidding war over Sprint
Sprint's plans in limbo thanks to Dish's $25.5B offer and Verizon's play for Clearwire
Dish makes $25.5B offer to buy Sprint, countering Softbank
Dish amasses $10B cash pile as questions swirl over its plans
Report: Worries about Chinese vendors weigh on Sprint/Softbank deal
FCC's Genachowski says review of Sprint/Softbank deal is on track

Read more about: softbank, Softbank Mobile
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By Phil Goldstein

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3. Report: Former CTIA chief Wheeler front-runner for top FCC post

As expected, Samsung Electronics is bringing its flagship Galaxy S4 to a bevy of U.S. carriers--and the operators are tripping over themselves to offer deals tied to the phone in an attempt to boost sales.

Sprint will start selling the 16 GB version of the GS4 April 27 for $250 with a two-year contract

The Galaxy S4 will be available from Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T), Sprint Nextel (NYSE:S), T-Mobile USA, U.S. Cellular (NYSE:USM), Cricket provider Leap Wireless (NASDAQ:LEAP) and C Spire Wireless starting this month. Further, the Galaxy S4 will be sold at Best Buy and Best Buy Mobile, Costco, Radio Shack, Sam's Club, Staples, Target and Walmart.

And, not surprisingly, each carrier is offering the Galaxy S4 in a slightly different pricing format with the hope of getting S4 users onto their network--the gadget is expected to be a blockbuster.

Sprint, for instance, will start selling the 16 GB version of the GS4 April 27 for $250 with a two-year contract. However, it said that for a limited time only new customers who switch to Sprint from another carrier will receive an additional $100 instant credit, reducing the price of the phone to $150. Sprint said pre-orders will begin April 18.

U.S. Cellular, meanwhile, is offering the GS4 for $200 with an instant rebate. In addition, the carrier is exclusively offering a $60 "S View" flip cover for free to anyone who pre-orders the device online. The flip cover is has a clear window to read a text message, answer or reject a call, and view the battery status. U.S. Cellular customers can begin pre-ordering the phone now with sales starting later this month.

T-Mobile said that under its new, no-contract Simple Choice plans customers will pay a down payment of $150 with 24 equal monthly payments of $20 for qualified buyers, bringing the total cost to $630. Customers can also pay the full cost of the phone upfront. Once customers pay off the phone's cost under T-Mobile plans, their monthly bill goes down. T-Mobile said the Galaxy S4 will be available online starting April 24, and at select T-Mobile retail stores and through select dealers and national retail stores starting May 1.

AT&T said it its taking pre-orders for the Galaxy S4 now and devices will be shipped on April 30. AT&T is offer the 16 GB GS4 for $200 with a two-year contract.

Representatives from Verizon and C Spire did not immediately respond to requests for comment about their Galaxy S4 launch plans. A Cricket spokesman said the company is not announcing pricing or availability yet.

The S4 runs Android 4.2.2 Jelly Bean and sports a 5-inch 1080p Super AMOLED display with 441 pixels per inch resolution. The device runs a quad-core 1.9 GHz (NASDAQ:QCOM) Snapdragon 600 processor in the U.S., and an octa-core 1.6 GHz Samsung Exynos processor in other markets, and includes a 13-megapixel camera and a 2-megapixel front-facing camera, 2 GB of RAM, and will come in 16 GB, 32 GB, and 64 GB variants, with a removable 2,600 mAh battery.

S4 will offer what Samsung calls a "Smart Pause," which the company said will allow users to control the screen by where they look. Specifically, the technology will pause a video when the user looks away. Also, Samsung said its S4 "Air View" technology will allow a user to hover with their fingers over the screen to preview the content of an email, image gallery or video without having to open it. The phone also offers an "S Translate" translating service that supports English, Chinese, French, German, Italian, Chinese, Japanese, Portuguese and Latin American Spanish, and supports speech to text and text to speech.

The Galaxy S4 will also be going head-to-head with the HTC One, which AT&T, Sprint and T-Mobile are offering earlier than the Galaxy S4. AT&T is selling the 32 GB One starting April 19 for $199.99 with a two-year contract, and is the only U.S. wireless carrier at launch to also offer a version with 64 GB of memory for $299.99 with a two-year contract. Sprint is also launching the 32 GB One April 19 for $199.99 with a two-year contract. T-Mobile confirmed via Twitter it will launch the HTC One April 24, the same day as the Galaxy S4. T-Mobile CEO John Legere has said the One will be available for a $99.99 down payment, though he did not detail the monthly payments.

HTC is trying to be more aggressive in its marketing for the well-reviewed One to counter the marketing Samsung is likely going to drop for the Galaxy S4.

For more:
- see this Samsung release
- see this CNET article

Related Articles:
Samsung posts 53% jump in expected Q1 profit ahead of Galaxy S4 launch
HTC receives 'several hundred thousand' U.S. pre-orders for One smartphone
Samsung to open 1,400 mini-stores within Best Buys, challenging Apple
Samsung unveils Galaxy S4, draws support from AT&T, Verizon, Sprint and T-Mobile

Read more about: Galaxy S4, Sprint, U.S. Cellular
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By Phil Goldstein

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4. Microsoft gets Foxconn parent Hon Hai to license its patents for Android

Tom Wheeler, a former CTIA president who is now a venture capitalist and a larger donor to President Obama, is a lead choice to succeed Julius Genachowski as the chairman of the FCC, according to a TIME report.

Wheeler

The report, which cited unnamed "top telecom analysts and D.C. policy sources," said Wheeler is among the top candidates for the job. Wheeler was president of the CTIA from 1992 to 2004 before joining D.C.-based venture capital firm Core Capital Partners as managing director in 2005. Wheeler, who raised almost $250,000 for Obama's 2012 re-election effort, is seen as someone with the technology and policy chops to do the job. However, as a former lobbyist, he has also taken flak from public interest groups and some lawmakers.

As TIME notes, Wheeler enjoyed a recent boost from several prominent former Obama administration officials, who wrote a letter to the president supporting Wheeler. "Tom has had an impressive career in the telecommunications and high-tech field that makes him eminently qualified for this position," the officials wrote. "He understands the importance of reclaiming the pro-competition, pro-innovation, pro-growth regulatory ideal."

Wheeler declined to comment, according to TIME.

"That the White House has yet to nominate a replacement in the aftermath of Genachowski's resignation announcement and early Wheeler opposition, could create the impression Obama is having second thoughts about appointing an individual who was a prominent lobbyist for the cable and wireless industries in the past," Medley Global Advisors analyst Jeffrey Silva recently wrote. "We're told that is not necessarily the case and that the absence to date of an Obama FCC chairman nomination is more likely due to follow-up vetting of Wheeler by the FBI."

In reading the tea leaves of the recent letter in support of Wheeler, Silva noted: "By signing onto the pro-Wheeler letter, Andrew Schwartzman, former president of the progressive Media Access Project, acts as counterbalance of sorts to opposition by some left-leaning public interest groups. The letter backing Wheeler also effectively serves to remove from contention an outside FCC chairman candidate who likely would have attracted significant political (mostly Republican) and industry opposition."

"After picking up some helpful endorsements to cover his left flank, former wireless and cable industry lobbyist Tom Wheeler appears to still have the inside track on becoming FCC chairman, in our opinion," Stifel Nicolaus telecom analysts Christopher King and David Kaut wrote in a recent research report. "We believe he would be a capable chairman who is receptive to many wireless and cable policy arguments, but would feel pressure from rivals and critics of those sectors, including wireline telcos and broadcasters to demonstrate independence."

However, FCC Commissioner Jessica Rosenworcel received her own letter of support last month from 37 senators. However, picking Rosenworcel has its own complications, since Obama would be passing over Commissioner Mignon Clyburn, who is more senor on the panel.

"Instead of improving Rosenworcel's chances for FCC chairman, the letter, choreographed by Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.), may have worsened her prospects because of concern that Rosenworcel (a former senior telecom legislative advisor to Rockefeller's panel) could at a minimum have divided loyalties between Congress and the president," Silva wrote.

For more:
- see this TIME article
- see this Broadband Breakfast article

Read more about: Barack Obama
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By Phil Goldstein

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