Sprint Shareholders Shouldn't Rush Into Dish Network's Arms

Sprint shareholders have some serious thinking to do.

On the one hand, they have SoftBank's $20.1 billion offer for a 70% stake. On the other, there is Dish Network's $25.5 billion bid for the entire company.

In many ways, SoftBank's proposal, which delivers a one-time $4.9 billion cash infusion into Sprint on top of the $3.1 billion the Japanese carrier has already invested, seems to carry lower risk. While Sprint's gross debt would remain the same, the cash injection would give it more flexibility to invest in upgrading its network and allow it to participate in future deals. Dish's bid looks to be riskier. But the combined company would also have greater cash flows. Then there is the added promise of greater reward down the line. That would come if Dish-Sprint can forecast synergies worth $37 billion in today's money and successfully execute a "double play" strategy of video and voice. The latter sounds appealing. But estimating the value of synergies can involve a lot of rough math, particularly in light of the fact that Dish's bankers have yet to see Sprint's books. There is no guarantee these will pan out.