Telecom & Wireless

Dish Network Cites National Security Threat of Sprint Acquisition by Softbank

Satellite TV
Source: Thinkstock
It was perhaps inevitable that the fight between Japan’s Softbank and Dish Network Corp. (NASDAQ: DISH) over Sprint Nextel Corp. (NYSE: S) would take turn in this direction. In a not-at-all-veiled attempt to paint Softbank as a threat to U.S. national security, Dish Network has launched a new website that amounts to a lobbying effort aimed at whipping up sentiment against Softbank’s acquisition of the country’s third-largest wireless carrier.

The strategy appears to be directed at both Congress and the U.S. population in general, and is reminiscent of similar campaigns that derailed the proposed 2005 acquisition of Unocal by China’s Cnooc Ltd. (NYSE: CEO) and the attempt in 2006 by Dubai Ports World to acquire the management of six major U.S. ports. Both acquisitions were scuttled when issues of national interest and security were raised.

Dish Network appears to be launching a counterattack to a reported threat by Softbank to withhold a piece of the underwriting of the planned IPO of China’s Alibaba e-commerce website from any bank that offers to help fund Dish Network’s offer for Sprint. Softbank owns a one-third interest in Alibaba.

The new Dish Network website also conjures a threat from the use of Chinese-made network equipment to U.S. national security. In February 2011, the U.S. Committee on Foreign Investment in the United States (CFIUS) forced China’s Huawei Technologies to unwind its $2 million acquisition of bankrupt U.S. networking startup 3Leaf Systems.

It is hard to fault Dish Network for running out a strategic attack that has proved successful on at least three other occasions. The company’s arguments against an acquisition of Sprint by Softbank fit easily into the mold carved out by others. The one significant difference is that Softbank is based in Japan, one of the U.S.’s staunchest allies. It will be a lot harder to persuade Congress — and CFIUS — that Softbank poses a serious threat to U.S. national security.

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