Sprint, Dish Network Could Merge in Unexpected $25.5 Billion Deal

Sprint (NYSE: S) has become one of the most attractive telecommunications companies in the world, having earned a $20.1 billion bid from Japan-based SoftBank last fall.

Now the company has another suitor: DISH Network (NASDAQ: DISH).

The satellite TV giant surprised the world Monday morning when it announced that it is willing to pay $25.5 billion for Sprint.

"The DISH proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal," Charlie Ergen, Chairman of DISH Network, said in a company release. "Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined DISH/Sprint with a significantly-enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal."

DISH has been interested in entering the wireless carrier market for more than a year. The company had planned to build its own service to compete against the likes of Verizon (NYSE: VZ) and AT&T (NYSE: T), but those plans were reportedly put on hold when the FCC denied Dish's request for a waiver. At the time, DISH believed that the waiver would have helped the company "build a new, national high-speed wireless network."

By acquiring Sprint, DISH could enter the cellular service market right away. It would automatically gain access to millions of Android and iOS customers, and could use its satellite TV service to promote the launch of new handsets.

This is not the first acquisition that DISH has proposed, but it could be the biggest. Two years ago, DISH acquired Blockbuster Video in an attempt to bolster its streaming video library.

The company also took control of many of the remaining Blockbuster Video outlets, many of which have been closed. An additional 300 locations will be shut down this year, resulting in the loss of 3,000 jobs.

It seems unlikely that a similar fate could befall Sprint. While the deal is not set in stone (Sprint could go with SoftBank instead or choose to remain public), DISH seems to be more interested in the cellular service market now than it is streaming video.

According to The Wall Street Journal, Deutsche Telekom, T-Mobile USA and MetroPCS (NYSE: PCS) have been speculated as potential targets for DISH's strategy. DISH ultimately chose to make an offer for Sprint, however.

"We felt like we needed to act now," Thomas Cullen, Dish's executive VP for corporate development, told The Wall Street Journal.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis@benzingapro.com. Follow him @LouisBedigianBZ