Since we published our Sprint-Softbank: how it will disrupt the US market analyst’s note, a fair few things have changed. Everything has been slower and more complicated than it seemed. The minority investors in Clearwire have been troublesome, something we pointed out as an issue. (NB We’ll be discussing Disruptive strategies further at the EMEA Brainstorm in London, June 5th-6th).
But the real surprise was the intervention of satellite TV operator, DISH Network, which as regular readers of our news review will know, has tried to muscle-in on the deal with a rival bid for the whole thing. There’s some more detail here, for background.
And the soap opera continues, with the latest gripping instalment. Softbank has issued an unusually combative response, in a presentation from CEO Masayoshi Son which describes DISH’s proposal as “inferior”, “incomplete”, “inefficient”, and “illusory”, and asserts that Softbank’s is “superior” no fewer than 7 times in 46 slides not counting front-matter. Clearly someone’s read, marked, learned, and inwardly digested the bit of their Big Book of Behavioural Marketing where it says “If you do not repeat, you won’t compete.”
Son’s presentation also goes after Charlie Ergen, DISH CEO, personally, endeavouring to scare the shareholders with the prospect of a company substantially controlled by Ergen personally (he would speak for 85% of the combined company, although he would only own 36%). Here’s the action replay:
“I just deliver the results, instead of big-mouthing about the future,” Son said. “Do you want to attach a satellite dish to your smartphone? It’s going to become much heavier. I don’t see any real meaningful value that he can offer to the smartphone customers.”….”He himself admits he’s an amateur to our mobile industry,” Son said at the Tokyo event. “He does not have any history in our industry. So he’s a newcomer — totally, totally a newcomer.”
There’s certainly a bit of needle here - Son is punching upwards at Ergen, No.100 in the Fortune 500 with $10.6bn as against Son’s No.128 with $8.6bn. Like Iron Mike in the streets of Brooklyn. Or something. Certainly, this is shaping up to be the most personal and embittered merger in telecoms since Vodafone-Mannesmann or perhaps the feud between the Ambali brothers at Reliance.
The ego wars besides, Softbank has some valid points.
A Cunning Plan?
Operationally, DISH’s strategic concept can be described as “wireless quad-play”. DISH’s satellite TV network mostly serves rural or exurban customers who can’t get decent broadband or cable thanks to long DSL copper runs and sparsity. DISH proposes to add a fixed-wireless broadband product - essentially Clearwire - to their TV product and then round it off with a mobile product, essentially Sprint mainline. And Charlie Ergen is talking about selling advertising across all three channels.
They have their reasons - subscriber growth in their satellite business has slowed to a crawl, and therefore they’re looking for an upsell that would add some juice to their ARPU and margins. Son’s presentation put it this way:
In the original, this appears next to Softbank’s global subscriber numbers, which isn’t really a fair comparison - why would Japanese UMTS subscriber growth tell you anything about US satellite TV? But who said this was a fair fight?
Continue reading "Softbank-Dish Round 2: Smartphone Samurai vs Satellite Cowboy" »
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