Dish Trying to 'Agitate' Sprint, Not Buy: Grubman

Friday, 31 May 2013 | 9:35 AM ET
Grubman Raises Red Flag on DISH-Sprint Deal
Friday, 31 May 2013 | 7:37 AM ET
Former telecom analyst Jack Grubman, Magee Group founder, says the "math" don't seem to add up in the pending deal between DISH Network and Sprint Nextel.

Billionaire founder of Dish Network Charles Ergen does not want to own wireless companies Sprint Nextel or Clearwire, telecommunications expert Jack Grubman told CNBC on Friday. It was his first television appearance since his $15 million settlement with the SEC in 2003 over analyst conflict of interest allegations.

"[Ergen] wants to agitate … to get a network access deal from Sprint," the founder of consultancy firm Magee Group said in a "Squawk Box" interview.

With the subscription television business in secular decline, Dish has been "snarfing up spectrum" to offer terrestrial cellular service, Grubman added, pointing out that the company still lacks a network.

This week, Dish Network increased its offer to buy Clearwire to $4.40 a share, which tops a Sprint offer for Clearwire of $3.40. Sprint already owns about 50 percent of Clearwire.

At the same time, Dish has bid $25.5 billion for all of Sprint, trying to outbid Japan's Softbank, which has offered $20.1 billion for 70 percent of Sprint.

In a New York Times DealBook op-ed, Grubman wrote:

"For someone who made his name covering the 1990s explosion in the telecommunications sector, the "strategic logic" behind Dish Network's bid for Sprint Nextel brings back bad memories.

"A newly formed, highly leveraged company promising to take market share from more established competitors with stronger, less leveraged balance sheets is a movie I have seen before. Trust me, it ends badly."

Grubman broke his public silence a decade after he agreed with the Securities and Exchange Commission to pay the $15 million fine, and was permanently barred from the securities industry.

His settlement was one of several high-profile actions resulting from the SEC's investigation into allegations of undue influence of investment banking interests on research analysts at brokerage firms.

Ten top investment firms at the time also settled with the SEC and agreed to pay $1.4 billion penalties.

By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.

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