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The Dish (DISH) effort to out-bid Softbank for Sprint (S) sounds like a great reason to buy Sprint shares.

But watch out below.

The frantic bidding between the two companies misses a key point. Once a deal is done, the winner will have to spend billions of dollars combining it with the spectrum of Clearwire (CLWR) and effectively marketing the result, if there is to be hope of breaking the Verizon (VZ) Wireless and AT&T (T) duopoly.

As is true in many markets, the U.S. mobile market is a two-horse race. Between them, Verizon and AT&T have about 70% of the market, leaving crumbs for everyone else.

Masayoshi Son's idea was to push his way through as he did in Japan, where he bought a moribund Vodafone Japan, added new technology, and pushed prices down aggressively. As BGR notes, Softbank wound up not just competing, but taking a dominant share of that market.

The idea behind DISH is somewhat different. DISH sees a "triple play" opportunity, combining Internet, mobile and entertainment in one subscription. In this scenario the company's market share vs. the two incumbents is less important than its ability to steal share on the video side from DirecTV and the cable operators.

But it all takes money. And spectrum. Much of the spectrum in both companies' scenarios is held by Clearwire, which has been in deep financial straits for some time. Sprint holds the bulk of the shares, but it really needs control in order to proceed.

So Verizon's move to buy some of Clearwire's spectrum comes off as very clever. The cash would be a lifeline for Clearwire, but taking the cash would also deny Sprint the extra spectrum it needs to be competitive.

Since all this was announced the price action has been predictable. Sprint is up 15%, DISH is up 1.5%, while shares of Softbank (OTCPK:SFTBF) have plunged almost 7%. DISH is seen as being in pole position to complete its deal, and Softbank is seen as weakened by having its bid trumped.

But there is another way for this to play out that would do great harm to Sprint bulls. Namely, Softbank and DISH could combine their bids. Verizon Wireless is itself a joint-venture, between Verizon and Vodafone. A Softbank-DISH combination through Sprint would offer consumers the best of all worlds - competitive markets in wireless and entertainment - and the combined company would have the cash to move forward without financial strain.

Such a move, however, would be very bearish to Sprint in the short term. The combined deal would likely be done on Sprint's terms, which are lower. The current price of Sprint indicates a value well north of Softbank's offer, although well short of the DISH offer.

All of which tells me you need to be careful here. Peace could break out at any moment.

Source: Sprint Shareholders: Watch Out Below