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The battle between DISH Network's (NASDAQ:DISH) Charlie Ergen and Sprint's (NYSE:S) Masayoshi Son has provided vast entertainment, and it's been great for holders of Clearwire (CLWR).

But once the baby is split, does either player have what it takes to compete with Verizon (NYSE:VZ) and AT&T (NYSE:T) in the mobile space?

Son doesn't seem to think so. It is going to court to break a deal under which Clearwire takes $4.40/share for 25% of that company, while Sprint remains stuck on 51% ownership.

Sprint needs to hold all of Clearwire, Son believes, so that it has the spectrum and 4G technology necessary to make good on the promises it will make to consumers, of delivering more bits to them for less than its larger rivals.

Ergen, meanwhile, seems intent on maintaining Clearwire's independence and tying it into his own efforts to add a terrestrial leg to DISH, which remains stuck at a market share of under 15%. His idea is to turn the old Blockbuster into a version of Netflix (NASDAQ:NFLX), using Clearwire's spectrum, adding voice and Internet services to his mix, and using the bundle to go directly after cable while DirecTV (NASDAQ:DTV) remains stuck in "the past" of satellite entertainment.

That won't work for Sprint. Sprint needs a single brand across all its spectrum assets so it can push handsets addressing all of that spectrum. Without that, Son will remain a poor number three in the market, a situation he managed to turn around in his home market of Japan after buying Vodafone Japan in the middle of the last decade.

For investors the right move seems clear, namely to stay with the targets, the companies most likely to be taken out. And that's Clearwire, which rose 40% in value after DISH announced its offer, rather than with either parent company.

The best move in the long run, it seems to me, remains a merger of equals, a combination of Sprint, Clearwire and DISH which could go to market with enormous power and assets. The two firms, taken together, are currently worth $40 billion, a small fraction of the $194 billion AT&T market cap or the $128.7 billion market cap of Verizon.

How much is there to be gained? Consider that Vodafone was, early this year, mulling over a $80 billion deal for half of Verizon Wireless. Investors basically see the wired assets of both the phone giants as something close to worthless. A combined DISH and Sprint, with Clearwire spectrum, would have a shot at taking a ton of market power away for itself.

But that would require two billionaires to make nice, which they seem unwilling to do. So long as that's the case, stay with the targets rather than the shooters. Enjoy your run with Clearwire.

Source: DISH And Sprint Can't Split The Baby