Shares of Sprint rose 84 cents, or 14 percent, to close Monday at $7.06. Because that's above Dish's offer, it indicates that investors are expecting a sweetened bid from Softbank or Dish. Dish shares fell 86 cents, or 2.3 percent, to $36.77, as the broader market retreated and investors figured that to own a piece of the combined company, it would be cheaper to buy Sprint shares instead.
The fight over Sprint pits two high-stakes gamblers against each other. Masayoshi Son, the CEO of Softbank, is a famously aggressive deal maker. Dish's Ergen is a former professional poker player and the engineer of risky deals such as the acquisition of the Blockbuster video-store chain.
"It appears to us that Sprint is in a solid position from a negotiating standpoint," Stifel Nicolaus analyst Christopher King wrote in a research note.
He said Softbank could comfortably raise its bid. Dish isn't as strong as Softbank financially, but King said Dish is a "strategically desperate" bidder and might be forced to raise its offer, as it needs Sprint to gain a foothold in wireless.
Sprint might not be Dish's last chance, however. Farrar said that if Dish is outbid by Softbank, an alternative might be to buy T-Mobile USA instead.
Cable companies, Dish's chief competitors, have also repeatedly sought an entry into the wireless world but have largely abandoned those efforts, daunted by the high cost of setting up a network. Instead, some of the largest ones have partnered with Verizon Wireless to co-market wireless and cable-TV service. Because cable modems are the most popular way to connect a home to the Internet, cable companies are also able to capitalize on the popularity of the Internet in a way satellite companies can't.
Ergen said during the conference call that Dish believed that Softbank undervalued Sprint. Although he would not say whether Dish would raise its bid for Sprint if Softbank came back with a higher offer, he said that Dish would be more than will to pay the $600 million breakup fee for Sprint and Softbank to terminate their proposed transaction.
Another component of the Sprint purchase is wireless network operator Clearwire. In December, Sprint agreed to buy the portion of Clearwire it didn't own for $2.2 billion.
That deal would give Sprint control of an affiliate it depends upon to provide high-speed "Sprint 4G" data services on some of its phones. The Clearwire deal is contingent on the Softbank deal going through, as Sprint lacks the money to complete it on its own.
Dish made its own bid of about $5.15 billion for Clearwire in January. Ergen said that Dish has not formally withdrawn its Clearwire offer and that its Sprint buyout bid is not contingent on Clearwire going through with the Sprint offer.
Further complicating the picture, Clearwire revealed Friday that it has received an offer of $1 billion to $1.5 billion for some of its spectrum rights from an unnamed company. The Wall Street Journal on Monday identified the prospective buyer as Verizon Wireless. Verizon declined to comment.
AP Business Writer Michelle Chapman contributed to this report.