Technolgy Rules: T-Mobile and Sprint get DOJ approval for $26 billion merger deal

Friday, July 26, 2019

T-Mobile and Sprint get DOJ approval for $26 billion merger deal

The U.S. Department of Justice this morning gave the green light to T-Mobile US and Sprint for their proposed $26 billion merger. The deal, which would combine the nation’s third and fourth largest carriers (by subscriber number) has been green lit on the condition that Sprint sell its prepaid assets (including Boost Mobile) to Dish Network.

As part of the deal, some nine million prepaid subscribers will move over to Dish, which will also have access to T-Mobile/Sprint’s network for a period of seven years.

The proposed merger has been under regulatory scrutiny for some time now, as the deal will leave three major wireless carriers accounting for more than 95% of U.S. mobile phone customers. Last month, a group of attorneys general led by New York and California sued to block the deal over concerns that limiting competition would ultimately drive up prices for consumers.

“The promises made by Dish and T-Mobile in this deal are the kinds of promises only robust competition can guarantee,” New York Attorney General Letitia James said in a statement offered to TechCrunch.“We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger’s harm to consumers, workers, and innovation.”

A spokesperson for California’s AG tells TechCrunch that the office is currently reviewing the settlement. As it stands, the lawsuit could still present a hurdle for the deal.

“The reported deal would eliminate Sprint, an established competitor in the wireless marketplace, and replace it with Dish, an unproven newcomer that has no experience in building its own wireless network, which it will need to build essentially from scratch,” George Slover, senior policy counsel for Consumer Reports said in a statement. “The deal reportedly gives DISH some of the building blocks it will need to make a go of it. But it could take years for DISH to get to the point where Sprint is now — if it ever gets there.”

Proponents of the deal, meanwhile, have argued that the merger will actually make a combined T-Mobile/Sprint more competitive with category leaders Verizon and AT&T. Under the deal, T-Mobile (as it will be known) will represent around 80 million consumers in the U.S., making it a much closer third place to the around 100 million subscribers both top carriers currently have. They have argued separately that a deal would make it easier to compete with AT&T and Verizon in the push to deploy 5G, a sentiment with which the DOJ appears to agree.

“With this merger and accompanying divestiture, we are expanding output significantly by ensuring large amounts of currently unused or underused spectrum are made available to American consumers in the form of high quality 5G networks,” DOJ antitrust chief Makan Delrahim told The Wall Street Journal.

T-Mobile has been particularly aggressive in its lobbying attempts, after years of suggesting a proposed merger. Notably, its CEO John Legere and other executives have spent a combined $195,000 at D.C.’s Trump International Hotel since last April.