What you need to know
- Sprint and T-Mobile are finally merging after a year awaiting regulatory approval.
- Deal will see Sprint sell prepaid assets, including Boost and Virgin, to Dish for $1.4 billion.
- Dish will also pay over $3 billion for Sprint’s 800Mhz spectrum.
- Dish will have access to T-Mobile’s network for 7 years until it can build its own network.
- Combined company, also called T-Mobile, will have around 140 million customers.
After a year in limbo and plenty of pushback from many sides, including lawsuits filed by Attorneys General in 10 U.S. states, the T-Mobile / Sprint merger is finally set to go ahead.
The approval came after Sprint and Dish, a satellite TV provider and hoarder of wireless spectrum that it’s never used, agreed to pay $1.4 billion to purchase prepaid assets from Sprint, including Boost Mobile, Virgin Mobile, Sprint’s own prepaid business, and an additional $3.5 billion for all of the company’s 800Mhz spectrum that it currently utilizes for its legacy 3G and newer LTE network.
The settlement requires a substantial divestiture package in order to enable a viable facilities-based competitor to enter the market. Further, the settlement will facilitate the expeditious deployment of multiple high-quality 5G networks for the benefit of American consumers and entrepreneurs.
The Justice Department is hoping that the significant divestiture will appease the remaining Attorneys General of five states will following through with lawsuits against the merger. As part of the deal, Dish will have access to T-Mobile’s network under an MVNO agreement for seven years, and Sprint will need to provide access to 20,000 cell sites and hundreds of retail locations and storefronts to help the fledgling network get off the ground. At the end of the process, the goal is to have Dish, or whatever name it eventually gives its new wireless network, act as the de facto fourth facilities-based carrier in the U.S. — the role Sprint has played until today.
There have been rumors that Google will partner with Dish to help establish that network once the assets are all transferred over, but the search giant hasn’t commented on its potential role in the venture.
So what now?
The deal isn’t done yet. While the FCC Chairmain, Ajit Pai, said in May that he supports the merger, the official vote hasn’t yet taken place. But because he holds the balance of power at the five-person commission, the vote will almost certainly accede, likely divided on party lines.
The Justice Department, which took its time to examine the merger to ensure that competition was not unduly harmed in the process of these two companies coming together, has given its go-ahead to the merger, but there are still dozens of lawsuits across the country that will need to be dropped or countered before the deal is actually approved. That could take months.
Will the New T-Mobile actually be better for consumers?
Once merged, the new T-Mobile will still only be the third-largest wireless carrier in the U.S. behind Verizon and AT&T with nearly 140 million customers, but chief executive John Legere promises lower prices and better service as we move towards a 5G future.
The T-Mobile and Sprint merger we announced last April will create a bigger and bolder competitor than ever before — one that will deliver the most transformative 5G network in the country, lower prices, better quality, unmatched value and thousands of jobs, while unlocking an unprecedented $43B net present value in synergies. We are pleased that our previously announced target synergies, profitability and long-term cash generation have not changed.
But Both T-Mobile and Sprint believe that they need to merge in order to provide the 5G coverage that will be necessary to compete with AT&T and Verizon, combining their considerable high-band, mid-band and low-band spectrum. Right now, Sprint’s 5G network relies on “sub-6” 2.5Ghz spectrum that lacks the capacity of high-band millimeter wave, but travels further and isn’t as prone to interference. T-Mobile, on the other hand, has a considerable share of low-band spectrum in the 600Mhz range that will be needed to provide 5G coverage to rural areas and less dense urban environments.
Whether prices will drop as promised remains to be seen, but there is evidence that in countries where the number of competitors drops from four to three, overall competitiveness declines and prices eventually rise, even if there’s a short-term drop to entice customer migration.
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