Jul 26, 2019

DOJ approves T-Mobile-Sprint deal with conditions

Illustration: Rebecca Zisser/Axios

The Department of Justice has approved T-Mobile's deal to acquire Sprint, requiring the companies to divest some assets that Dish Networks can use to build a new fourth national U.S. wireless network.

Why it matters: T-Mobile and Sprint have argued that a combination of their resources will help them compete with market leaders Verizon and AT&T. Opponents of the deal argued that it will reduce competition.

The Justice Department and five states reached the settlement with Sprint and T-Mobile, which calls on the companies to:

  • Sell Sprint's prepaid brands (Boost, Virgin and Sprint Prepaid) to Dish Network.
  • Make available at least 20,000 cell sites to Dish
  • Divest some spectrum in the 800MHz range to Dish
  • Provide Dish with "robust access" to the T-Mobile network for at least 7 years while Dish builds out its 5G network
  • engage in "good faith" negotiations about leasing some of Dish's existing 600MHz spectrum

Yes, but: Dish already has been sitting on a bunch of spectrum that it has yet to use and many wireless industry experts doubt its ability to emerge as a serious fourth player in the market.

What they're saying:

  • Assistant Attorney General Makin Delrahim said that the merger "would be anti-competitive” if not for the remedies the agency includes in its settlement.
  • Former FCC official Gigi Sohn: "The state AGs who sued to block the merger shouldn’t be fooled by this weak attempt to maintain competition in the mobile wireless market.... A new mobile wireless entrant that starts with zero postpaid subscribers and that must rely on its much bigger rival, the new T-Mobile, just to operate is not a competitor. It's a mobile Frankenstein."
  • T-Mobile CEO John Legere noted in a statement that the Dish deal won't change "previously announced target synergies, profitability and long-term cash generation" projections.
  • Dish Chairman Charlie Ergen said the deal will help fulfill two decades of work and more than $21 billion in spectrum investments. Dish also notes in a press release that the deal requires it to "use its spectrum to deploy a nationwide 5G broadband network covering at least 70 percent of the U.S. population by June 14, 2023" or else "make voluntary contributions to the U.S. Treasury of up to $2.2 billion.”

What's next: A court will have to approve the deal, and 10 other states have separately sued to block it. Those states have asked the court for more time in the event of a DoJ settlement that changed the terms of the deal, as is now the case.

  • The FCC also needs to give the agreement formal approval, but Chairman Ajit Pai had signaled his support even before the Dish deal and says he will now circulate a draft order approving the transaction.
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