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How Dish could save the Sprint T-Mobile merger

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Illustration: Rebecca Zisser/Axios

When T-Mobile US and Sprint first announced their $26 billion merger in early 2018, the endgame was to reduce the country's number of major mobile carriers from four to three ⁠— thus letting the new partners better compete with AT&T and Verizon. But that ship appears to have sailed.

The state of play: Multiple reports are saying that the Justice Department is insisting on the maintenance of four majors, despite T-Mobile CEO John Legere's still-available tweet about how DOJ doesn't believe the deal needs any restructuring. Enter Dish, which currently is a satellite TV company without any mobile telecom offering.

  • But it does have a bunch of spectrum, which makes it one of a few viable partners to get this thing over the finish line.
  • The idea is that T-Mobile/Sprint would make divestitures to ensure Dish could become the fabled fourth player — albeit possibly more as a reseller on the existing network, rather than a new network itself.

The big picture: It's an elegant solution, but not without its own challenges.

  • The biggest obstacle may be Dish chairman and former CEO Charlie Ergen, who holds nearly a 37% stake in the company and is known to be a very tough negotiator. What Ergen wants may not ultimately be palatable to T-Mobile, and he appears to have most of the leverage.
  • Plus, it's possible that DOJ won't like the final compromise, assuming there is one.
  • Sprint owner SoftBank recently hired another lobbyist to work on the transaction, per Axios' David McCabe.

The bottom line: When announced, this deal was presented as a much easier regulatory pass than was AT&T-Time Warner, even though it's a very vertical merger. It was wishful thinking.

Go deeper: Sprint's stock rallies again as merger hopes rise