America's third- and fourth-largest mobile operators, T-Mobile and Sprint have secured clearance from the Department of Justice for their merger. The approval is subject to the sale of assets to Dish Network, so the latter can develop into a credible competitor.
The companies must divest Sprint’s prepaid business, including Boost Mobile, Virgin Mobile and Sprint prepaid with a total of 9.3 million customers to Dish for a price of USD 1.4 billion. Sprint will also sell 14 MHz of its 800 MHz spectrum for an additional USD 3.6 billion to Dish, three years after the merger closes in order to allow a transition period. In addition, the companies agreed to negotiate on providing Dish access to T-Mobile's 600 MHz spectrum.
T-Mobile and Sprint also must make available to Dish at least 20,000 cell sites and hundreds of retail locations they are expected to eliminate due to the merger over the next five years, and provide Dish with access to the T-Mobile network for seven years while Dish builds out its own 5G network.
Dish already owns significant spectrum assets and is preparing to launch its own mobile network. Dish co-founder and Chairman Charlie Ergen said the transaction represents the culmination of two decades of work and USD 21 billion in spectrum investments to become a wireless broadband operator.
The DoJ said the conditions mean the country's spectrum resources will be put to good use in developing 5G networks as well as create a new competitor to replace the one eliminated by the merger.
The conditional approval builds on an earlier agreement struck with the Federal Communications Commission to divest the prepaid brands and invest in expanding broadband coverage. It also includes the consent of five state attorney generals, from Nebraska, Kansas, Ohio, Oklahoma and South Dakota.
The agreed settlement remains subject to court approval; the companies expect to complete the federal clearance in Q3. There was no mention of the status of a separate suit brought by 10 state attorneys general opposing the merger.
Sprint, T-Mobile and their respective controlling shareholders Deutsche Telekom and Softbank first agreed the all-stock merger in April 2018. The approval comes just ahead of an extended deadline of end-July to complete the deal. The closing date has now been extended again to 01 November. The companies expect over USD 6 billion in annual synergies from the merger by 2024, thanks to savings on spectrum, operating costs and capital investment.
