T-Mobile and Sprint announced their intention to merge more than a year ago, but the behind-the-scenes legal wrangling delayed the federal approval. The Federal Communications Commission (FCC) got on-board with the deal months ago, but the Department of Justice (DOJ) was more skeptical. The carriers have now agreed to terms with the DOJ that allow the merger to move forward.
While the deal is billed as a merger, T-Mobile plans to swallow up the smaller carrier completely. The Sprint brand will go away, and the new carrier will simply be known as “T-Mobile.” The sticking point for the DOJ was the loss of a fourth wireless carrier in the US. Even those in favor of the deal had to admit that dropping to three US carriers had the potential to limit competition and raise prices. Although, T-Mobile and Sprint disagreed. The solution was a deal with Dish, which has been a sideline player in mobile for years.
As part of the merger, Sprint and T-Mobile will sell assets including 800MHz spectrum and the Boost Mobile prepaid carrier to Dish. While its main business is still satellite TV, Dish has purchased massive swaths of wireless spectrum in recent years — it has almost as much spectrum as the pre-merger T-Mobile, but it doesn’t have a wireless network. The assets from this deal theoretically allow Dish to become a fourth carrier. The new T-Mobile has agreed to give Dish access to its network for the next few years while it builds out a 5G network, but it seems like Dish would prefer just to get acquired by another company.
Getting federal approval for the merger is a major win for T-Mobile, even with the forced divestments to Dish. Sprint has struggled to compete in the 4G era, thanks in large part to its failed bet on WiMAX as the standard. It never caught up in LTE, but it’s well-positioned for 5G thanks to its massive block of mid-band spectrum. No other US carrier has that, which is why ATT and Verizon are pushing millimeter-wave 5G so hard.
There are still several outstanding state lawsuits blocking the deal, but several have already been dropped alongside the DOJ approval. It’s unlikely the remaining suits will last long. We expect news about how the merger will proceed in the coming months, but it will take years to fully integrate the T-Mobile and Sprint networks.
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