The ongoing merger between the third- and fourth-largest U.S. mobile carriers may have finally cleared its last hurdle, with a federal court judge ruling in favour of T-Mobile’s takeover of Sprint in a move that would create a sizeable new third contender in the U.S. telecom market, next to giants AT&T and Verizon.
The plan for the two carriers to unite has been ongoing for over two years now. T-Mobile and Sprint first began talking about tentative terms for a merger back in late 2017 in a move that was poised to represent a major consolidation of the U.S. telecommunications marketplace, and would have given both companies the necessary resources to build out a 5G network that could compete with the larger incumbents.
After both companies came to a deal in early 2018, the U.S. Federal Communication Commission put things on hold, saying it was going to need some time to review the proposed merger, largely in order to study the technical aspects of the new network engineering model that the newly-unified companies would be moving forward with.
Meanwhile, the deal also went before the U.S. Department of Justice to be reviewed for potential antitrust and anticompetitive issues, receiving the green light last spring to proceed, subject to a few conditions, including that the new carrier wouldn’t raise prices for three years following the merger, that they must commit to building a coast-to-coast 5G network that would cover 97 percent of U.S. customers within three years, and 99 percent of Americans within six, and that it would need to sell off some of its assets to Dish to give it a leg up in filling the void left by Sprint as the fourth-largest U.S. carrier.
Then finally, after more than a year of analysis, the FCC also voted in favour of the merger, which should have cleared the way for everything to proceed, and in fact, T-Mobile was so enthusiastic about getting started that it announced the rollout of its nationwide 5G network only two days later.
One Last Hurdle
Unfortunately, while “The New T-Mobile,” as it was to be called, received every necessary regulatory blessing needed to proceed, it still had to face opposition from 13 U.S. States and the District of Columbia, who filed a lawsuit calling for the merger to be blocked on the basis that it was anti-competitive and would be harmful to consumers.
In the lawsuit, the states feared that the merger would reduce competition in the telecommunications industry, which would, in turn, result in higher cellphone bills that would impact lower-income customers, even though T-Mobile and Sprint have said that they don’t plan to raise prices, and in fact are prevented from doing so for the first three years after the merger.
According to The New York Times, however, it seems that a U.S. federal court judge doesn’t agree with the states’ concerns, ruling today in favour of the deal, indicating that he believes The New T-Mobile will have a more positive impact for consumers thanks to its ability to more effectively take on AT&T and Verizon with a unified front.
In the ruling, Judge Victor Marrero of the U.S. District Court in Manhattan praised T-Mobile as a “maverick that has spurred the two largest players in its industry to make numerous pro-consumer changes,” and said that he saw no reason why the merged companies wouldn’t continue to employ this “undeniably successful business strategy” to continue to offer consumers more choices.
Technically speaking, T-Mobile will actually be buying Sprint for approximately $26.5 billion, although this will be done entirely in the form of stock transactions. While the deal was supposed to close late last year, the lawsuit from the states means that it missed its original closing date, and as a result has had to renegotiate the deal for the new timeline.
With all of the necessary regulatory approvals already in place, however, and the last challenge to The New T-Mobile now having been struck down, the transaction is expected to close by April 1, creating a new carrier that will have more than 100 million customers. Sprint customers will ultimately end up with T-Mobile plans, while those on Sprint’s prepaid brands such as Boost and Virgin Mobile will be inherited by Dish as part of the DOJ’s requirements that T-Mobile sell those assets off.
Meanwhile, T-Mobile has already launched its nationwide 600MHz 5G network in 5,000 cities and towns across the U.S. ahead of its own schedule and well ahead of the deadlines mandated by its deals with U.S. regulators. With the actual deal now going through, it’s only a matter of time before we see The New T-Mobile’s 5G coverage ramp up even further, which will hopefully provide iPhone customers with access to more affordable plans when Apple’s 5G iPhone lineup arrives this fall.