T-Mobile and Sprint Merger Approved by DOJ

The United States Justice Department has approved the $26 billion merger deal between T-Mobile and Sprint. After over a year in regulatory limbo, the merger received the green light from the last federal agency to hold out, with the Federal Communications Commission already signaling that it will approve the deal.

The Justice Department finally approved the deal after Dish reached an agreement with the carriers to acquire Boost Mobile, Virgin Mobile, Sprint’s prepaid business, and “certain” spectrum assets. This will position Dish as the replacement fourth major US carrier that will be lost once T-Mobile and Sprint merge. The two companies will be required to provide at least 20,000 cell sites and hundreds of retail locations to Dish, and the satellite TV provider will also get unfettered access to T-Mobile’s network for seven years as it works to build out a mobile network of its own using the newly acquired assets and spectrum that Dish has held on to for years. Dish has publicly remained silent on its plans throughout this entire process, but that is likely to change starting today.

“With this merger and accompanying divestiture, we are expanding output significantly by ensuring that large amount of currently unused or underused spectrum are made available to American consumers in the form of high quality 5G networks,” Makan Delrahim, assistant attorney general of the DOJ’s antitrust division, said.

T-Mobile and Sprint announced their intention to merge last April, claiming that their combined assets would make them a more viable competitor to AT&T and Verizon. The companies said they would be able to lower prices for consumers and more quickly deploy next-generation 5G networks across the country, which are arguments that have faced harsh criticism from consumer advocates and some experts.

Both the FCC and the Justice Department are required to approve the deal before it can move forward. The deal is likely to be approved by the FCC, although the official vote has yet to take place. In May, FCC chairman Ajit Pai announced that he would be voting to approve the deal after the companies made new promises to provide greater wireless and broadband access to rural areas.

“In light of the significant commitments made by T-Mobile and Sprint as well as the facts in the record to date, I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it,” Pai said. “This is a unique opportunity to speed up the deployment of 5G throughout the United States and bring much faster mobile broadband to rural Americans. We should seize this opportunity.”

T-Mobile and Dish will also be required to support e-sim technology to make switching carriers easier in hopes of spurring competition.

Shortly after Pai’s comments, the other two Republican commissioners voiced support for the deal as well, despite never seeing any documents related to the new promises. At a congressional hearing last month, commissioners Brendan Carr and Mike O’Rielly confirmed that they had yet to see the specifics of the agreement.

T-Mobile’s connections to the Trump administration have come under heightened scrutiny as the deal has progressed. In March, The Washington Post reported that the company had spent over $195,000 at the Trump Hotel in Washington, DC while lobbying for the merger.

Congress has held a number of hearings on the proposed merger, with many top Democrats (and even presidential candidates) criticizing it for shrinking the US’s major wireless carrier pool down from four to three providers. Lawmakers like Sens. Amy Klobuchar (D-MN), Kirsten Gillibrand (D-NY), Elizabeth Warren (D-MA), and Cory Booker (D-NJ) all signed letters to Pai and Delrahim, citing threats to market competition that could harm the US’s ability to lead in 5G.

“The best way to achieve the goal of high-quality, affordable, nationwide 5G is through competitive markets,” the senators wrote. “This merger moves us further away from the sort of competition we need to accomplish this aim. It will lead to excessive consolidation and undermine innovation.”

T-Mobile and Sprint’s main counterargument to those concerns was a proposed deal selling off Boost Mobile and a portion of their combined wireless spectrum. Dish will acquire the assets, a move that could supercharge the network into replacing the two companies as the fourth major carrier. Charter and Altice were also reportedly bidding for the spectrum, but Dish became the winner for both the spectrum and the additional assets.

T-Mobile has sought to merge with other major carriers in the past. In 2011, AT&T said that it would purchase T-Mobile for $39 billion, but a few months after the announcement, the DOJ nixed the deal. In 2012, T-Mobile reached an agreement with MetroPCS to take over the smaller company. The Sprint acquisition is now the company’s largest successful purchase.

The merger has one more hurdle to cross before the companies get the all-clear to finalize. Last month, over a dozen state attorneys general filed a multistate lawsuit to block the deal, headed by New York Attorney General Letitia James and California AG Xavier Becerra. “When it comes to corporate power, bigger isn’t always better,” James said. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans.”

In today’s announcement from the Justice Department, five states have agreed to settle including Nebraska, Kansas, Ohio, Oklahoma, and South Dakota. New York and California are still pushing the lawsuit opposing the deal.

“We intend to be prepared to go to trial to fight for a fair, competitive, and equitable marketplace for consumers nationwide,” Becerra said.

Now that the DOJ has approved the deal, T-Mobile and Sprint can move ahead. But if the states’ suit wins out in the end, the whole deal will have to be unwound.

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