$S $TMUS - T Mobile and Sprint take the next step
How do you know when it’s official? When the Justice Department gives its blessing.
T-Mobile (+5.43%) and Sprint (+7.39%) finally got that validation yesterday when DOJ officials greenlighted their more than $26 billion merger after five years of on-again, off-again (the merger was first proposed in June 2014).
Sprint’s taking T-Mobile’s name: Once combined, the country’s third and fourth largest wireless providers plan to be called T-Mobile and serve over 90 million U.S. customers. The first and second largest providers, Verizon and AT&T, each have about 100 million wireless customers.
But relationships take work
And attorneys general from 13 states and D.C. are testing this pair’s devotion. They sued to block the merger last month, arguing that reducing the number of big-league telecom players limits competition and raises prices. If the marriage survives the lawsuit, 95% of American cellphone customers will get service from the top three U.S. operators.
The trial is scheduled to start in October...and T-Mobile said it expects to close the Sprint deal in the second half of the year.
The DOJ knows it’s all about compromise
Which is where Dish Network (+0.87%) and its sought-after airwaves come in. Under the deal officials struck with T-Mobile and Sprint, satellite TV provider Dish will snap up some of the pair’s divestitures and promise the DOJ a 5G rollout.
Dish will get about 9 million Sprint prepaid cellphone customers, which it can move from pay-as-you-go to the more profitable postpaid model. It’ll also be writing thank you notes for more wireless spectrum, hundreds of retail locations, and "robust access" to the newly combined company’s network.
Zoom out: The shadow hanging over all of this is that coveted 5G tech. The government wants the U.S. to get to the next wireless generation ASAP, which is why part of the deal involves T-Mobile promising 5G access for 97% of the U.S. population in three years.
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