Newsletter
Over a year in the making, tomorrow the Justice Department is expected to approve the merger of T-Mobile and Sprint.
This comes after Dish Network agreed to purchase Boost Mobile and some spectrum from the new T-Mobile, which would cost them around $5 billion and make Dish into a viable fourth carrier. Which is exactly what the Justice Department wanted – a fourth competitor.
One could argue the Dish Network could have already been a viable competitor to the four national carriers, with all of the spectrum that it has been accumulating over the past few years. But with this additional spectrum, it can really be a competitor to AT&T, Verizon and the new T-Mobile.
Dish is going to be paying $1.4 billion up-front, and then the remaining $3.6 billion over the next few years, to T-Mobile. It will get Boost Mobile as well as some spectrum. Though the exact spectrum that Dish will be getting has not been disclosed just yet. It wouldn’t be surprising to see Dish getting some 1900MHz spectrum.
With this deal, Dish is going to get unlimited capacity from T-Mobile’s network for the first three years. With it going down from there. This is going to allow Dish to get their network up and running, piggybacking off of T-Mobile’s nationwide network. This would be similar to what Comcast and Charter are doing now with their MVNO’s, where they use Verizon’s network when there’s no WiFi hotspots available.
T-Mobile and Sprint announced this merger in April 2018. Everyone knew that it would be under quite a bit of scrutiny before it got approved (if it got approved). It’s been a long road for the two companies, convincing regulators that this merger needs to happen. In fact, Sprint had even submitted some letters stating that if this merger didn’t happen, it would be out of business in the next few years.
It’s no secret to anyone that follows the industry, that Sprint has a ton of debt (most of it coming due in the next couple of years) and it isn’t bringing in much money. It also isn’t investing as much into its network as it should be, simply because it doesn’t have that money available. The company has been shrinking in size over the past decade or so, while T-Mobile has been growing pretty dramatically. But the two are still far behind Verizon and AT&T’s size, even as a combined company. However, allowing the two to combine would mean a third viable player to the duopoly, instead of two much larger carriers and then two much smaller carriers. Which isn’t really helping anyone.
The announcement is expected to come tomorrow, and the Justice Department is expected to approve it. But there is still the fact that several State Attorney’s General are suing to block this merger. That could come into play, and whether T-Mobile and Sprint will actually be able to merge. Right now, they won’t be able to close this deal until the beginning of Q4, which is October 1, just a few days before the trial between this group of State Attorney’s General and T-Mobile/Sprint begins.