Commentary

Federal Judge Reportedly Will Approve T-Mobile, Sprint Merger

Judge Victor Marrero will give the nod to the $26.5 billion merger of T-Mobile and Sprint in U.S. District Court in New York today, sources are telling reporters for two news organizations, sending the stock of Sprint soaring and T-Mobile surging in after-hours trading.

“Three sources told The New York Times the case brought by a group of attorney generals aiming to scupper the deal on competition grounds would be rejected, though it noted further conditions could be imposed as part of the decision. A number of concessions have already been made by the operators to get the regulatory nod, including agreeing to divest assets to aspiring 5G rival Dish Network. The pending court decision is the final major hurdle the operators face,” Chris Donkin writes  for Mobile World Live.

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And “people familiar with the matter” tell The Wall Street Journal that “the parties have been notified of the imminent ruling” and it will “hand the carriers a victory over a group of state attorneys general who argued the merger could result in higher cellphone bills for customers,” Cara Lombardo and Drew FitzGerald report.

“Concerns about the antitrust fight had weighed on Sprint’s share price in recent months, pushing it to a deep discount to T-Mobile’s all-stock offer. Shares of Sprint surged more than 50% in after-hours trading Monday to $7.49 after The Wall Street Journal reported on the decision. T-Mobile shares added 8%,” Lombardo and FitzGerald add. 

Sprint had risen to $7.97, up 66%, at 6:42 this morning.

“The merged company would compete with AT&T and Verizon in the U.S. wireless industry. Previously, the DOJ and FCC had approved the merger after reaching a side deal with Dish Network, the satellite TV provider that wanted to develop its own wireless platform. Multiple states had sued to block the deal,” writes  CNBC’s Kif Leswing.

“The lawsuit was the final roadblock to the merger, which made steady progress through the approval process since it was announced in April 2018. If the judge’s ruling goes in favor of the two companies, the deal will create a new telecommunications giant, called T-Mobile, that will have more than 100 million customers,” Edmund Lee and Andrew Ross Sorkin write  for The New York Times.

“T-Mobile and Sprint have long said the merger was crucial to their futures in an industry challenged by pricing wars that have undercut profits and stalled growth. By combining with Sprint, T-Mobile has said it would be able to accelerate its development of 5G, the next generation of cellular networks,” Lee and Sorkin add.

“T-Mobile has long argued that it needs Sprint's spectrum to build a truly robust 5G nationwide network. Sprint is the only U.S. carrier to currently offer 5G on what is known as midband spectrum. This frequency that allows for faster data connections than the low-band 5G network T-Mobile turned on for 200 million people on Friday, but with significantly more range than the higher frequency millimeter-wave 5G currently favored by Verizon,” Eli Blumenthal writes  for CNET.

“The carrier says that by merging with Sprint it will be able to build out a network that utilizes all three flavors of 5G: low-band, midband and millimeter-wave,” he adds.

Then there’s Dish, which hopes to take Sprint’s spot as a fourth major competitor.

“The deal is also a victory for Dish Network Corp. co-founder and chairman Charlie Ergen, who is buying assets from the two carriers to set up a new wireless network. With his company’s core satellite TV business in decline, Ergen has amassed a trove of airwaves to build a state-of-the-art network,” write  Bloomberg’s David McLaughlin, Erik Larson and Scott Moritz for Yahoo Finance.

But there’s much work to be done.

“What is Dish's strategy for retail sales of its wireless plans and for phone sales? The company hasn't talked about this. But it will be entering a competitive landscape that’s well established. And it will need a retail strategy that doesn't ignore urban areas,” observes   Jeff Moore for Fierce Wireless.

“The current No. 4 carrier, Sprint, has painstakingly built a major retail and advertising presence over the past quarter century. Sprint has nearly 4,000 stores. A slight majority are corporate stores, and there are more than 1,800 stores operated by Sprint dealers. Sprint is sold at Walmart, Best Buy, Sam’s Club, and at some Costco stores. It has taken Sprint decades to develop this thorough retail presence and to build a brand that has a reputation of providing value for the dollar,”  Moore continues.

“One merger opponent, Gigi Sohn, a former telecoms regulator now at Georgetown Law, tweeted her displeasure with reports of the decision. ‘If #antitrust law doesn’t even block a 4-3 merger like this, we need to start from scratch,’ she tweeted, referring to the market shrinking to three from four competitors. ‘I’ll have more to say tomorrow after I read the judge’s decision (through my tears),’” Reuters’ Diane Bartz and Greg Roumeliotis report.

Outgoing T-Mobile CEO John Legere is, no doubt, having a different reaction -- all the way to the bank. 

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