T-Mobile is inching closer to getting the Justice Department to sign off on its $26 billion bid to buy Sprint thanks to a deal to sell assets to Dish Network, according to several reports.
The merger, which was announced more than a year ago, could bring about a seismic shift in the mobile world. The Justice Department is reportedly working out the final details on an agreement with T-Mobile in which the carrier would sell assets to Dish that would make the satellite TV provider a viable fourth competitor in the nationwide wireless market.
The Justice Department has yet to approve the deal. The agency has been concerned that reducing the number of nationwide nationwide carriers from four to three would hurt consumers. The Federal Communications Commission, which also must approve the deal, gave its blessing last month.
The deal needs the blessing of both the FCC and the Justice Department. The two agencies usually work side by side on merger reviews and typically agree on whether to approve deals. Experts say it’s rare that they’d come to different conclusions. Approval from the Justice Department could also help the company as it faces lawsuits filed by a group of state attorneys general who argue the merger should be stopped because it will harm competition and increase prices.
If the deal is approved, the company would retain the T-Mobile name, and T-Mobile CEO John Legere and his management team would run day-to-day operations.
The deal comes at a time when the US carriers are bending over backward to win your business, with offers like unlimited data and freebies, such as access to Netflix. Sprint is still giving away a year of service for free. Those competitive pressures have driven T-Mobile and Sprint together. And while executives from both companies vow lower prices and better service, consumer groups and analysts are skeptical.
Indeed, some senators are seeking to kill the deal. T-Mobile and Sprint executives have appeared before lawmakers twice to make their case. In a bid to convince regulators, T-Mobile hired a former commissioner with the Federal Communications Commission and vowed not to raise prices.
Worried about how this might affect you? CNET breaks down everything you need to know about this mega mobile merger.
Why a merger?
T-Mobile and Sprint have long courted each other. The logic is simple: Verizon and AT&T are far bigger than either of the two companies. A merger would create a stronger competitor.
Actually, T-Mobile and Sprint tried twice before. Back in 2014, Sprint parent SoftBank floated the idea of a deal with T-Mobile, but regulators and the White House were keen on keeping four national competitors.
The current administration and the FCC are more open to deals, which is why both sides got close to a deal in 2017. The deal fell apart in late 2017 when SoftBank and T-Mobile parent Deutsche Telekom couldn’t agree on how much control each side would get.
So this deal is a slam dunk, right?
Nope. Since the deal was announced more than a year ago, analyst opinions on whether the merger will get regulatory approval have hovered around 50-50. The odds improved when the FCC threw its support behind the deal. But the DOJ concerns left some doubt on the outcome. Remember, the government sued to kill a deal between AT&T and Time Warner, and those two companies weren’t competing against each other. The DOJ ultimately lost that case.
T-Mobile and Sprint have pushed the idea that the merger would create jobs, largely thanks to the combined company’s investment in 5G. In January, they said they’d build five customer service centers after the deal closed. They’ve also promised to freeze prices for the next three years. And they’ve been promising a nationwide build-out of their 5G network, along with a new service to offer rural broadband customers a fixed wireless broadband solution.
The company codified those promises in a deal with the FCC in exchange for the agency’s support. But the Department of Justice still has concerns. Then there are the. A group of 13 state attorneys general and the District of Columbia, led by New York Attorney General Letitia James and California Attorney General Xavier Becerra, filed or joined a multistate lawsuit last month claiming the merger would “deprive consumers of the benefits of competition and drive up prices for cellphone services.”
What’s the deal the Justice Department has hammered out?
The Justice Department reportedly has been looking at Dish as a potential fourth carrier in the wake of the merger. This would answer the agency’s concerns that the deal would leave the US wireless market competitive with just AT&T, Verizon and T-Mobile as national players. As part of this deal, Dish would buy additional wireless spectrum from Sprint and T-Mobile, so that it could build its own wireless network. Sprint and T-Mobile would also sell Dish Sprint’s prepaid services, Boost Mobile, Virgin Mobile and Sprint prepaid, according to Bloomberg. Also as part of the deal, Dish would get a six- to seven-year wholesale agreement to sell T-Mobile wireless service under the Dish brand, Bloomberg said.
The companies are still working through the details around the network sharing. This could mean that the Justice Department may have a decision as early as next week, the report said.
Why would Dish want to strike a deal with T-Mobile?
Dish already owns billions of dollars’ worth of its own spectrum, but the company has yet to build its own wireless network. Some have accused the company of hoarding valuable wireless spectrum, but it has yet to make a major announcement about the plans for its spectrum. The company has until March 2020 to utilize the airwaves or risk losing its licenses. The satellite TV provider has reportedly been hoping to gain an extension from the government as part of its negotiations to buy the divested assets.
Purchasing Boost, Virgin Mobile and Sprint wireless prepaid businesses and getting additional airwaves would make it easier and more cost-effective for Dish to finally build a competing network.
So Dish will be a new fourth carrier?
Not yet. While reports have circulated in recent weeks that Dish was closing in on a deal with T-Mobile to purchase the Sprint assets, you can never count anything over with Dish co-founder Charlie Ergen until an agreement is officially announced.
Just days after a report Read More>>on a divestiture deal, a new report Friday from Fox Business Network’s Charles Gasparino claimed that “what looked like ‘done deal’ broke down at least once because of changing deal terms” from Ergen………