Blog: Sprint and T-Mobile won in court, now what? – Mobile World Live

Blog: Sprint and T-Mobile won in court, now what?

17 FEB 2020

T-Mobile US and Sprint cleared another major hurdle in their nearly two-year-long quest to merge, prevailing against state legal officials in a court battle over the deal.

With approvals from the Federal Communications Commission (FCC) and Department of Justice (DoJ) already in hand, the transaction seems like it finally has a clear path to completion.

But does it really? And what should we expect if it eventually crosses the finish line?

Not so fast
While the operators scored a key victory in defeating the state attorney generals in court, a number of hurdles remain.

First and foremost is the prospect state officials won’t accept the judge’s ruling and will take the operators back to court with an appeal. Though New York Attorney General Letitia James, who helped lead the campaign against the deal, announced her state would not press ahead the possibility remains the 13 other attorney generals involved in the case might continue the fight.

Potential appeal aside, Sprint and T-Mobile are still waiting for a judge to sign-off on merger conditions proposed by the DoJ, as required by federal law. They also await a decision from the California Public Utilities Commission (CPUC), which has been reviewing the transaction since July 2018. One of 19 state commissions reviewing the deal, CPUC is the only yet to issue approval.

It is unclear whether the operators would push to close the deal with the latter outstanding.

In a research note, LightShed Partners analysts highlighted the potential for a renegotiation of the transaction terms, specifically the $26 billion price tag, as another potential barrier. T-Mobile parent Deutsche Telekom indicated it could seek an amendment due to a deterioriation in Sprint’s financial performance since the deal was announced.

T-Mobile CEO John Legere (pictured, left) stated on a recent earnings call any amendments to the merger agreement would be handled “very swiftly after the deal was approved,” but LightShed Partners said a renegotiation “could take weeks”.

After close
So what will happen if the deal ever makes it across the finish line?

One of the first things the combined company is expected to do is announce its leadership team. While Legere and T-Mobile CEO-elect Mike Sievert were already tapped to head the so-called New T-Mobile, questions remain about the future of Sprint CEO Michel Combes, and other key roles including CTO and CFO have yet to be filled.

In an interview with Mobile World Live (MWL), Strategy Analytics director Susan Welsh de Grimaldo flagged Mishka Dehghan, VP for 5G development at Sprint Business; Grant Castle from the T-Mobile networks team; and Callie Field, EVP of T-Mobile Customer Care, as standout figures who have the potential to land roles in the merged company.

New T-Mobile is also expected to work quickly to launch integrated marketing and sales offers, with Combes stating those will come “about 60 to 90 days” after close.

De Grimaldo said the combined company will have to work quickly to “delight current customers to keep them on board” and attract newcomers. In particular, she noted the second half of the year will be “crucial for ramping 5G subscribers and creating real buzz: networks have to perform, devices need to be affordable and exciting”.

“New T-Mobile has to create some compelling services offers and marketing messaging to show customers why they really need 5G, and why T-Mobile.”

The Strategy Analytics analyst and GSMA Intelligence head Peter Jarich both tipped New T-Mobile to make a play in the enterprise market, mounting a stronger challenge to Verizon and AT&T than either Sprint or T-Mobile managed to on their own.

Indeed Sievert on a recent T-Mobile earnings call, flagged the segment as a strategic focus area, noting “there’s been a change too in how enterprises are engaging with us”. He said the operator is now seeing increased interest from large companies, rather than just from small- and medium-sized businesses, adding “T-Mobile for Business is now present in over half of Fortune 500 companies”.

Network
Of course, any and all moves New T-Mobile makes will be underpinned by its network.

Legere said in October 2019 plans are in place to rapidly deploy Sprint’s 2.5GHz spectrum “soon after closing”. T-Mobile CTO Neville Ray previously explained the addition of those assets to its current portfolio will provide a 14-times increase in capacity and ten-time uplift in network speeds.

Work to decommission some 35,000 redundant Sprint cell sites will also get underway, ultimately leaving New T-Mobile with a network comprised of 85,000 macro sites and 50,000 small cells.

But executives noted it would take time to migrate Sprint customers to the new operation. In 2018, Sievert said the process was expected to take approximately three years, and noted the operator will maintain CDMA service on 800MHz spectrum until the shift is complete to mimimise service disruptions.

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.

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Diana Goovaerts

Diana is Mobile World Live's US Editor, reporting on infrastructure and spectrum rollouts, regulatory issues, and other carrier news from the US market. Diana came to GSMA from her former role as Editor of Wireless Week and CED Magazine, digital-only...

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