The US Department of Justice (DoJ) issued long-awaited approval for a proposed $26 billion merger between T-Mobile US and Sprint, and as expected, demanded the divestiture of assets to Dish Network in exchange for its blessing.
Specifically, T-Mobile and Sprint will be required to divest the latter’s prepaid businesses and 800MHz spectrum assets to Dish, and make available for lease at least 20,000 mobile sites and “hundreds” of retail locations for Dish’s use.
Additionally, T-Mobile must grant Dish access to its network for seven years while the latter builds its own 5G network. Both T-Mobile and Dish will also be required to support eSIM technology on smartphones.
In a statement, DoJ antitrust chief Makan Delrahim said the merger and divestitures will help ensure “large amounts of currently unused or underused spectrum are made available to American consumers in the form of high quality 5G networks”.
T-Mobile CEO John Legere hailed the news as “an incredibly important step forward”.
“Our goal was to ensure that the DOJ’s concerns were addressed while enabling us to deliver on every aspect of the synergies we promised to unlock and we did it. It may have taken longer than expected by some, but today’s results are a win-win for everyone involved.”
Separately, Federal Communications Commission (FCC) chairman Ajit Pai, who already endorsed the deal, said he would introduce a measure to formally approve the transaction.
A new operator
The divestures are intended to provide a stepping stone for Dish to become a new facilities-based operator, maintaining the presence of four competitors in the market. The company will pay approximately $5 billion for Sprint’s assets, including $1.4 billion for its prepaid businesses and $3.6 billion for its 800MHz spectrum.
Dish was already planning to launch a 5G network as part of a two-phase effort to meet usage requirements set by the FCC for its existing spectrum licenses, but did not provide a precise timeline for its rollout.
Following the DoJ announcement, however, Dish committed to launch a 5G network capable of serving 70 per cent of the US population by June 2023, and asked the FCC to modify its license requirements accordingly. It agreed to “make voluntary contributions to the US Treasury of up to $2.2 billion” if it fails to meet this deadline.
In a statement, Dish chairman Charlie Ergen said the developments represent “the fulfilment of more than two decades’ worth of work and more than $21 billion in spectrum investments intended to transform Dish into a connectivity company”.
The DoJ said legal officials from five states, including one which earlier joined a lawsuit to block the transaction, accepted its divestiture proposal as sufficient to alleviate competitive concerns.
However, the aforementioned lawsuit filed by state officials has yet to be resolved, and is scheduled to go trial in October.
On a call, T-Mobile COO Mike Sievert said the operator does not plan to close the transaction while litigation with the states remains ongoing.
Other critics reiterated their opposition to the deal following the DoJ’s announcement, including the Rural Wireless Association, which in a statement called the settlement “insufficient”.
“Expecting Dish, a startup mobile carrier in its infancy, to be able to compete as a fourth nationwide network…spells disaster for American consumers. Three years is not nearly enough time to launch a facilities-based network. Clearly, DoJ has no idea what it takes to build a competitive nationwide mobile network.”