T-Mobile’s deal with Sprint is almost across the finish line as a New York judge has ruled to let thego ahead. First reported Monday night from The Wall Street Journal and The New York Times, US District Judge Victor Marrero formally ruled in favor of the deal Tuesday.
Fourteen attorneys general, led by New York and California, had opposed the deal, arguing that combining the companies into one would dramatically reduce competition and push up prices.
“Today was a huge victory for this merger … and now we are FINALLY able to focus on the last steps to get this merger done!,” T-Mobile CEO John Legere said in a statement. “We want to thank the Court for its thorough review of the facts we presented in our case. We’ve said it all along: the New T-Mobile will be a supercharged Un-carrier that is great for consumers and great for competition.”
Added Sprint executive chairman Marcelo Claure: “Judge Marrero’s decision validates our view that this merger is in the best interests of the U.S. economy and American consumers.”
“We’re delighted that the Court has sided with Deutsche Telekom and the rest of the Defendants and will permit the T-Mobile and Sprint merger to proceed,” Richard G. Parker, partner for Gibson Dunn, the law firm that represented T-Mobile parent company Deutsche Telekom, said in a statement.
“As we argued in court, this merger ensures competition by allowing the combined companies to more effectively compete with the market leaders. It is our hope that with the Court’s endorsement of the merger, along with the federal agencies’ approval, this matter can be closed so that the market can do what it does best: fuel competition and innovation.”
Dish, a satellite TV service that is set to acquire assets divested by T-Mobile and Sprint, was similarly pleased with the ruling.
“The ruling, in addition to the DOJ and FCC approvals, accelerates our ability to deploy the nation’s first virtualized, standalone 5G network and bring 5G to America,” said Charlie Ergen, Dish’s co-founder and chairman in a statement.
“We are eager to begin serving Boost customers while aggressively growing the business as a new competitor, bringing lower prices, greater choice and more innovation to consumers. We look forward to the Boost employees and dealers joining the Dish family.”
Announced in 2018, the proposed deal receivedand in 2019. The states represented one of the remaining hurdles preventing the companies from completing their deal, though it still requires the blessing of some public utility commissions, including California’s. The deal also needs to pass a Tunney Act review for antitrust.
With the deal now passing through the courts, T-Mobile looks to fulfill its earlier expectation of completing the merger in “early 2020.”
T-Mobile and Sprint stock soared on the news in pre-market trading. Shares of T-Mobile rose nearly 10% to $92.50, while Sprint jumped more than 74% to $8.37.
NY AG: Ruling is “a loss for every American”
In a statement, New York attorney general Letitia James called the ruling “a loss for every American who relies on their cell phone for work, to care for a family member, and to communicate with friends.”
“From the start, this merger has been about massive corporate profits over all else, and despite the companies’ false claims, this deal will endanger wireless subscribers where it hurts most: their wallets,” said James.
“There is no doubt that reducing the mobile market from four to three will be bad for consumers, bad for workers, and bad for innovation, which is why the states stepped up and led this lawsuit. We disagree with this decision wholeheartedly, and will continue to fight the kind of consumer-harming megamergers our antitrust laws were designed to prevent.”
James adds that while the attorney generals are reviewing “our options, including a possible appeal” she says “Americans should continue to hold the companies to account for their promises.”
In a statement, California attorney general Xavier Becerra said that the AGs fight against the merger sent a “strong message: even in the face of powerful opposition, we won’t hesitate to stand up for consumers who deserve choice and fair prices.”
“We’ll stand on the side of competition over megamergers, every time,” adding that “our coalition is prepared to fight as long as necessary to protect innovation and competitive costs.”
Where things go now
Approval of the deal can trigger a few follow-up actions.
As stated by NY AG James, the attorneys general can look to appeal the deal, furthering their fight. Assuming the AGs lay down their arms, however, here are some of the next steps.
T-Mobile, Sprint and Dish will need to complete their respective agreements. T-Mobile and Sprint need to hammer out final terms, particularly if T-Mobile is renegotiating the price as some analysts have called for T-Mobile to renegotiate the price of its deal as it dragged on givensince the deal was first announced.
T-Mobile did not immediately respond to a request for comment on if it was renegotiating its price with Sprint.
Once that is done, T-Mobile and Sprint will have to begin the merging of their networks, including enabling their respective devices to be able to tap into the other’s network. T-Mobile has said it would take about three years to migrate customers over to the T-Mobile network. Luckily most recent phones support both Sprint and T-Mobile airwaves, including recent 5G devices.
Dish and T-Mobile, meanwhile, will also need to iron out the final details on its deal, which will have Dish acquire the Boost brand from Sprint, wireless spectrum and gain the ability to use T-Mobile’s network for seven-years while it builds its own 5G offering.
How we got here
The road to the deal was long and winding, riddled with promises and obstacles that called in to question the deal’s viability.
In a bid to gain FCC approval, T-Mobile announced a host of promises around 5G and pricing, including a pledge to not increase prices for three years. The wireless carrier won the DOJ’s blessing after a deal was brokered with Dish, which proposed buying assets, including Sprint’s Boost Mobile brand. That purchase would allow Dish to become a new, fourth wireless carrier.
With most deals, approval by the DOJ and FCC would be enough. But 14 attorneys general continued to fight. They filed a multistate lawsuit in June, arguing that allowing the nation’s current third- and fourth-largest wireless carriers to combine would “deprive consumers of the benefits of competition and drive up prices for cellphone services.”
The attorneys general have also questioned whether Dish has the expertise necessary to operate a competitive fourth carrier, citing the company’s inexperience in mobile telecommunications.
“It will not be a new, robust wireless operator that can replace Sprint,” California Deputy AG Paula Blizzard said in remarks delivered before the trial that began on Dec. 9 and ended last month.
A number of executives from T-Mobile, Sprint and Dish appeared at the trial to defend the deal, including T-Mobile CEO John Legere, President and Chief Operating Officer Mike Sievert and President of Technology Neville Ray. Other execs who appeared in court included Sprint Chairman Marcelo Claure, current Sprint CEO Michel Combes and Dish co-founder Charlie Ergen.
After T-Mobile unveiled a host of additional initiatives in November that it said it would offer if the merger was approved — including providing free service to first responders and free home internet to low-income households — the company was able to sway a few states into supporting its cause, including Texas and Nevada.
T-Mobile has long argued that it needs Sprint’s spectrum to build a truly robust 5G nationwide network. Sprint is the only US 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 operates for 200 million people, but with significantly more range than the higher-frequency millimeter-wave 5G currently favored by Verizon.
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.
Originally published Feb. 10, 4:17 p.m. PT.
Update, 5:39 a.m.: Adds details and comments on the judge’s ruling.