How T-Mobile-Sprint Merger Will Benefit Telecom Business

The approval of the merger between T-Mobile and Sprint by U.S. District Court Judge Victor Marrero on Feb. 11, 2020 removed the last major hurdle to the massive telecom buy. In his decision, Judge Marrero found that the merger is lawful.

Attorneys general for 14 states had sued to stop the merger, claiming that it would harm competition and raise prices. Judge Marrero rejected the states’ arguments, noting that T-Mobile’s “maverick” approach to the cellular markets was likely to continue, and that the commitment to support the role of Dish Networks as a fourth national wireless carrier would provide competition.

Judge Marrero also disagreed with the states’ assertion that Sprint could continue on its own, noting the company’s continuing decline. He also rejected arguments that Dish wouldn’t live up to its promises to become a fourth wireless carrier, noting that Dish had already agreed to acquire some of Sprint’s assets, including prepaid carrier Boost Mobile.

Cross-Movement of Subscriptions in the Offing

After the merger, Dish will acquire some 7 million Boost customers and will gain access to T-Mobile’s wireless network until it can built its own. Like Sprint, Dish has vast mid-band wireless holdings. Dish needs to use those licenses or lose them according to FCC rules.

The next two steps in the T-Mobile / Sprint merger are a Tunney Act review of the Justice Department conditions by Judge Timothy Kelly of the U.S. District Court for the District of Columbia. The comment period on that review has already ended, and a decision is expected within a few days of the merger approval.

The California Public Utilities Commission also will need to rule on the merger, but analysts have said that it’s unlikely that a single state would be able to stop the merger, considering the approval at the federal level. It’s always possible that the states that sued could appeal the court’s ruling, but such an appeal would depend on a higher court accepting the appeal. Even if it did, the court would have to be willing to issue an injunction to stop the merger.

If everything falls into place, the merger is expected to be closed by April 1, 2020, according to an announcement by T-Mobile. Once the merger closes, T-Mobile plans to send updates to existing customers allowing their phones to use the Sprint network, and to do the same for Sprint customers who will be able to use the T-Mobile network. Boost customers will also get access to the T-Mobile network along with phones from the Dish network, once they begin operation.

Sprint Customers Will Get More Access to a Wider Network

For Sprint enterprise customers this will mean access to a wider network, and it will mean access to T-Mobile’s 600 MHz 5G network, which is already available nationally. T-Mobile customers will get access to Sprint’s mid-band 5G network once phones are available. T-Mobile has announced that a series of new Samsung Galaxy phones, the S20+ 5G and S20 Ultra 5G will be available in March and will be able to use all of the T-Mobile and Sprint 5G bands, including 600 MHz low band, 2.5 GHz mid band and the millimeter band 5G from both carriers where it’s available.

The broad range of support will be a significant benefit to customers that need 5G for IoT communications because of the increased flexibility.

“For wide area support of cell phones and equipment using IoT cellular connections, the situation is similar to consumers,” said Frank Gillett, vice president and principal analyst for Forrester Research in an email. “The new T-Mobile, with a combined 5G footprint, will be competitive for serving mobile devices in a wide footprint, especially for supporting sub 6 GHz (I call it 5G Next, a useful upgrade from 4G LTE). For mmWave support (I call it 5G Fast), the new T-Mobile will have to build out support in specific areas, just like AT&T and Verizon, since that requires all new gear.”

“So overall, for enterprise customers, this should increase the competition and offers around 5G coverage, but doesn’t change things radically in the short run,” Gillett said. But he noted that you need to keep an eye on what happens next.

“The new T-Mobile, assuming it emerges, will be a stronger competitor for AT&T and Verizon than either Sprint or old T-Mobile were, with much better spectrum/radio assets and a similar large base of customers,” Gillett said. “But the concerns about reduced competition and increased minimum service pricing are real–so watch Dish Network see if they follow through on promises to build a powerful fourth wireless provider to keep competition going.”

Appeals by States Unlikely

Of course, the exact nature of the merger closure has yet to be seen, but a number of analysts have said that an appeal of the states’ suit against the merger is unlikely, and even if it happens, they expect T-Mobile and Sprint to merge anyway.

“We believe an appeal process, in its entirety, could take more than six months,” said analysts Walter Piecyk and Joe Galone of Lightshed Partners in their report on the merger. “However, we do not believe T-Mobile would suspend the closing of its transaction while it waits for the outcome of an appeal. The states could attempt to secure a court ordered stay on the closing of the deal pending the outcome of the appeal process. It is our belief that a stay would be very difficult to secure.”

Piecyk and Galone did say that they believe that the price T-Mobile actually pays for Sprint will be reduced because of Sprint-reduced business and because of some legal issue involving Sprint’s receipt of subsidies from the federal government.

Unless something unexpected happens, this all means that T-Mobile will close the deal with Sprint sometime in the next six weeks, and the process of combining the two companies will begin. Customers of both companies should see improvements almost immediately.

Wayne Rash, a former editor of eWEEK, is a longtime contributor to our publication and a frequent speaker on business, technology issues and enterprise computing.

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