T-Mobile, Sprint Merger Gets DOJ Approval With Asset Sales to Dish
Dish said it "will enter the U.S. wireless market as the fourth nationwide facilities-based network competitor” with what it called a "transformative transaction."
Telecom giants T-Mobile US and Sprint on Friday got approval from the Department of Justice for their merger, which will combine two of the largest U.S. wireless providers. They must sell assets to Charlie Ergen's Dish Network in a deal valued at $5 billion.
"The Department of Justice announced today that it and the attorneys general for five states reached a settlement with T-Mobile and Sprint regarding their proposed merger," the DOJ said in a statement. "Under the terms of the proposed settlement, T-Mobile and Sprint must divest Sprint’s prepaid business, including Boost Mobile, Virgin Mobile, and Sprint prepaid, to Dish Network Corp., a Colorado-based satellite television provider. The proposed settlement also provides for the divestiture of certain spectrum assets to Dish."
Continued the DOJ: "Additionally, T-Mobile and Sprint must make available to Dish at least 20,000 cell sites and hundreds of retail locations. T-Mobile must also provide Dish with robust access to the T-Mobile network for a period of seven years while Dish builds out its own 5G network."
The deal between the third and fourth largest U.S. carriers is designed to create a new behemoth that can better compete with wireless leaders AT&T and Verizon.
T-Mobile is majority owned by Deutsche Telekom. The two companies had 2018 revenue of $75 billion on a combined basis.
Dish said it "will enter the U.S. wireless market as the fourth nationwide facilities-based network competitor” with what it called a “transformative transaction,” which it said was valued at approximately $5 billion. It said it has committed to the Federal Communications Commission to deploy “a facilities-based 5G broadband network capable of serving 70 percent of the U.S. population by June 2023.”
In the deal, Dish will acquire Sprint's prepaid businesses and customers, including Boost Mobile, Virgin Mobile and the Sprint-branded prepaid service; buy 14 MHz of Sprint's nationwide 800 MHz spectrum; and get to access the new T-Mobile network for seven years, including the ability to serve Dish customers seamlessly between T-Mobile's nationwide network and its own new 5G broadband network.
Dish said the deal’s price tag was made of the $1.4 billion purchase of Sprint's prepaid businesses and a $3.6 billion agreement to purchase Sprint's nationwide wireless spectrum, which is expected to be completed three years after the closing of the acquisition of the prepaid businesses.
"These developments are the fulfillment of more than two decades' worth of work and more than $21 billion in spectrum investments intended to transform Dish into a connectivity company," said Dish co-founder and chairman Ergen. "Taken together, these opportunities will set the stage for our entry as the nation's fourth facilities-based wireless competitor and accelerate our work to launch the country's first stand-alone 5G broadband network."
Ergen said about the new chapter in Dish’s history: "We've been here before. When we entered pay TV with the launch of our first satellite in 1995, we faced entrenched cable monopolies, and our direct competitor was owned by one of the largest industrial corporations in the world. As a new entrant, Dish encountered many skeptics who questioned our ability to succeed. But customers loved the disruption we brought to the marketplace with innovations such as a 100 percent digital experience, local-into-local broadcast, the DVR and ad-skipping. Our substantial investments, constant innovation, aggressive pricing and commitment to the customer led us to become the third largest pay TV provider. As we enter the wireless business, we will again serve customers by disrupting incumbents and their legacy networks, this time with the nation's first stand-alone 5G broadband network."
The T-Mobile and Sprint merger was seen in limbo for a while until the companies and regulators agreed on the asset sales. T-Mobile CEO and New T-Mobile CEO John Legere said Friday the deal "will create a bigger and bolder competitor than ever before — one that will deliver the most transformative 5G network in the country, lower prices, better quality, unmatched value and thousands of jobs, while unlocking an unprecedented $43 billion net present value in synergies." He added: "We are pleased that our previously announced target synergies, profitability and long-term cash generation have not changed."
Added Sprint executive chairman Marcelo Claure: "Today’s clearance from the DOJ, along with our anticipated approval from the FCC, will allow the U.S. to fiercely compete for 5G leadership. We plan to build one of the world’s most advanced 5G networks, which will massively revolutionize the way consumers and businesses use their connected devices to enhance their daily lives. The powerful combination of 5G, artificial intelligence and the Internet of Things will unleash endless possibilities.”