The 2013 acquisition battle between SoftBank and Dish Network to win Sprint’s hand was a drama. Finally, SoftBank won and now the company owns 80% of the fourth largest carrier in the U.S. Six years from now on, Sprint is involved in another merger with some more twists and turns. While 13 state attorneys general and Washington DC AG have filed a lawsuit against the merger and a lawsuit cannot begin until October, both T-Mobile and Sprint are awaiting approval from the Justice Department which will eventually allow the merger to close.
But the DOJ will not favor this merger unless the two wireless operators help divide a new competitor to replace Sprint. Part of DOJ’s job is to make sure companies aren’t disturbing consumers due to lack of competition in a specific industry. The merger would reduce the number of major wireless service providers in the states by 25%. As a result, T-Mobile and Sprint have agreed to sell the Boost Mobile prepaid unit from the FCC to approve the merger by the FCC. And apparently, Dish’s president, Charles Ergen, is sufficiently interested that the conversations would start with a transaction valued at $6 billion.
Ergen Asks FCC A Favor In Exchange For Helping The T-Mobile-Sprint Merger To Get The Justice Department Approval
But it is assumed that Ergen wants to delay the purchase of Boost, waiting for a better price for this purchase. Instead, Bloomberg says he has a better idea. He wants the FCC to eliminate the March deadline attached to a wireless spectrum that Dish purchased years ago; According to the terms of the acquisition, if Dish does not use the airwaves of March, the company will lose the licenses that belong to the spectrum. Therefore, Ergen proposes that, in exchange for this exemption, Dish will purchase spectrum, customers and additional resources from T-Mobile and Sprint. In this way, Dish can be considered a new wireless competitor by the DOJ which allows the closure of the $26.5 billion mergers. In this scenario, Ergen does not have to spend $6 billion on Boost Mobile.
In fact, a floating idea would have allowed Dish to become a wireless player without spending money. This plan would induce Dish to send part of its spectrum to T-Mobile and the satellite company would become a mobile virtual network operator (MVNO) that uses the T-Mobile network to provide customers with wireless service. It is the same type of scheme used by many other companies including Google’s Project Fi and Comcast’s Xfinity Mobile. Going on this route would prevent Dish from spending billions of dollars to build a new wireless network from scratch. The only question would be whether the DOJ would consider an MVNO-owned by Dish a strong enough player in the industry to allow the merger to continue.
If T-Mobile and Sprint are not satisfied with Ergen’s proposals, there are other companies that believe they are interested in Boost Mobile. It is said that the Comcast and Altice cable companies are interested and that Amazon is also considering the situation.
The president of the FCC, Ajit Pai, already says that he is recommending to his commissioners that the merger will be approved by his agency. He made this announcement after the proposed merger partners agreed to get Boost off the ground, freeze prices for three years after the merger closed, and cover 97% of the nation with low-band 5G after three years. The approval of DOJ is one of the main obstacles that the merger must eliminate. It has also been assumed that the judge overseeing the suit trying to block the agreement will issue a temporary restraining order. This would prevent T-Mobile and Sprint from closing the merger until the end of the trial.
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