We may be a few days from seeing T-Mobile and Sprint finally receive approval from the US Justice Department to complete their $26.5 billion merger. To receive the approval from a regulatory agency, T-Mobile and Sprint must agree to sell some resources to Dish Network to help create a new wireless service provider to replace Sprint.
On Thursday, we told you that there was a problem that was holding things back. Deutsche Telekom, the parent company of T-Mobile, wanted to include the formulation of any agreement that would allow T-Mobile to cancel any signed MVNO contract if a third party acquired a stake of more than 5% in the satellite content manager. The MVNO agreement would allow Dish to sell the wireless service through the T-Mobile network while building its own 5G pipeline.
According to reports, Deutsche Telekom has reduced its demands. As a result, T-Mobile and Sprint should announce the agreement between the couple and Dish Network next week. The two carriers will sell the prepaid Boost Mobile service provider to Dish Network along with a bit of spectrum. DOJ wants Dish to use these resources to build a wireless carrier in competition with Verizon, AT & T and the new T-Mobile. The Justice Department’s work in each merger is to ensure that the competitive landscape remains the same once the transaction has been closed. The agency fears that with Sprint gone, Verizon, AT & T and the new T-Mobile cannot raise their rates in any way. As part of an agreement to receive the FCC’s approval of the merger, T-Mobile agreed that it would freeze its prices for three years after the merger became official.
The DOJ Had Previously Blocked AT & T’s Attempt To Buy T-Mobile In 2011
The Post reports that Dish will use Boost and the MVNO agreement to start offering wireless services nationwide no later than a year after asset sales are closed. The sources indicate that the Justice Department’s threat to block the deal if an agreement was not reached within a week led Deutsche Telekom to abandon its demands. “We have a real deal here and it will be very good for Dish,” a source said. Dish’s president, Charles Ergen, wanted to take over a wireless company for many years. In 2013, he lost to SoftBank in a battle disputed by Sprint. Dish has purchased an unused spectrum of $20 billion which must be used by 2020 or it will lose the rights to use these waves. Previously in the negotiation process with the DOJ, T-Mobile and Deutsche Telekom, Ergen threatened to walk unless the FCC agreed to delay this deadline. At this stage, it is not known exactly which parts agreed to make this merger.
A few years ago, T-Mobile remained on the altar. In March 2011, when T-Mobile was a last-minute idea, AT & T agreed to buy the carrier for $39 billion. The deal would have created the nation’s largest mobile carrier but was blocked by, you guessed it, the Justice Department. Dan Hesse, the then CEO of Sprint, spoke out against the agreement on every occasion he had. In 2014, T-Mobile and Sprint spoke with the FCC and the DOJ to see if there was any chance that the agencies would approve a merger between the two. They were quickly repelled by both.
And while there were always rumors of a possible merger between T-Mobile and Sprint, something has changed. Under the leadership of CEO John Legere, T-Mobile has become the most innovative and fastest-growing of the four major wireless operators in the US. While the dynamics of a merger between the pair had changed (T-Mobile would now be the buyer), Sprint still had something that T-Mobile wanted; that is, a 2.5 GHz medium band spectrum accumulation. T-Mobile intends to be the first to build a national 5G network in the US. Combining its low-frequency 600 MHz airwaves with its ultra-high frequency airwaves and adding the 2.5GHz Sprint spectrum in the middle. Recently, T-Mobile and Qualcomm have successfully passed the test of the first 5G data call in the low-band radio waves of this carrier.
(Via: New York Post)
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