T-Mobile And Sprint Score Justice Department Approval For Merger.
Here's where the megamerger stands.
Enabling a new fourth carrier
In line with what the previous media reported, T-Mobile and Sprint must divest Sprint's prepaid business, which includes Boost Mobile, Virgin Mobile, and Sprint's branded prepaid segment. Boost Mobile and Virgin Mobile are wholly owned subsidiaries that operate as mobile virtual network operators (MVNOs). DISH Network ((https://www.fool.com/quote/nasdaq/dish-network/dish) NASDAQ:DISH ) will scoop up the prepaid business in addition to wireless spectrum assets.
"Additionally, T-Mobile and Sprint must make available to Dish at least 20,000 cell sites and hundreds of retail locations," the DOJ notes in its announcement. "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."
In other words, T-Mobile has to help support DISH's burgeoning wireless business, which will initially be composed of MVNOs buying wholesale capacity of the New T-Mobile network, giving DISH time to construct its own network. T-Mobile majority parent Deutsche Telekom has reportedly been concerned about the possibility of a larger company acquiring DISH and subsequently using New T-Mobile's network to compete against the combined entity, and it's unclear if the finalized divestiture deal comes with restrictions. (https://www.bloomberg.com/news/articles/2019-07-24/dish-is-said-to-agree-to-5-billion-deal-to-buy-wireless-assets) Bloomberg reported earlier this week that DISH won't be able to sell off or transfer control of any of the assets for three years.
"With this merger and accompanying divestiture, we are expanding output significantly by ensuring that large amounts of currently unused or underused spectrum are made available to American consumers in the form of high-quality 5G networks," DOJ antitrust chief Makan Delrahim said in a statement. "Today's settlement will provide Dish with the assets and transitional services required to become a facilities-based mobile network operator that can provide a full range of mobile wireless services nationwide."
Critics worry that DISH has "no experience" as a wireless carrier
It's also worth noting that the DOJ's proposed settlement includes five state attorneys general. Ten state prosecutors filed a multistate lawsuit in June to block the deal, with (https://www.fool.com/investing/2019/06/21/even-more-states-pile-on-to-oppose-t-mobile-and-sp.aspx) four more joining the fight . With five states -- Nebraska, Kansas, Ohio, Oklahoma, and South Dakota -- getting on board with the settlement, that leaves nine to proceed with the case. The DOJ is concurrently filing a lawsuit to block the deal, as well as the proposed settlement, which must be approved by the U.S. District Court for the District of Columbia.
New York Attorney General Letitia James still maintains that the merger will hurt consumers, even after the concessions. "We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger's harm to consumers, workers, and innovation," James said in a release today. Her office points out that DISH "has never owned any kind of mobile wireless business and has no experience building or operating a nationwide mobile wireless network," undercutting the notion that DISH will be a competitive fourth carrier.
(http://boards.fool.com/profile/TMFNewCow/info.aspx) Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US. The Motley Fool has a (http://www.fool.com/Legal/fool-disclosure-policy.aspx) disclosure policy.
This article (https://www.fool.com/investing/2019/07/26/t-mobile-and-sprint-score-justice-department-appro.aspx) originally appeared in the Motley Fool.
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|Publication:||International Business Times - US ed.|
|Date:||Jul 27, 2019|
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