T-Mobile’s merger with Sprint may have the FCC backing it needs to become a reality, but prolonged negotiations with the U.S. Department of Justice are dragging the process out, the Wall Street Journal reports today, as the parties work to set terms for the transfer of certain assets to a future competitor, Dish Network. While all parties are said to be optimistic about the deal, T-Mobile and Sprint will reportedly once again extend their merger plan, this time past a July 29 deadline, to reach an acceptable arrangement.
The third- and fourth-place U.S. carriers have worked since April 2018 to cement a deal that will pass regulatory muster, repeatedly describing their $26 billion tie-up as an opportunity to improve competition at the top of the U.S. cellular industry. Describing itself as the “uncarrier,” T-Mobile has said it will leverage the combined companies’ customer base, employees, and spectrum offerings to create a more viable challenger to larger carriers Verizon and AT&T, complete with more pervasive nationwide coverage, particularly in rural and previously underserved areas.
Regardless, Justice Department officials continued to question the merger’s impact upon consumer prices, and reportedly sought additional measures to prop up potential competitors underneath the country’s top tier. Following a merger between T-Mobile and Sprint, all three of the top U.S. carriers would have around 100 million customers, while the next-largest carrier, U.S. Cellular, has fewer than 5 million.
To that end, the Justice Department reportedly hosted negotiations with T-Mobile and Sprint officials to divest and transfer assets to Dish Network, which already owns significant national spectrum licenses and has previously floated the prospect of developing its own 5G network for $10 billion. While the carriers agreed to the divestment, talks have slowed based on asset ownership requirements requested by T-Mobile, which wants to prevent Dish from reselling its assets to a cable or technology company, or from overwhelming T-Mobile’s network under a required asset-sharing agreement.
Resolving the issues with Dish appears to be the last hurdle before T-Mobile and Sprint receive the final sign-off from all required federal regulators, but the companies still face a combined lawsuit from multiple state attorneys general — a situation similar to one that killed a deal between T-Mobile and AT&T in 2011, albeit with the Justice Department’s backing. Assuming the carriers can’t settle that dispute, a trial to block the merger at the state level will begin October 7.
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