Report claims that the T-Mobile-Sprint merger will receive DOJ approval next week

Report claims that the T-Mobile-Sprint merger will receive DOJ approval next week
Late last month, we told you about the good news and bad news related to the $26.5 billion merger between T-Mobile and Sprint. While FCC Chairman Ajit Pai had approved the deal and told other commissioners that they should vote in favor of it, the Justice Department had concerns. Both regulatory agencies looked at different aspects of the deal; the FCC examined the technical issues that could pop up from the transaction while the DOJ concerned itself with the loss of competition that such a deal might bring. The merger needs approval from both agencies to close, and the Justice Department was afraid that the drop from four to three major U.S. carriers would lead to higher prices.

The DOJ and its antitrust chief Makan Delrahim reportedly floated an idea last month. The agency would approve the merger under the condition that T-Mobile and Sprint help create a new carrier and that is apparently what will happen. The New York Times today said that the two wireless providers will sell off enough assets to help create a new competitor in the industry. The report cited three sources who are "familiar with the plan." The Justice Department wants the carriers to sell off one of its pre-paid units along with some of the wireless spectrum that both companies own. T-Mobile and Sprint have already agreed to sell Sprint's Boost Mobile unit to placate the FCC, and Amazon and a few other firms have already expressed interest in Boost. A company as big and rich as Amazon should have no problem making Boost a major competitor to Verizon, AT&T, and the New T-Mobile.

Boost Mobile could become a competitor to its current parent Sprint

Boost Mobile could become a competitor to its current parent Sprint


But as we said, other companies have expressed interest in buying Boost along with some spectrum from Sprint, and the Times says that both merger partners have spoken with companies like Dish Network, Charter and Altice. Dish, you might recall, was involved in a battle with Japan's SoftBank for control of Sprint back in 2013.

A little bit of math can show you if the public is optimistic or pessimistic about the deal closing


The three unnamed sources cited by the newspaper say that a settlement between T-Mobile, Sprint and the Justice Department will be announced next week. But a new issue has popped up that could be damaging to T-Mobile and Sprint's plans. Earlier this week, nine state attorneys general and the attorney general of Washington D.C. filed a suit in New York to block the merger.

Investors feel that the odds of the deal closing are much improved. The spread between Sprint's current stock price ($7.01) and the theoretical value of each Sprint share if the merger takes place ($7.68) has dropped to 67 cents from the $1.15 it was at last Tuesday. The narrower the spread, the more optimistic investors are about the deal closing. You can easily compute this yourself by taking T-Mobile's stock price (TMUS) and multiplying by .10256. That is how many T-Mobile shares each Sprint holder will receive if the merger goes through. Take that figure and subtract from it Sprint's current stock price (S) to compute the spread.

T-Mobile has a rather checkered past when it comes to mergers and the DOJ. Back in 2011 when the carrier was practically irrelevant, AT&T agreed to buy the company for $39 billion. The deal would have made AT&T the largest wireless operator in the U.S., but the Justice Department put the kibosh on the deal. Sprint, and then CEO Dan Hesse, were among the most vocal opponents to the deal. In 2014, both T-Mobile and Sprint floated a trial balloon about combining. But before a deal could be announced, the FCC and Justice Department each expressed their reluctance to approve a merger. Things have changed since then. T-Mobile is now the fastest growing and most innovative of the four major carriers, and Sprint is in need of some help. While the DOJ may disagree, many argue that a combined T-Mobile-Sprint would offer more competition to AT&T and possibly Verizon.

PhoneArena headline from March 20, 2011; the deal never closed

PhoneArena headline from March 20, 2011; the deal never closed


In addition to agreeing to sell Boost Mobile to get Ajit Pai and the FCC to approve the transaction, T-Mobile and Sprint promised to have 97% of the U.S. covered by its 5G signals three years after the deal closes and also agreed to a price freeze over that same 36 month period. There is another aspect to the merger; T-Mobile's low-frequency 600MHz spectrum will mesh well with Sprint's 2.5GHz mid-range airwaves to create a nationwide sub-6GHz 5G network.

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15 Comments

1. oldskool50

Posts: 769; Member since: Mar 29, 2019

Prices won't go up for 3 years. But when they do they will be as expensive as ATT and Verizon This I'd a big mistake and we are gonna see why.

5. Sparkxster

Posts: 1186; Member since: Mar 31, 2017

I think it's a risk worth taking. We'll have three carriers who are on par with each other and if Amazon acquires Boost Mobile they will build them out quickly and competitively imagine having unlimited prime with your phone plan. This could completely change the way we buy our phones. I think this will be great for the US.

9. oldskool50

Posts: 769; Member since: Mar 29, 2019

No it is not. The benefit of both TMo and Sprint is they offered similar service at a lower price. Once this 3 years is up, if ATT and VZW raise costs, TMo is gonna match. Since TMo already offers MetroPCs for cheap price and Boost won't be under Sprint, Tmo can just say go to Metro for a lower price. Less competition means higher cost. It had not really lowered prices, you simply have other options for lower prices. Look at phones. Yes Android has competition, but it has t resulted in low prices. It has resulted in having lower priced options as the majority. But Android pricing has less to do with competition vs the fact those phones were made for markets where high prices won't offer the same results as low cost sales.

8. Godlymansean

Posts: 318; Member since: Apr 14, 2017

There are so many variables to what each individual needs. No carrier is more expensive than another depending on what you, as the consumer, needs.

10. oldskool50

Posts: 769; Member since: Mar 29, 2019

That's false. Paying just for what I need on VZW per month with taxes is, $180 for just one phone. With TMo the same exact whatbi need would be $130. The main reason I left TMo was because of poor service at hole requiring me to have a cell spot in the house, and poor service in many rural areas where I still get service with VZW. I tested this beyond, by having an activated phone on both services and out of the 30 rutal areas frequent, VZW was more widely available. You get what you pay for and sometimes you dont. Your claim is false. Period. The reason TMo didnt charge as much, is because they couldnt offer as much. Now they can and nod they will most certainly match ATT and VZW once that 3 years is up. Remember this post bruh. I was their when the Govt broke up ATT. Breaking them up resulted in much higher pricing. I use to pay as little as $35 on VZW for a line of service when I had my BlackBerry Storm. Not I pay $60 for the same service and where data was unlimited and included, now i pay another $70 to get unlimited data You're wrong bruh...PERIOD.

12. Godlymansean

Posts: 318; Member since: Apr 14, 2017

"depending on what you need" in your case no. You're daft if you believe one carrier will be less or more than another for long. bruh.

13. Larry_ThaGr81

Posts: 559; Member since: May 26, 2011

They still won't be as big as ATT or Verizon, so I'm not too sure that this would be their approach after only 3 years, unless their coverage across the country can match ATT and/or Verizon.

2. LawnBoy

Posts: 133; Member since: Feb 23, 2019

Awesome news!!!

3. baldilocks

Posts: 1462; Member since: Dec 14, 2008

0 X 0 is still 0.

4. veerhardik

Posts: 10; Member since: Feb 23, 2019

New T-Mobile will be awesome like the old one who never increased my prices from last 9 years of simple choice. It's just simply great and better.

6. FLOGROWN

Posts: 41; Member since: Oct 25, 2018

I’ll jump to one of the big 2 if the deal closes

14. Larry_ThaGr81

Posts: 559; Member since: May 26, 2011

Enjoy!

7. Godlymansean

Posts: 318; Member since: Apr 14, 2017

Interesting to see if this finally happens. Boost growing would be huge. Could do a lot with that.

11. RoryBreaker

Posts: 197; Member since: Oct 11, 2015

Lock in your rate plan now

15. civicsr2cool

Posts: 257; Member since: Oct 19, 2016

I am not excited for a sprint/T-mobile merger, but the Boost being bought out would be a great thing. Most people I know are on Boost and the ghetto really needs boost to stick around lol

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