Here's why a telecom analyst expects neither the states nor T-Mobile to appeal the judge's decision

Here's why a telecom analyst expects neither the states nor T-Mobile to appeal the judge's decision
As the U.S. wireless industry awaits a decision from U.S. District Court Judge Victor Marrero that will determine whether the T-Mobile-Sprint merger can close, analysts at New Street Research believe that the judge's ruling will be the final word on the matter (more on that in a moment). After a two-week non-jury trial, closing arguments were heard on January 15th and Judge Marrero is expected to deliver his decision next month.

The suit was brought by 14 state attorneys general and the attorney general of Washington D.C. because they fear that without Sprint, the number of major wireless providers in the states drops by 25% and will allow the three surviving carriers to raise prices. There are several reasons why these arguments seem ridiculous. First of all, as part of the concessions it made to get the FCC to approve the transaction, T-Mobile promised not to raise prices for three years after the deal closes.

A standalone Sprint is unlikely to repeat T-Mobile's amazing turnaround


And if the merger is approved, a $5 billion deal between Sprint and Dish Network will help turn the satellite television provider into a "fourth nationwide facilities-based network competitor." The argument made by the states for both of these issues is that companies can lie, and Dish has never sold wireless service before. The latter argument is true, but with 9.3 million customers, 400 employees, 7,500 retail stores and a seven-year MVNO deal with T-Mobile, Dish will be starting its wireless division in pretty good shape.

What also doesn't seem to make sense is the states' argument that Sprint can still make it as a standalone company because T-Mobile made an amazing turnaround starting in 2012. Yes, T-Mobile is now the fastest-growing and most innovative of the major carriers in the U.S. But it also received $3 billion, a seven-year 3G roaming deal and 128 AWS markets from AT&T after the Justice Department blocked a $39 billion merger between AT&T and T-Mobile. The terms of the merger called for the latter to receive this consolation package if the deal didn't go through. In addition, naming John Legere CEO in September 2012 was perhaps the biggest move T-Mobile made. Sorry, but we can't imagine that Legere would ever join a standalone Sprint. And since he is one of a kind, Sprint might never be able to find an executive with Legere's unique talents to lead it out of the basement.


Whichever side loses the case would normally seek to appeal the decision. According to Fierce Wireless, New Street analyst Blair Levin told clients in a note sent on Monday that "we think an appeal is unlikely. In the case of the states, we think that if the judge rules against them, the combination of a low likelihood of victory and political considerations probably weigh against appealing." However, Levin believes that if Judge Marrero says in his decision that the courts should defer to the decisions made by the FCC and the Department of Justice, the states would then be forced to appeal "to overturn what we think would be (a) new and problematic law for the states."

As for the carriers, Levin wrote, "We think that if the judge rules against them, he can do so in a way in which the odds of overturning the decision are very low. Moreover, both T-Mobile and Sprint would have business reasons for wanting to have clarity about the prospects of the merger before they, and all the other potential users of spectrum, have to commit to purchasing spectrum in the upcoming CBRS and C-Band auctions."

This goes back to T-Mobile's reason for wanting to merge with Sprint. The latter owns a hoard of mid-band 2.5GHz spectrum that T-Mobile covets. As Legere said under oath during the trial, with the merger T-Mobile will "triple the total 5G capacity of standalone T-Mobile and Sprint combined." If the deal doesn't go through, Legere says that in some markets, T-Mobile will "exhaust capacity in the next two to four years."


The FCC plans two spectrum auctions this year. The Citizens Broadband Radio Services (CBRS) auction will take place on June 25th, 2020. These 3.5GHz airwaves can be used without purchasing a license although the U.S. Navy gets priority. Carriers can still purchase priority licenses for what is essentially Band 48 in the U.S. and that will be done through the auction. And before the end of the year, the FCC hopes to auction off spectrum in the C-Band. This would cover airwaves in the 3.7GHz-4.2GHz range.

As New Street's Levin pointed out to clients, T-Mobile and Sprint would like clarity on the merger before they commit to the auction. The analyst notes that on average, it takes 11.3 months in the second circuit for an appeal to reach a decision. As a result, "it is impossible for the appeal to be over before the CBRS auction, and highly likely an appeal would still be pending as the C-Band auction begins. There are business reasons to continue the appeal, but we believe the reasons on the other side of the ledger are more compelling."

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8 Comments

9. Iamsloshed

Posts: 1; Member since: Jan 23, 2020

Everyone who thinks Sprint has TMobile chance of turnaround, say AYE! Yay! Whoa! we got one there. Now, everyone who sees Sprint going down the same way that telecom provider they bought out, what are they called, you know the walkie-talkie one, yeah, exactly my point, hard to remember, say AYE or YAY! Either way, say goodbye to Sprint. This is not starting a web store with 0 startup cost and losing huge on acquisition adventures like walkie-talkie company (how the hell you gonna close a multi-billion M/A without due diligence to realize the networks aren't compatible - or the sense to see the direction technology is going to be so myopic the networks are diverging based on industry adoption), or the bold bet on 4g Wimax for MAN over LTE (are you kidding me? We're you not listening to Steve Jobs saying he's adopting LTE for his next generation iPhone that you thought you can go without jumping on the bandwagon everyone else is getting on having seen iPhone's sales figures the previous 2 generations? Really? The whole world thought Steve was on to something I dunno, so maybe your CEO has inside scoop on how to run a ship aground. Steve single handedly unites GSM with CDMA camps into embracing one protocol with LTE arguably to facilitate possible cross marketing with Apple's breakthrough product offering soon to have LTE for 4G data and you go Wimax. Why max, why)? Well how is any venture capitalist to trust your vision going into the future? Forget tech bets, just marketing alone. It became synonymous to Sprint you not only got Win as, it came free with billing gotchas!!! For real! Accounting and billing problems you never resolve unless it favored Sprint with explanations GAAP lawmakers scratch their heads it became obvious you were amassing uncollectable-debt hoping you can either collect cents to the dollar you didn't earn, or increase asset to write-off, whichever. Voodoo accounting at its best. Sprint is how to best describe your exit from our parlance like who's that walkie-yalkie company again? Nextel, yeah them. Next Telecom to vanish, how fitting. And you can say the AG, those OG cooks in state on the take for significance chiming in we need 4 carriers yadi yadi yada, you can blame them for nailing the death knell to your last attempt to catch the liferaft called TMobe.

8. TheTruthSayer

Posts: 3; Member since: Jan 23, 2020

It should absolutely be referred back to the Feds, since they've approved it already.

5. maximuslyricus

Posts: 8; Member since: Dec 07, 2015

Meh. Masa Son needs to match his money to his mouth. Before he was even allowed to purchase Sprint, he was selling Americans snake oil obviously. The wireless market is so much more competitive in Japan, prices are lower and the networks are better. He said he was going to revolutionize the American market, but he simply reneged on his promises. If he won't do it, sell Sprint to someone besides a competitor that will.

4. tsunsami

Posts: 6; Member since: Jan 12, 2020

Judge Marrero is too smart to leave Sprint on the dust to die.

3. RoryBreaker

Posts: 332; Member since: Oct 11, 2015

To block this merger will be a travesty & a major blow to 5G integration & innovation. I appreciate the AGs desire for competition and wanting to keep prices fair for customers, but they are doing us all an injustice.

1. warrenellis93

Posts: 568; Member since: Jul 21, 2011

i just want to know what happens to boost, i get a good deal on data but call quality has been getting worse

2. RoryBreaker

Posts: 332; Member since: Oct 11, 2015

From what I understand if the merger goes thru, Boost gets sold off. Please don't take what I say as a certainty, but that is what I've been led to believe.

6. Crispin_Gatieza

Posts: 3208; Member since: Jan 23, 2014

Someone just left a flyer on my front door promoting Boost via Xfinity Mobile with various prepaid packages.

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