Back on April 29, 2018, T-Mobile CEO John Legere and Sprint's then-CEO Marcelo Claure announced the merger of the two wireless operators. Back then, would you have been surprised had we told you that the deal would still not be closed after the 2020 ball dropped in Times Square? When the deal was announced, the two biggest concerns were getting regulatory approval from the FCC and the Justice Department. But concessions made by T-Mobile and Sprint, including the promise to set up Dish Network as the "fourth nationwide facilities-based network competitor," allowed the transaction to get past both regulatory agencies.
T-Mobile was the recipient of a huge break-up fee that AT&T gave to the carrier after their $39 billion merger was blocked by the Justice Department. This included $3 billion in cash and helped T-Mobile boost its coverage at the time from 230 million Americans to 280 million. And later that year, John Legere was named CEO of T-Mobile. Both of these events are unlikely to happen to Sprint.The deal has one hurdle remaining and that is a lawsuit filed by the attorneys general of 13 states and Washington D.C. Presiding over the trial is U.S. District Judge Victor Marrero and since it is a bench trial with no jury, the judge will be making the final decision on whether the transaction can close. The plaintiffs have tried to show Judge Marrero that Sprint could turn around on its own just as T-Mobile did beginning in 2012. However,
Without the merger, T-Mobile's Legere says that the carrier could run out of capacity in some markets within 4 years
Sprint might have to raise prices and borrow more money to keep the company afloat. If Sprint does have to raise prices, there is no reason for the states to block the merger since their main concern is that the deal will lead to less competition and...higher prices. In addition, as part of the concessions it made to the government alphabet soup (FCC, DOJ), T-Mobile promised that it wouldn't raise prices for three years after the merger closes. Some merger critics argue that there are loopholes that T-Mobile could exploit in that promise. And if Sprint has to borrow more money to stay alive and can't service the increased debt load, Sprint disappears anyway (although we should point out that Sprint has a deep-pocketed parent in SoftBank).Testimony from Claure indicated that without the merger,
Axios reports today that both sides will make their closing arguments in front of the judge on January 15th. Judge Marrero will make a final ruling shortly afterward. The current iteration of the merger (as opposed to the one floated in 2014 that was quickly shot down by the FCC and DOJ) has always been about T-Mobile acquiring Sprint's hoard of mid-band 2.5GHz spectrum. Legere testified last month that with the merger T-Mobile will "triple the total 5G capacity of standalone T-Mobile and Sprint combined." If the deal is blocked, Legere says that in some markets T-Mobile will "exhaust capacity in the next two to four years."
Two initiatives announced by T-Mobile also depend on the carrier obtaining Sprint's 2.5GHz spectrum. Connecting Heroes provides first responders with free unlimited talk, text, and data with the highest priority on the T-Mobile network. And Project 10Million will bring internet service to the 15% of American households with children that cannot access the web because they live in a low-income household.
In addition, with Sprint's mid-band airwaves T-Mobile will be able to cover more rural Americans with 5G coverage and it will help the wireless provider enhance the quality of its recently launched nationwide 5G network. The next generation of wireless connectivity, 5G will deliver faster download data speeds and will help create new technologies and industries. Countries that are the first to deliver 5G to their citizens should be among the first to experience an economic boom from the faster data speeds.