US antitrust authorities on Friday approved the $26 billion merger of T-Mobile and Sprint in a deal that brings together the third- and fourth-largest wireless operators as the industry moves toward deployment of superfast fifth-generation (5G) networks.
The tie-up aims to create a strong number three US operator to compete against sector leaders Verizon and AT&T and expedite 5G deployment, but consumer groups have complained it would mean reduced competition and higher prices.
The deal calls for Sprint to sell some of its prepaid wireless operations to satellite TV operator Dish Network, which would create its own telecom service.
“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,” said Makan Delrahim, head of the Department of Justice’s (DoJ’s) antitrust division.
Delrahim added that the agreement would provide Dish with the resources needed to “provide a full range of mobile wireless services nationwide”.
T-Mobile, whose parent is German-based Deutsche Telekom, and Sprint, controlled by Japan’s SoftBank, say the merger will be good for consumers.
It will create a “bigger and bolder competitor than ever before – one that will deliver the most transformative 5G network in the country, lower prices, better quality, unmatched value and thousands of jobs”, said T-Mobile CEO John Legere, who will retain his position upon completion of the merger.
“Today’s results are a win-win for everyone involved. We cannot wait to get to work bringing this pro-consumer, pro-competition New T-Mobile 5G network to US customers from coast to coast.”
Sprint executive chairman Marcelo Claure said the tie-up “will allow the US to fiercely compete for 5G leadership” and that the combined firm would build “one of the world’s most advanced 5G networks, which will massively revolutionise the way consumers and businesses use their connected devices to enhance their daily lives”.
Legere told analysts on a conference call he expected regulatory approval to be completed soon, with the merger completed by the end of the year.
Earlier this year, 14 states sued to block the deal. DoJ said five agreed to the settlement, which still requires approval in court.
New York state attorney general Letitia James said a group of state regulators would maintain their effort to block the merger.
“The coalition today reaffirmed its commitment to opposing this merger, which would reduce competition and increase prices for consumers,” James said in a statement.
Legere said the companies were “willing to engage” with opponents and that “our intention is not to close while the litigation is ongoing”.
Joshua Stager, of the New America Foundation’s Open Technology Institute, said the deal fell short of retaining four “viable competitors” for the sector, adding that the effort to sell assets to Dish was “needlessly convoluted”.
“DoJ does not need to bend over backwards to fix a bad merger. It can simply block the deal,” he said.
Avery Gardiner, an antitrust fellow at the Center for Democracy & Technology, said the decision to approve the deal “goes against decades of settled principles” of competition.
“The wireless industry is already highly concentrated, and this deal is likely to result in higher prices, calcified cell service plans, and lower quality all around,” she said.
Chris Shelton, president of the Communications Workers of America union, said the tie-up would kill 30,000 jobs and would make Dish a reseller of services over the T-Mobile network rather than a genuine rival.
But Jessica Melugin of the Competitive Enterprise Institute said the deal would be positive for consumers by allowing for three strong 5G operators.
She added that, with the government out of the way, consumers would get the wireless innovations they deserve in an unfettered marketplace.
Dish Network, which operates satellite and other pay TV systems, said it would deploy a 5G broadband network capable of serving 70 per cent of the US population by June 2023.
Dish will get wireless spectrum to be divested in the deal as well as the prepaid Sprint operations Boost Mobile, Virgin Mobile and Sprint Prepaid.