DOJ ready to approve Sprint, T-Mobile merger that involves Dish Network, says report
The Justice Department is expected to approve Sprint’s $26.5 billion merger with T-Mobile under a plan that would divest enough assets to Dish Network to build its own wireless brand, according to a Wall Street Journal article citing anonymous sources.
If the merger happens, and the Justice Department’s apparent blessing is a significant indication that the deal could happen, the resulting company would have 80 million customers and could be in a better position to compete with wireless giants AT&T and Verizon.
The two companies have been in talks all summer with regulators who had expressed some misgivings about the prospect that combining the third- and fourth-largest wireless networks would harm consumers by reducing competition.
But multiple reports have said Dish will buy assets from the two companies, giving it a road map for forming its own wireless brand. Bloomberg reported overnight that Dish had agreed to pay $1.5 billion for prepaid wireless businesses and $3.5 billion for spectrum, allowing the satellite-television provider to sell T-Mobile wireless service under its own brand for seven years.
A remaining hurdle is a lawsuit filed earlier this summer by several state attorneys general who protested the merger and its effect on consumers.
If the deal gets inked it would mean the name of one of Kansas City’s most iconic private businesses will become T-Mobile. Sprint, whose origins trace back to 1899 in Abilene, Kansas, and later took hold in the Kansas City area as United Telecommunications, has for decades been one of the region’s largest businesses.
Headquartered on its sprawling corporate campus in Overland Park, the company employs about 6,000 workers and 2,000 contractors. The Sprint campus was designed to handle 13,000 workers when it opened in 1999. But Sprint’s fortunes have flagged since then, particularly in the aftermath of a troubled $35 billion merger with Nextel in 2005 that left Sprint saddled with debt.
And while the merged T-Mobile has pledged to keep a secondary headquarters in Overland Park, the future of the wireless company’s presence in the region remains an unknown. T-Mobile is based in suburban Seattle.
From Sprint’s perspective, the merger was the only path forward. Sprint chief executive Michel Combes told regulators earlier this year that in the absence of a tie-up with T-Mobile, the long-term prospects for Sprint as a standalone company were bleak. The investments needed to deploy a fifth generation, or 5G network, a major selling point in the merger with T-Mobile, would have been difficult for Sprint to pull off on its own, Combes said.
The Federal Communications Commission, which also has regulatory oversight of the deal, was expected to offer its approval after a majority of the five-member commission signaled they were keen on the arrangement.
The three Republican appointees to the FCC appeared to warm to the merger after both companies announced a series of concessions, including a promise not to raise wireless rates for three years after the deal takes effect, while also pledging to deploy a high-speed 5G network to nearly all rural parts of the country within the next six years.
The two companies have argued that a fast 5G rollout is a key benefit of their merger. They’ve portrayed their combination as a means to keep pace or even blanket the country in what they call “blazing fast” wireless download speeds sooner than their rivals AT&T and Verizon.
Earlier this month, Sprint announced that portions of Kansas City — largely downtown and Johnson County — were covered by its initial 5G network, along with Dallas, Houston and Atlanta.