T-Mobile, Sprint, Eager to Challenge AT&T, Verizon, Get Big Approval for 'Consumer-Harming' Merger

T-Mobile executives are cheering a judge’s favorable ruling on its $26 billion merger with Sprint.

U.S. District Court Judge Victor Marrero dismissed a lawsuit from 14 state attorneys general in a move that represents the last federal regulatory hurdle for the two companies. The merger awaits approval from the California Public Utilities Commission, but T-Mobile executives are celebrating the latest win. T-Mobile president and chief operating officer Mike Sievert said the merger may close as soon as April 1.

T-Mobile’s Mike Sievert

“Now we can get to work finishing what we set out to do — bringing a new standard for value, speed, coverage, quality and customer service to U.S. consumers everywhere and truly changing wireless for good,” said Sievert, who will replace CEO John Legere on May 1.

A divestiture plan spurred by the U.S. Justice Department stipulates that Dish Network will pay for Sprint spectrum and T-Mobile network access in order to become the nation’s fourth wireless carrier in place of Sprint.

The now-dismissed lawsuit argued that T-Mobile would pursue “anticompetitive practices,” that Sprint would function as a viable wireless competitor if the merger did not go through and that Dish Network could not fill the gap left by Sprint. Judge Marrero disagreed on all three counts.

Marrero wrote that while Sprint’s recent “cost-cutting campaign” succeeded in attracting new customers with low prices, the carrier has struggled to keep those subscribers.

“Unlike T-Mobile, Sprint’s trajectory over the past decade has been largely downward, as it has lost subscribers and has been eclipsed by T-Mobile as the third-largest MNO,” Marrero wrote in his ruling. “Due in part to several questionable technological choices, Sprint’s network is poorer in quality than those of its competitors and its brand image is correspondingly poor.”

Marrero lauded Dish, on the other hand, as “financially stable.”

“Over the past eight years, Dish has amassed a large portfolio of spectrum, roughly equivalent in size to that of Verizon, through a series of private transactions and purchases at FCC auctions,” Marrero said.

T-Mobile John Legere celebrated the ruling in a series of tweets Tuesday.

New York State Attorney General Letitia James blasted the ruling in a statement. She characterized the deal as a “consumer-harming” megamerger.

“Today’s decision marks a loss for every American who relies on their cellphone for work, to care for a family member, and to communicate with friends. From the start, this merger has been about massive corporate profits over all else, and despite the companies’ false claims, this deal will endanger wireless subscribers where it hurts most: their wallets. There is no doubt that reducing the mobile market from four to three will be bad for consumers, bad for workers, and bad for innovation, which is why the states stepped up and led this lawsuit,” James said.

James led the lawsuit with California Attorney General Xavier Becerra. Fourteen attorneys general filed the suit June 11, 2019.

“Our fight to oppose this merger sends a strong message: Even in the face of …… powerful opposition, we won’t hesitate to stand up for consumers who deserve choice and fair prices,” Becerra said. “We’ll stand on the side of competition over megamergers, every time. And our coalition is prepared to fight as long as necessary to protect innovation and competitive costs.”

T-Mobile promised several benefits in a celebratory news release, including the goal of employing 3,500 more full-time U.S. workers than Sprint and T-Mobile would have without a merger and multiplying the T-Mobile 5G network capacity by a factor of 14 by 2024.

Sprint executive chairman Marcelo Claure said the decision establishes that the merger will serve U.S. consumers.

“Today brings us a big step closer to creating a combined company that will provide nationwide 5G, lower costs, and a high-performing network that will invigorate competition to the benefit of all mobile wireless and in-home broadband consumers,” Claure said. “With the support of federal regulators and now this Court, we will focus on quickly completing the few remaining necessary steps to close this transaction. I am proud of my Sprint team’s dedication, passion and resilience throughout the merger review process, and we are ready to make the vision of a New T-Mobile a reality.”

While regulatory debates have centered around the consumer impact, both companies sell indirectly and will need to decide how consolidation will impact their channel programs.

Check out USA Today’s article to read more analysis and view the judge’s 173-page ruling.