Following news that the US Department of Justice has approved the merger of T-Mobile and Sprint, Tammy Parker, Technology Analyst at GlobalData, offers her view on the impact on the US mobile sector
“T-Mobile’s $26.5 billion takeover of Sprint took a giant step forward, thanks to an unlikely rescue from Dish Network, which pulled a rabbit out of its hat to set itself up as a fourth national wireless operator and retain spectrum that it was likely going to have to hand back to the U.S. Federal Communications Commission.
Rival mobile operators are likely breathing a sigh of relief. Although the new T-Mobile is gaining scale that will enable it to compete more aggressively, the entry of Dish as a fourth national operator is not a significant threat.
Dish has no track record in building out a nationwide wireless network or conducting business as a wireless MVNO or network operator. Furthermore, it has the distraction of dealing with the ongoing decline of its core satellite pay-TV business as customers shift to over-the-top streaming services.
The deal with Dish Network is a tremendous victory for T-Mobile and Sprint, which now expect to complete their merger before year’s end. Though T-Mobile is giving up Sprint’s 800 MHz spectrum and the Boost, Virgin Mobile and Sprint prepaid brands to Dish in exchange for $5 billion, T-Mobile will get to keep all of Sprint’s 2.5 GHz and PCS spectrum, which is key to its ambitious 5G rollout plans.
It will also potentially be able to lease some or all of DISH’s 600 MHz spectrum to flesh out coverage. The agreement is also a face-saving win for Dish Network, which could be forced to relinquish certain spectrum licenses it holds if it does not meet network buildout requirements by March 2020.
Dish now has leverage to convince the Federal Communications Commission to modify terms of Dish’s spectrum licenses to enable it to build out a 5G broadband network capable of serving 70 percent of the U.S. population by June 2023.
However, T-Mobile and Sprint still need merger approval from the California PUC, and they need to convince opposing state attorneys general to give their blessings to their merger and drop a multi-state lawsuit opposing it. Furthermore, numerous Democratic presidential contenders are lined up to oppose this deal and will do their best to drum up public opposition in coming weeks.”