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Officials in the Justice Department are asking T-Mobile and Sprint to spin off a portion of their networks to lay the foundation to create a new national wireless carrier, with its own network, as a deal condition for approving their $26.5 billion merger.
Bloomberg News reports the launch of a new “fourth largest” U.S. wireless company would help win Justice Department approval for the merger deal, according to unnamed sources. Such a network could be created with the spinoff of Sprint’s Boost Mobile, a prepaid MVNO dependent on Sprint’s wireless network. Since a considerable percentage of Sprint’s existing network was expected to be scrapped after the merger won approval, Sprint could theoretically give up part of its network that would have been deemed redundant anyway to appease regulators. But Wall Street is unlikely to approve of the prospect of creating a new competitor, especially in a transaction designed to reduce the number of wireless competitors in the United States.
Boost Mobile, according to Reuters, could be worth $3 billion in a sale — potentially more if an already-built wireless network is included in the deal.
Critics wonder why the Justice Department would approve a deal merging T-Mobile and Sprint at all if officials were worried about reducing the number of wireless options for consumers. Industry observers suspect T-Mobile and Sprint would be unlikely to support such a network spinoff plan, and the resulting emergence of a new carrier likely to be even smaller than Sprint would leave it in a difficult position in a marketplace that would be dominated by three much larger national carriers planning to spend billions to develop 5G networks.
A source told Bloomberg News Justice Department antitrust chief Makan Delrahim “still wants four carriers” and remains unmoved by T-Mobile and Sprint’s arguments that combining operations would lead to more competition and lower prices for consumers.
Many state attorneys general remain opposed to the merger, fearing that it will lead to less competition and higher prices. They are waiting for the Justice Department to make its decision before contemplating lawsuits to block the merger if the deal wins approval in Washington.
Ugh. Whatever happens, faithful customers of T-Mobile like me are bound to be screwed over and end up much higher monthly rates.
Let ’em merge…if they can figure out a way to incentivize Dish enough to stop sitting on its spectrum and actually build out a network. There was talk of Sprint sharing network assets with lightSquared, so they could do the same with Dish. Add in preferential roaming rates (but not low enough to disincentivize Dish from building their own network) and you have a merger that actually increases competition whatever way you look at it. Heck, throw in all PCS spectrum in each market above a certain threshold. Dish has both 600 MHz and, as I recall, S-Band (~2200 MHz)… Read more »