T-Mobile's $26.5B Sprint megamerger clears major legal hurdle
After two years of waiting, the end may be in sight.
Eli BlumenthalSenior Editor
Eli Blumenthal is a senior editor at CNET with a particular focus on covering the latest in the ever-changing worlds of telecom, streaming and sports. He previously worked as a technology reporter at USA Today.
Expertise5G, mobile networks, wireless carriers, phones, tablets, streaming devices, streaming platforms, mobile and console gaming,
is almost across the finish line after a New York court decision that the pending $26.5 billion transaction could go ahead. US District Judge Victor Marrero formally ruled on Tuesday in favor of the deal, which will combine the third- and fourth-largest US wireless carriers.
Fourteen state attorneys general, led by New York and California, had opposed the transaction, arguing that combining the companies would dramatically reduce competition and push up prices.
In his ruling, Marrero said the merger was unlikely to "substantially lessen competition" and said it was "misleading" to presume the deal would be anticompetitive given the rapid changes in the industry. He credited T-Mobile with having spurred industry leaders
to make pro-consumer changes, calling it a "maverick." He also said Sprint had tried to remain competitive but was "falling farther and farther short of the targets it must hit to remain relevant as a significant competitor."
The principals in the merger deal expressed relief Tuesday at the judge's ruling.
"Today was a huge victory for this merger … and now we are FINALLY able to focus on the last steps to get this merger done!" T-Mobile CEO John Legere said in a statement. "We've said it all along: The new T-Mobile will be a supercharged Un-carrier that is great for consumers and great for competition."
Sprint Executive Chairman Marcelo Claure also praised the ruling. "Judge Marrero's decision validates our view that this merger is in the best interests of the US economy and American consumers," he said.
After the ruling, Sprint's shares soared more than 70% to around $8.25, while T-Mobile's rose 11% to around $93.90.
Dish, a satellite TV service that is set to acquire assets divested by T-Mobile and Sprint, was similarly pleased. The deal will give the company, which is buying the
budget brand from Sprint, the opportunity to expand into phone service using billions of dollars' worth of wireless spectrum it has accumulated.
"We are eager to begin serving
customers while aggressively growing the business as a new competitor, bringing lower prices, greater choice and more innovation to consumers," Charlie Ergen, Dish's co-founder and chairman, said in a statement. "We look forward to the Boost employees and dealers joining the Dish family."
Watch this: How T-Mobile deals with life after John Legere
Announced in 2018, the deal received approval from the Federal Communications Commission and Department of Justice in 2019. The states represented one of the biggest remaining hurdles preventing the companies from completing the transaction, though it still requires the blessing of some public utility commissions, including California's. The deal also needs to pass a Tunney Act review for antitrust concerns.
With the deal now passing through the courts, T-Mobile looks to fulfill its earlier expectation of completing the merger in early 2020.
NY AG: Ruling is 'a loss for every American'
In a statement, New York Attorney General Letitia James called the ruling "a loss for every American" who relies on a cellphone.
"From the start, this merger has been about massive corporate profits over all else," James said. "Despite the companies' false claims, this deal will endanger wireless subscribers where it hurts most: their wallets."
James said the attorneys general are reviewing their options, including the possibility of an appeal.
In a statement, California Attorney General Xavier Becerra said the fight against the merger signaled that "we won't hesitate to stand up for consumers who deserve choice and fair prices."
Where things go now
Approval of the deal can trigger a number of follow-up actions.
The attorneys general can look to appeal the deal, furthering their fight. If they don't, however, the companies still have steps they need to take.
T-Mobile, Sprint and Dish will need to complete their respective agreements, while T-Mobile and Sprint need to hammer out final terms. That could prove tricky if T-Mobile renegotiates the price, as some analysts have called for because of Sprint's declining health.
T-Mobile didn't immediately respond to a request for comment on whether it would renegotiate with Sprint.
Once that's done, T-Mobile and Sprint would have to merge their networks, including enabling their devices to tap into both. T-Mobile has said it will take about three years to migrate customers over to its network. Most recent
, including recent 5G devices, support both Sprint and T-Mobile airwaves.
A Sprint spokeswoman tells CNET that "about one-half of Sprint's branded customer base, or about 20 million users, have devices that are already compatible with T-Mobile's network" with a "simple software update" being all that is needed to enable them to take advantage of T-Mobile's service.
Dish and T-Mobile, meanwhile, will also need to iron out the final details of its deal, which will have Dish acquire the Boost brand, wireless spectrum and access to T-Mobile's network for seven years while it builds its own 5G offering.
How we got here
The road to the deal was long and winding, riddled with promises and obstacles that called into question the deal's viability.
In a bid to gain FCC approval, T-Mobile announced a host of promises around 5G and pricing, including a pledge not to increase prices for three years. The wireless carrier won the DOJ's blessing after a deal was brokered with Dish, which proposed buying assets, including Sprint's Boost Mobile brand. That purchase would allow Dish to become a new, fourth wireless carrier.
For most deals, approval by the DOJ and FCC would be enough. But 14 attorneys general continued to fight. They filed a multistate lawsuit in June, arguing that allowing the wireless carriers to combine would "deprive consumers of the benefits of competition and drive up prices for cellphone services."
The attorneys general have also questioned whether Dish has the expertise necessary to operate a competitive fourth carrier, citing the company's inexperience in mobile telecommunications.
"It will not be a new, robust wireless operator that can replace Sprint," California Deputy Attorney General Paula Blizzard said in remarks delivered before the trial, which began on Dec. 9 and ended last month.
A number of executives from T-Mobile, Sprint and Dish appeared at the trial to defend the deal, including T-Mobile's Legere, President and Chief Operating Officer Mike Sievert and President of Technology Neville Ray. Other execs who appeared in court included Claure, current Sprint CEO Michel Combes and Dish's Ergen.
T-Mobile has long argued that it needs Sprint's spectrum to build a truly robust
nationwide network. Sprint is the only US carrier to currently offer 5G on what is known as midband spectrum. This frequency allows for faster data connections than the low-band 5G network T-Mobile operates for 200 million people, but with significantly more range than the higher-frequency millimeter-wave 5G currently favored by Verizon.
The carrier says that by merging with Sprint it'll be able to build out a network that utilizes all three flavors of 5G: low-band, midband and millimeter-wave.
Originally published Feb. 10. Update, Feb. 11, 7:18 a.m.: Adds details from the judge's decision, as well as statements and comments from the companies and attorneys general.