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Judge OKs $26.5B Sprint/T-Mobile Megamerger, Reshaping U.S. Wireless Market

The decision by a U.S. district court judge clears one final hurdle to Sprint and T-Mobile's third merger attempt in six years.

The two-year battle over the right to join forces is nearly over after a U.S. district court judge ruled in favor of the $26.5 billion Sprint/T-Mobile merger on Tuesday.

Bellevue, Washington-based T-Mobile and Overland Park, Kansas-based Sprint announced their intent to merge nearly two years ago in April 2018. This deal marks the third merger attempt for Sprint and T-Mobile, which also tried to come together in 2014 and 2017.

The ruling clears one of the final hurdles for the deal. Now, the California Public Utilities Commission must approve the transaction before it can be closed.

[Related: Partners: Sprint, T-Mobile MegaMerger Could Create A 'Viable' Third Wireless Carrier Option For Channel, Business Customers ]

Sprint and T-Mobile in January made their final arguments as to why they should be allowed to join forces in a U.S. District Court after month-long legal battle that had the two carriers squaring off against a group of states that were staunchly opposed to the $26.5 billion mega-merger. The states had argued that combining the third and fourth carriers in the country would limit competition and raise prices for consumers. U.S. District Judge Victor Marrero in mid-January said at the time that he would make a decision “as soon as possible.”

Marrero in his filing on Tuesday rejected the states' case, saying that the states failed to prove that the merger would "pursue anticompetitive behaviors," or higher prices. He also said that Sprint wouldn't be able to compete long-term without the merger.

“The Court is thus substantially persuaded that Sprint does not have a sustainable long-term competitive strategy and will in fact cease to be a truly national [mobile network operator],” the ruling said.

Lawyers representing the states called the decision "a loss" for American consumers.

The two companies in July received approval to join forces from the U.S. Department of Justice (DoJ) under a set of specific conditions that still apply. The combined company will have to divest Sprint’s prepaid businesses, including Boost Mobile and Virgin Mobile, and Sprint’s 800 MHz spectrum assets to satellite TV provider Dish Network. Additionally, the two companies must provide Dish wireless customers access to the new company’s network for seven years and offer standard transition services arrangements to Dish during a transition period of up to three years.

Outspoken T-Mobile CEO John Legere took to Twitter to announce the news. "The New T-Mobile is now one step closer to being finalized! The new Supercharged Un-carrier will provide benefits for all customers and drive competition! We can't wait!"

Sprint and T-Mobile, for their part, said the merger would help them compete against market incumbents AT&T and Verizon and allow them to build a better, nationwide 5G network.

Legere also said that the merger will create new jobs, including the addition of 3,500 employees in year one, 11,000 more jobs by 2024, 600 new retail locations, and five new customer experience centers.

Sprint's stock soared up by 75 percent on Tuesday morning on news of the decision.

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