Asset deal with Dish Network could pave way for Justice Department’s blessing.
The $26.5 billion merger between wireless carriers T-Mobile and Sprint, which has been years in the making, could receive government approval as early as today, according to Bloomberg and other news outlets.
The carriers have faced resistance from the Justice Department and the Federal Communications Commission among others at various times. However their fortunes changed when Dish Network Corp reportedly agreed to pay $5 billion for wireless assets in a deal with T-Mobile US Inc. and Sprint Corp. The deal makes the Justice Department’s approval of merger more likely, according to people familiar with the matter.
The parties agreed Dish would pay approximately $1.5 billion for prepaid mobile businesses and about $3.5 billion for spectrum, according to sources. The deal forbids Dish to sell assets or relinquish control of the agreement to a third party for three years. T-Mobile is expected to state the asset sale to dish won’t impact the economic terms of the Sprint merger, Bloomberg reports. Dish will also get a seven-year wholesale agreement that lets it sell T-Mobile wireless service under its brand. T-Mobile will also provide operational support for three years as prepaid customers move to Dish.
Dish, T-Mobile, Sprint and DOJ representatives have all declined to comment however.
T-Mobile and Sprint have been working for more than a year to get this merger approved. Some of the pushback subsided in May when FCC Chairman Ajit Pai recommended the organization approved the deal. The Justice Department has been more difficult to convince, however. The Dish asset sale opened the door for the DOJ to approve the merger—the department’s antitrust chief Makan Delrahim fought for an agreement that would benefit customers and make up for the fact that the T-Mobile-Sprint union would bring the number of major wireless carriers down to three. Dish’s involvement will satisfy the government’s demand that there are four mobile service companies in the U.S. even after Sprint and T-Mobile merge.
Even if T-Mobile and Sprint secure the Justice Department’s blessing, they face resistance from a group of state attorneys general. They say the deal should be blocked because it will hinder competition and raise prices.