US judge removes major hurdle in T-Mobile’s £20.4bn Sprint takeover bid

11 February 2020, 16:04

T-Mobile chief executive John Legere
John Legere. Picture: PA

The number of major US wireless companies would shrink from four to three.

A US federal judge has removed a major obstacle to T-Mobile’s 26.5 billion dollar (£20.4 billion) takeover of Sprint.

Judge Victor Marrero rejected claims by a group of states that the deal would mean less competition and higher phone bills.

After the deal closes, the number of major US wireless companies would shrink from four to three.

T-Mobile said the deal would benefit consumers as it becomes a fiercer competitor to the larger Verizon and AT&T.

Sprint executive chairman Marcelo Claure, left, swith T-Mobile US chief executive and president John Legere
Sprint executive chairman Marcelo Claure, left, with T-Mobile US chief executive and president John Legere (Jose Luis Magana/AP)

But a group of state attorneys general tried to block the deal, arguing that having one fewer phone company would cost Americans billions of dollars in higher bills.

Consumer Reports said the three remaining carriers would have fewer incentives to compete on prices and quality.

Judge Marrero ruled that most antitrust litigation ends in “competing crystal balls” that “shed little light on a clear path to resolving the dispute”.

The judge said he was not convinced the deal would lead to higher prices or lower quality for the industry, as the states insist.

His decision comes after the Justice Department had already approved the deal.

As part of a settlement with the Justice Department, T-Mobile agreed to help create a new but smaller wireless competitor in satellite-TV company Dish.

Another judge still needs to approve that settlement, a process that is usually straightforward but has taken longer than expected.

A utility board in California also has to approve the deal.

New York attorney general Letitia James, one of the leading attorneys general in the case, said her office was considering an appeal.

T-Mobile launched its bid for Sprint in 2018, after being rebuffed by Obama-era regulators.

John Legere, T-Mobile’s chief executive, had seen President Donald Trump’s election and his appointed regulators as a good opportunity to try again to combine, according to evidence during the trial.

T-Mobile, which promised not to raise prices for three years, defended its deal as good for competition.

It repeated previous arguments that the combined T-Mobile and Sprint will be able to build a better 5G network – a priority for the Trump administration – than either company could alone.

The deal got the nod from both the Justice Department and the Federal Communications Commission, thanks to an unusual commitment to create a new wireless player in Dish.

The Justice Department only allowed the deal after T-Mobile agreed to sell millions of Sprint’s prepaid customers to Dish, a satellite TV company with a shrinking customer base.

T-Mobile also has to rent its network to Dish while the fledgling rival builds its own.

Dish is also required to build a 5G network over the next few years.

Its co-founder Charlie Ergen said the ruling will accelerate its ability to deploy 5G and that its growth as a new competitor will bring “lower prices, greater choice and more innovation to consumers”.

The states had said that Dish was not certain to succeed as a wireless company and was far smaller than Sprint, and the resulting wireless market would still be worse for consumers.

Dish has spent about 21 billion dollars (£16.2 billion) over a decade buying wireless spectrum, the airwaves for transmitting data and calls, although it has not done much with it.

Analysts have long been sceptical of whether Dish intends to build its own network or sell the spectrum to others.

Now Dish faces up to 2.2 billion dollars (£1.7 billion) in fines if it fails to create a 5G network that serves 70% of the country by 2023.

Some analysts have said that Dish has potential as a viable competitor, but a big question is when.

Even if it meets the 2023 government-imposed deadline, it will still not reach as many potential customers as Sprint’s 4G network does today.

In the ruling, Judge Marrero said he did not think Sprint would be a “strong competitor” as an independent company.

And he disagreed that Dish would not be a viable competitor or live up to its commitments to build a national wireless network.

By Press Association

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