T-Mobile US is back on track to complete its takeover of Sprint after a US Federal Court approved the deal, ruling that it is unlikely to reduce competition. If the companies go ahead with closing the $26bn deal as planned, they will create a new 5G giant with a strong combined spectrum portfolio and aggressive 5G rollout commitments that were made to regulators to secure approval for the deal.
Closing the deal will also lead to T-Mobile US growing by more than 50% to some 131 million mobile subscriptions representing a market share of 26%, based on data from Omdia's World Information Series – Mobile. That will catapult the "New T-Mobile" to being closer to the size of the two leading players in the market, Verizon Wireless and AT&T, which have 36% and 33% of US mobile subscriptions, respectively.
T-Mobile and Sprint announced plans to merge in April 2018 and made a number of concessions to secure approval for the deal from the Department of Justice in July 2019 and from the Federal Communications Commission in November 2019. The attorneys general of 18 states then filed a suit to block the merger on the grounds it was anti-competitive. That case recently concluded with the judge ruling that the deal could go ahead.
The 5G commitments the companies made to regulators to secure approval for the merger include the following:
Within three years, provide 5G services in low-band spectrum to 97% of the population and 5G services in mid-band spectrum to 75% of the population.
Within six years, provide 5G services in low-band spectrum to 99% of the population and 5G services in mid-band spectrum to 88% of the population.
In rural areas, offer 5G outdoor coverage to 59.4 million residents and indoor 5G coverage to 31 million residents.
Provide T-Mobile home internet with minimum speeds of 25Mbps down and 3Mbps up and average speeds above 100Mbps down and price it significantly below incumbent provider prices for comparable speeds.
The companies also agreed to sell Sprint's prepaid businesses (including Virgin Mobile and Boost Mobile) to Dish for around $1.4bn and Sprint's 800MHz spectrum to Dish for near $3.6bn.
New T-Mobile will be in a strong position to compete in the US 5G market by combining the low-band 600MHz spectrum of T-Mobile with the extensive mid-band 2.5GHz spectrum of Sprint.
Although New T-Mobile will be the number-three player in the US by mobile subscriptions, it will be in the top ten in the world, creating a new mobile giant with the scale to look beyond its domestic market in 5G and other segments.