Justice Department Approves Sprint, T-Mobile Merger

(Photo by Justin Sullivan/Getty Images)

The Justice Department has approved the merger of T-Mobile and Sprint under the condition that Sprint sells off several assets to Dish Network, so that Dish can become a viable fourth competitor in the US mobile carrier space.

Under the deal, Sprint must divest its prepaid business, Boost Mobile, and Virgin Mobile to Dish Network, a satellite TV provider. In addition, T-Mobile and Sprint will need to give Dish access to at least 20,000 cell sites and hundreds of retail locations.

“T-Mobile must also provide Dish with robust access to the T-Mobile network for a period of seven years while Dish builds out its own 5G network,” the Justice Department said in Friday’s announcement.

Although T-Mobile and Sprint have cleared a major hurdle to the proposed merger, the two companies are still facing resistance from 14 state attorneys general, who filed a lawsuit last month to block the deal. They’re concerned the merger would reduce competition in the wireless market and result in price increases and shoddier services for consumers.

“We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger’s harm to consumers, workers, and innovation,” said New York state attorney general Letitia James in a statement.

The Justice Department attempted to address the antitrust concerns by forcing Sprint to divest its assets to Dish Network, which responded to today’s settlement by declaring it’s entering the wireless market. The company said it’s committed to deploying its own 5G broadband network capable of serving 70 percent of the population by June 2023.

In total, Dish is buying about $10 billion worth in assets from Sprint to create the carrier business. Assuming the T-Mobile-Sprint merger gets full approval, Dish will immediately take over Sprint’s prepaid business, which covers about 9.3 million customers across the US.

“Dish will activate all new wireless customers on the New T-Mobile network. Existing prepaid customers will be supported on the Sprint legacy network and will eventually transition to the New T-Mobile network,” Dish said.

Despite the plan, not everyone is convinced today’s settlement will help turn Dish into a viable fourth competitor.

“Dish hasn’t made any effort to provide real, consumer-facing wireless services that could offset the high prices of the major players,” said S. Derek Turner, research director at consumer advocacy group Free Press. “The company is years and billions of dollars of investment away from doing any such thing.”

Today’s settlement has received the support of the FCC, which recommended the merger’s approval earlier this year. With the Dish deal added by the DOJ, the FCC must now vote to formally approve the merger. Senior FCC officials say that will happen soon, but declined to give an exact time frame. It will likely be approved by the commission on party lines.

“The commitments made to the FCC by T-Mobile and Sprint to deploy a 5G network that would cover 99 percent of the American people, along with the measures outlined in the Department’s consent decree, will advance US leadership in 5G and protect competition,” FCC Chairman Ajit Pai said in a statement.

FCC officials pushed back on the idea that Dish will not be able compete against huge rivals like AT&T and Verizon, pointing to commitments it’s made to the FCC and DOJ regarding 5G service and nationwide buildouts. T-Mobile and Sprint have made similar commitments for their part of the deal; failing to hit those targets could result in hundreds of millions to billions in fines, according to FCC officials.

Editor’s Note: This story has been updated with comment from New York’s…