- T-Mobile and Sprint have entered into a consent decree with the U.S. Department of Justice (DOJ) for a merger of the companies to create the New T-Mobile
Today T-Mobile US, Inc. and Sprint Corporation announced they have made a huge leap in completing their proposed merger to create the New T-Mobile by entering into a consent decree with the U.S. Department of Justice (DOJ). The DOJ’s action moves the merger another step closer to closing pending other regulatory approvals and the satisfaction of other closing conditions.
Plus the companies also announced agreements with DISH Network Corporation in which the combined T-Mobile and Sprint — as the proposed New T-Mobile — will divest Sprint’s prepaid businesses and Sprint’s 800 MHz spectrum assets to DISH. And upon the closing of the divestiture transaction, the companies will provide DISH wireless customers access to the New T-Mobile network for seven years and offer standard transition services arrangements to DISH during a transition period of up to three years.
“The T-Mobile and Sprint merger we announced last April will create a bigger and bolder competitor than ever before – one that will deliver the most transformative 5G network in the country, lower prices, better quality, unmatched value and thousands of jobs, while unlocking an unprecedented $43 billion net present value in synergies. We are pleased that our previously announced target synergies, profitability, and long-term cash generation have not changed,” said T-Mobile CEO and New T-Mobile CEO John Legere in a statement.
DISH is going to have an option to take on leases for certain cell sites and retail locations that are decommissioned by the New T-Mobile subject to any assignment restrictions. And the transactions with DISH are contingent on the successful closing of T-Mobile’s merger with Sprint among other closing conditions.
“Today marks an incredibly important step forward for the New T-Mobile. We are ready to bring this supercharged Un-carrier to consumers and businesses across the country, and this milestone brings us much closer to making that vision a reality for customers everywhere!” added Legere. “Our goal was to ensure that the DOJ’s concerns were addressed while enabling us to deliver on every aspect of the synergies we promised to unlock… and we did it. It may have taken longer than expected by some, but today’s results are a win-win for everyone involved. We cannot wait to get to work bringing this pro-consumer, pro-competition New T-Mobile 5G network to U.S. customers from coast to coast!”
“This is an important day for our country and, most important, American consumers and businesses,” explained Sprint Executive Chairman Marcelo Claure. “Today’s clearance from the DOJ, along with our anticipated approval from the FCC, will allow the U.S. to fiercely compete for 5G leadership. We plan to build one of the world’s most advanced 5G networks, which will massively revolutionize the way consumers and businesses use their connected devices to enhance their daily lives. The powerful combination of 5G, artificial intelligence and the Internet of Things will unleash endless possibilities.”
Upon the successful completion of T-Mobile’s merger with Sprint, the New T-Mobile will be committed to divest Sprint’s entire prepaid businesses including Boost Mobile, Virgin Mobile, and Sprint-branded prepaid customers (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Telecommunications Company and Swiftel Communications), to DISH for approximately $1.4 billion. These brands serve about 9.3 million customers in total.
As part of the agreement, Boost Mobile, Virgin Mobile, and Sprint-branded prepaid customers as well as new DISH wireless customers will have full access to the legacy Sprint network and the New T-Mobile network in a phased approach.
And access to the New T-Mobile network will be through an MVNO arrangement, as well as through an Infrastructure MNO arrangement enabling roaming in certain areas until DISH’s 5G network is built out.
The New T-Mobile is going to offer standard transition services arrangements to DISH for up to three years following the close of the divestiture transaction. And the transition services provided by the New T-Mobile will result in the orderly transfer of prepaid customers to DISH and will also ensure the continued and seamless operation of Boost Mobile, Virgin Mobile, and Sprint-branded prepaid businesses following the transition to DISH’s ownership.
In another agreement, DISH will be acquiring Sprint’s portfolio of nationwide 800 MHz spectrum for a total value of approximately $3.6 billion in a transaction to be completed subject to certain additional closing conditions following an application for FCC approval to be filed three years following the closing of T-Mobile’s merger with Sprint. Essentially, this will permit the New T-Mobile to continue to serve legacy Sprint customers during network integration, pending later FCC approval of the license transfer. And the companies also entered into an agreement providing the New T-Mobile the option to lease back a portion of the spectrum sold to DISH for an additional two years following the closing of the spectrum sale.
Once T-Mobile’s merger with Sprint closes DISH will have the option to take on leases for certain cell sites and retail locations that are decommissioned by the New T-Mobile for five years following the closing of the divestiture transaction subject to any assignment restrictions.
In connection with the DISH transaction, Goldman Sachs and PJT Partners acted as the financial advisors to T-Mobile, and J.P. Morgan acted as financial advisor to Sprint, Latham & Watkins LLP acted as lead legal counsel to T-Mobile and Morrison & Foerster LLP acted as lead legal counsel to Sprint with Wachtell, Lipton, Rosen & Katz, Cleary Gottlieb Steen & Hamilton LLP, and DLA Piper also acted as counsel to T-Mobile in connection with the DISH transaction and the combination of T-Mobile and Sprint.
The Morrison & Foerster LLP regulatory team is led by Washington, D.C. based antitrust partner Jeff Jaeckel and the MoFo transaction teams are led by San Francisco M&A partner Brandon Parris.
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