A little more than two months after closing its $26 billion merger with Sprint, T-Mobile reported a surprisingly robust first quarter despite setbacks associated with the COVID-19 pandemic, and according to some analysts, is positioning itself to be a wireless leader as 5G technology starts to take hold.

T-Mobile completed its Sprint merger on April 1, ending what had been a seven-year dance between the third- and fourth-largest U.S. wireless operators. T-Mobile first began exploring a Sprint merger in 2013, but didn’t make an offer until more than two years later. What followed was an 18-month federal approval process, followed by another six months battling with a handful of state attorneys general trying to block the deal. When the dust cleared, the pandemic forced T-Mobile to close its retail outlets across the country, delaying what was expected to be a major marketing push to increase awareness in the new T-Mobile brand.

“If one were so inclined, one might conclude that there is someone out there who just doesn’t want these companies combined,” MoffettNathanson principal and senior analyst Craig Moffett wrote in a note to clients. “For our part, we think New T-Mobile will be worth the wait.”

What has driven a lot of this optimism is a combination of T-Mobile’s Q1 results, which don’t include Sprint, and the promise of better days once the merger is fully integrated.

Q1 Strength

T-Mobile’s Q1 results were surprisingly good, especially during a pandemic that forced most of its retail stores to close. As the country went under lockdown, T-Mobile managed to add 777,000 new postpaid wireless subscribers in Q1, beating analysts’ consensus estimates of 752,000 additions. Though Q2 may be a bit lighter in terms of postpaid net additions — Sanford Bernstein analyst Peter Supino estimated T-Mobile would add about 100,000 postpaid customers in Q2 from the full effect of the pandemic — that is expected to turn around in Q3 and beyond.

The impact of Sprint churn won’t be known until Q2 results are released sometime in late July, but indications are that it has improved. Fueling that optimism is lower churn at T-Mobile during the first quarter; its superior network, which should increase customer satisfaction; and its aggressive rollout of 5G technology.

Churn at T-Mobile was 0.86% in Q1, well below the 0.99% most analysts expected and in line with much larger competitors AT&T and Verizon Communications.

“We believe this fact adds to our thesis that Sprint churn will improve substantially and quickly, to the benefit of growth and margins,” Supino wrote.

Supino estimates free cash flow for T-Mobile will double to $12 per share by 2023 and in the nearer term, lower churn rates will boost both consensus estimates and confidence in the merger. Supino’s own confidence in the deal is reflected in his
$124 per share 12-month price target on the stock, about 24% higher than its trading price of $100.17 per share on June 4 and 43% above its closing price when he raised his outlook on the stock.

For the year, T-Mobile shares are up about 28%.

T-Mobile has taken a different approach to 5G service than AT&T or Verizon opting for a slower-speed service (less than 1 Gigabit per second) based on the 600 Megahertz spectrum, which is easier to deploy and more adaptable to the spread-out rural areas where most of its customers live.

That’s why T-Mobile has been able to make its version of 5G available to about 215 million homes and now offers service in Detroit; St. Louis; Columbus, Ohio; and the San Francisco Bay Area, in addition to its initial rollout in New York and Philadelphia. In contrast, Verizon and AT&T have adopted millimeter wave technology that offers higher speeds (up to 10 Gigabits per second) but requires denser placement of towers. Verizon offers 5G in parts of 31 cities across the country (including New York, Los Angeles, Washington, D.C., and Denver) and expects to eventually be in front of about 30 million homes with the service. AT&T has said it is on track to deliver nationwide 5G service by the middle of the year.

While the 5G rollout continues, most Sprint customers can “roam” on T-Mobile’s 4G network — about 80% of Sprint customers have compatible handsets — and are finding the experience to be vastly better.

On a conference call to discuss first-quarter results, T-Mobile president of technology Neville Ray said about 10 million Sprint customers were using the T-Mobile network per week, or about one-third of the total postpaid subscriber base the company has with Sprint.

Sprint customer churn was a big question mark in the merger. It has historically been about twice that of legacy T-Mobile. Although it’s hard to predict what churn rates will ultimately be, T-Mobile CEO Mike Sievert said, he noted that customers leave a provider for two main reasons: network and value. In his mind, the New T-Mobile is providing both.

Value Proposition Is Key

Value, perceived or otherwise, can make a big difference in the wireless space. Cable companies like Charter Communications, Comcast and Altice USA have introduced aggressively-priced wireless offerings over the past two years and have seen spikes in customer additions. In Q1 alone, Charter added 290,000 wireless customers (nearly double that of the previous year), while Comcast added 216,000 (ahead of 170,000 in 2019). Altice USA, which launched wireless service in September 2019, added 41,000 customers.

On the T-Mobile call, Sievert suggested he expects value to drive consumer decisions as stay-at-home orders are lifted: “As the nation starts to emerge post-COVID-19, customers across the industry will likely be looking for better value in a tougher economic environment.”

Sievert added that he expects “AT&T and Verizon customers will most certainly be looking to get out from under their high monthly bills in search of a better value.” 

The Communications Workers of America, joined by a bunch of other groups including computer company-backed Open Technology Institute (New America), called on Congress Tuesday (April 21) not to give T-Mobile any pandemic relief money to meet "merger specific build-out commitments it agreed to when it sought approval of the T-Mobile-Sprint merger from the Federal Communications Commission (FCC), Department of Justice, state attorneys general, and state public utilities commissions." 

Related: FCC Approves Sprint/T-Mobile Merger 

Congress and the Trump Administration have signaled that money for infrastructure buildouts should be part of the pandemic recovery plan, but the groups, which also include the Rural Wireless Association and Free Press Action said that should not include money for the T-Mobile-Sprint buildout conditions. 

T-Mobile and Sprint committed to deploy 5G service covering 97% of the American people within three years, and 99% by year six. That included deploying 5G covering 85% of rural Americans within three years and 90% within six. 

T-Mobile should not get a "corporate handout" for meeting commitments it touted to get the deal approved," they wrote in a letter to members of Congress.

The letter points out that the FCC has signaled that the merger condition buildouts will not be eligible for its $9 billion 5G fund, saying it would be “inappropriate to allow the use of high-cost support to fulfill merger conditions." 

Related: All the Latest News on COVID-19 Impact on Industry

What's sauce for the 5G fund goose is sauce for the COVID-19 infrastructure gander, CWA et. al argue.  

“Congress must hold the new T-Mobile accountable for the promises it made to ram the merger through the approval process,” said CWA director of government affairs Dan Mauer in a statement. “T-Mobile promised that the merger would give the company the resources to build out 5G to nearly the entire U.S. population, including rural areas. COVID-19 recovery funds should be used to address the crisis caused by the pandemic, not as a corporate handout to help the new T-Mobile fulfill the promises the company was eager to make to push this merger through.”

Already facing some skepticism even before the COVID-19 pandemic crashed the global economy, Dish Network chairman Charlie Ergen’s quest to build a fourth U.S. wireless 5G network has come under serious doubt.

Just as the satellite-TV provider confirmed that it would lay off an unspecified number of workers, The New York Post quoted an unnamed source, identified as a part of Dish’s lending group for the network build-out, damning the project.

“I think whatever rosy projections Charlie had are now very questionable,” the source told the Post. “There is no financing to build a telecom network.”

Last summer, Dish and Ergen emerged as key catalysts in T-Mobile’s ultimately successful $26 billion bid to buy Sprint. Dish agreed to pay T-Mobile $5 billion to transform itself into the nation’s fourth major wireless carrier, thus alleviating U.S. Justice Department concerns about reduced competition.

Dish now owns T-Mobile’s prepaid wireless business, Boost Mobile, along with its 9 million customers. The satellite-TV operator also received more wireless spectrum, on top of the gobs it already owns. And it now has seven years to use T-Mobile’s broader wireless network, including its emerging 5G infrastructure, on relatively advantageous wholesale “MVNO” (mobile virtual network operator) terms while building out its own 5G wireless capacity.

Dish also has a tight Federal Communications Commission deadline to build out that 5G network, needing to cover 70% of the country by 2023.

Ergen already caught flack for pegging the cost of the build-out at only $10 billion.

“Verizon spends $15 billion annually to maintain a network that they’ve already built. The idea that Dish might spend $10 billion (their own estimate on previous conference calls) and then somehow be finished is, well, just silly,” MoffettNathanson principal and senior analyst Craig Moffett wrote.

In his staff-wide memo announcing the job cuts earlier this month, Dish CEO Erik Carlson expressed continued commitment to the infrastructure project. “We are committed to entering the wireless business, bringing full, standalone 5G to America, and delivering unparalleled innovation that will benefit U.S. consumers,” he wrote.

Meanwhile, other analysts aren’t so quick to write off Ergen’s determination.

“Two months of severe market uncertainty doesn’t really alter my view of a company to execute on a three-year plan,” LightShed Partners analyst Walt Piecyk told the Post.

If it fails to meet the 2023 deadline, Dish could face $2 billion in fines and the forfeiture of $12 billion worth of wireless spectrum.

But in a note to investors, Goldman Sachs suggested Dish could use an “act of God” clause to ease that commitment.

In December, while testifying in a Manhattan federal court to Dish’s abilities to replace Sprint as the No. 4 U.S. wireless carrier, Ergen included an interesting hedge in terms of what might prevent Dish from obtaining needed capital.

“Where the markets are today — if we don’t have another 9/11, God forbid — the banks are confident,” Ergen told the packed courtroom.

Will the “New T-Mobile” soon offer its unlimited wireless data plan subscribers free access to Netflix, Quibi and Hulu?

Last week, T-Mobile announced that in addition to getting the base version of Netflix for free, subscribers to its Magenta and other family-targeted unlimited data plans will also have free access to mobile-first streaming service Quibi, which launched Monday. T-Mobile calls the promo “Quibi on Us,” much like the “Netflix on Us”-branded promotion it's had in place since 2017.

Related: T-Mobile Offering Free Quibi Service to Customers

Last week, however, T-Mobile also closed on its $31 million acquisition of No. 4 U.S. wireless operator Sprint. That carrier has an existing deal, established in 2017 when Hulu was still a joint venture between Comcast, Disney, a pre-Disney-owned Fox and the erstwhile Time Warner Inc., to provide its unlimited wireless customers with free base-level, $5.99-a-month Hulu service.

Will there come a day when subscribers to the combined company, dubbed New T-Mobile, have free streaming access to all three OTT smorgasbords?

In an email response to Next TV this morning, a T-Mobile rep put it this way: “For now, Sprint and T-Mobile customers will continue to receive the same benefits they currently have, and we’re working on exciting new benefits in the future. Stay tuned!

In its buttressed position against Nos. 1 and 2 carriers Verizon and AT&T, offering Netflix, Quibi and Hulu would be a sizable value proposition for New T-Mobile.

Verizon has recently upped its strength by adding a year’s free access to Disney Plus. AT&T will soon provide HBO Max to unlimited wireless customers who also subscribe to HBO through AT&T’s pay TV services, or through direct-to-consumer means. 

After a nearly two-year slog through the federal approval process and a brief scuffle with a handful of states' attorneys general, T-Mobile dragged its $26 billion merger with Sprint Corp., across the finish line Wednesday, creating what it hopes to be a much stronger No. 3 wireless carrier.

T-Mobile first announced its intention to merge with Sprint on April 29, 2018, confirming what had been at the time one of the worst kept secrets in the telecom business.  The merger faced some backlash from consumer groups objecting to the removal of a viable wireless competitor (Sprint), but the company managed to pass federal regulatory muster by agreeing to conditions to sell its prepaid wireless business and a chunk of spectrum to Dish Network.  Last year, a handful of states’ attorneys general -- including AGs in New York and California -- sued to block the deal, but a federal court ruled in favor of the telecom companies in February. 

With the closing of the merger, the New T-Mobile will be led by former T-Mobile chief operating officer Mike Sievert. Sievert had been expected to assume the CEO role from John Legere on May 1, but the company said it decided to accelerate the transition.

“I’ve been fortunate enough to lead this company for the past seven years, but now it’s time for me to hand the reins over to Mike Sievert,” Legere said in the press release. “The Board of Directors and I agree that it makes perfect sense for Mike to assume his leadership role on day one of the new company. He’s ready!”

The new T-Mobile has committed to spend about $40 billion over three years on 5G deployment and to expand its rural wireless service to reach 59.4 million homes. It has also promised to deploy a new in-home broadband option to more than 52% of U.S. ZIP codes, with a plan to obtain 9.5 million U.S. households by 2024, with 20% of those homes in underserved areas. The new T-Mobile also expects to build 600 additional retail outlets.

“WIth this powerful network, the New T-Mobile will deliver real choice and value to wireless and home broadband customers and double down on all the things customers have always loved about the Un-carrier,” Sievert said in a press release. “T-Mobile has been changing wireless for good — and now we are going to do it on a whole new level!”

T-Mobile stock was up about 2% ($1.9 each) to $85.81 per share in early trading April 1. 

T-Mobile said it is “financially prepared” to complete its $26 billion merger with Sprint, despite the effect the coronavirus outbreak has had on financial markets.

T-Mobile said in a press release that it has previously secured commitment for bridge financing and senior secured credit financing for the all-stock deal. The company said it has been in communication with all 16 banks involved in the deal and has not received any word that they are unable to meet their commitments.

“I’m pleased that right now we have broad support from the banks to finance the closing of this merger -- we are very close to unleashing the capabilities of the New T-Mobile, and that is even more important for consumers during the current COVID-19 pandemic,” T-Mobile CEO John Legere said in a press release. “Our nation is more dependent than ever on connectivity, and we will continue to deliver our essential wireless service today and when we merge with Sprint, with a Nationwide 5G service that is broader and more robust than anything else in America.We can see the finish line and are prepared to close the merger very soon so our teams can get to work building a supercharged Un-carrier.”

Related: T-Mobile Outlines Coronavirus Related Service Changes 

T-Mobile and Sprint stocks have taken a hit along with the rest of the market as the coronavirus pandemic has ripped through financial markets over the past few weeks. The Dow Jones Industrial Average has lost about 10,000 points in the past five weeks as investors are uncertain what effect long-term social distancing can have on business. For T-Mobile and Sprint, the stocks are down about 22% and 13% respectively since Feb. 13, but analysts are generally optimistic that the deal will not only go through, but that the combined entity will be a stronger competitor.

Related: T-Mobile-Sprint Agree to Give Deutsche Telekom Bigger Stake 

For example, in a note to clients Sanford Bernstein analyst Peter Supino addressed concerns of some investors that fear Sprint’s higher customer churn would have a negative effect on the merger. In that note, Supino said that while the integration isn’t expected to be easy, he believes that most of Sprint’s customer churn is from those who switch to T-Mobile.

“Subscribers who would leave Sprint to go to T-Mobile and vice-versa will no longer have that option,” Supino wrote. “We believe the combined company can save $2 billion on lower sales commissions and handset subsidies. If we are correct and New T-Mobile begins to report lower churn, we think the stock's valuation multiple will expand in anticipation of improving cash flow.”

Legere is still scheduled to step down as CEO shortly after the merger closes, replaced by current T-Mobile chief operating officer Mike Sievert. In the press release, Sievert said the current coronavirus uncertainty means the industry needs the combination more than ever.

“In times when consumers need affordable service plans to stay connected, T-Mobile is fully prepared and well positioned to be the provider to meet these needs,” Sievert said in the release. “In fact, after we close the merger, the New T-Mobile may be the best positioned company to serve them, as more and more consumers seek value in these uncertain times. We are here for our community of consumers who count on us.”

A district court judge's decision upholding the Justice Department and FCC approval of the Sprint-T-Mobile merger drew immediate reaction from Washington.  

Both the FCC and Justice had argued the deal would help speed the 5G rollout, with conditions that would ultimately create a new, facilities-based, competitor, helping justify the reduction of the Big Four--AT&T, Verizon, T-Mobile and Sprint--wireless carriers to the Big Three. 

Delrahim Derides State Efforts to Derail T-Mobile-Sprint Merger 

“I’m pleased with the district court’s decision," said FCC chair Ajit Pai. "The T-Mobile-Sprint merger will help close the digital divide and secure United States leadership in 5G. After the merger, T-Mobile has committed to bringing 5G to 97% of our nation’s population within three years and 99% of Americans within six years. Its 5G network will also reach deep into rural areas, with 85% of rural Americans covered within three years and 90% covered within six years. This transaction represents a unique opportunity to speed up the deployment of 5G throughout the United States, put critical mid-band spectrum to more productive use, and bring much faster mobile broadband to rural Americans." 

“The New York District Court rightfully came to the same conclusion in considering the T-Mobile and Sprint merger as I did during my review, and I am pleased that the deeply flawed case made by the state Attorneys General was rejected," said Republican FCC Commissioner Michael O'Rielly. "It is time to wrap up the entire process and allow these parties to merge. Once completed, a new T-Mobile will have certain commitments to meet, but I am excited to see it return to its mavericky style, quickly deploying 5G networks and intensely competing in the wireless marketplace, ultimately bearing out our expectation that it will provide consumers with new innovative offerings and a creative choice of packages.”

More than a dozen states had sued to block the deal, saying it would raise prices and reduce competition. 

“I am pleased and agree with Judge Marrero’s decision to deny the injunction, and particularly his conclusion that the department’s divestiture and remedy package resolves the competitive concerns in this case,” said Assistant Attorney General Makan Delrahim , head of the DOJ's Antitrust Division. “This opinion is an important next step toward strengthening competition for high-quality 5G networks that will benefit American consumers nationwide.”

“This is good news for U.S. consumers who benefit from economies of scale and free markets picking winners and losers, not bureaucrats or politicians," said Jessica Melugin, associate director of the Competitive Enterprise Institute's Center for Technology and Innovation. "This merger isn’t about taking the number of wireless providers from four to three, it’s about letting the third and fourth biggest players combine in order to be a third provider of 5G, alongside Verizon and AT&T.” 

"While the expert career staff at the Federal Communications Commission and Department of Justice have already determined this transaction is in the public interest and will promote competition, I look forward to seeing the New T-Mobile continue to deliver on its commitments to serve rural America and inject further competition into the fast-changing wireless marketplace," said House Energy & Commerce Committee ranking member Greg Walden (R-Ore.).

“I’m pleased that Judge Marrero has denied the attempt of a minority of states to second-guess the considered decisions of the Department of Justice and the FCC to allow the T-Mobile/Sprint merger to be consummated," said Free State Foundation President Randolph May. "In comments before the FCC and before the the District Court, I explained that, all things considered, the merger was likely to increase competition and overall consumer welfare not only in today’s wireless marketplace but in the broader telecommunications marketplace as well."

“While NATE as an organization did not take a formal position on the proposed T-Mobile/Sprint merger, the news this week of a favorable merger ruling provides much needed clarity in the industry," said National Association of Tower Erectors Executive Director Todd SchleKeway. "We are particularly pleased that this decision came prior to our annual NATE UNITE 2020 Conference as this merger will be a major topic of conversation at our event. NATE and our 930 member companies are optimistic that this T-Mobile/Sprint merger news will ultimately lead to increased carrier and vendor spending investments that are necessary in order to build, install and maintain the next generation networks and related infrastructure that are so critical to the 5G deployment cycle in the United States."

But not everyone was cheering, including the losing parties, the public interest groups and unions that had fought the deal, and Democratic regulators who had opposed it.

New York Attorney General Letitia James, whose state was one of the leads in the suit, was not pleased.

“Today’s decision marks a loss for every American who relies on their cell phone for work, to care for a family member, and to communicate with friends," she said. "We disagree with this decision wholeheartedly, and will continue to fight the kind of consumer-harming megamergers our antitrust laws were designed to prevent." 

That could include appealing the decision to a higher court.  

"As we review our options, including a possible appeal, Americans should continue to hold the companies to account for their promises," she said. 

“The merger between T-Mobile and Sprint will dramatically alter America’s wireless landscape," said Democratic FCC Commissioner Geoffrey Starks, who voted against the merger. "The state Attorneys General presented a strong case. The court saw it differently. In particular, given how central DISH’s future role as a wireless competitor was to the court’s decision, I remain disappointed that those facts were not fully vetted in the merger that I voted on. Nevertheless, the merging parties have made significant promises – to lower prices, to deploy 5G throughout the country, and to increase the diversity of their suppliers, employees and executives. Moreover, DISH has promised to build a 5G network from scratch in a few short years. I look forward to seeing how these companies will fulfill their promises to the American people.” 

“This is disappointing," said Commissioner Jessica Rosenworcel, the other "no" vote in the FCC's 3-2 approval of the deal. "I am concerned that antitrust enforcement is not working for consumers. Going forward it is absolutely essential that the FCC enforce the promises made by these companies in their effort to secure approval from this agency. Any other outcome would be unacceptable—because in our 5G future we cannot afford to leave anyone behind.”

"We are profoundly disappointed that the judge approved a merger that will harm communities of color and low-income communities across California," said Greenlining Institute Technology equity director Paul Goodman. "T-Mobile's tepid promises to offer low-cost services were contradicted by T-Mobile's own experts, and T-Mobile's commitments are too vague and full of loopholes to ensure that the merger is in the public interest. The Greenlining Institute will continue to fight the merger at the California Public Utilities Commission to ensure that communities of color have access to affordable, high quality service." 

“How many times will judges and antitrust enforcers be fooled by the empty promises these companies make to get these deals approved?" said Free Press VP of policy and general counsel Matt Wood. "Using an unhealthy mix of hubris, bad judgment, and petty politics, the FCC’s Republican majority and Donald Trump’s attorney general for antitrust decided to wave this deal through — reportedly ignoring the advice of staff at both agencies who had called to reject it. More than a dozen state AGs rightly stepped in to fill the void, making the obvious case that the competition between Sprint and T-Mobile benefits all wireless users and especially those who seek out lower-priced plans and greater value." 

“Today's decision is a tremendous loss for consumers, the American economy, and antitrust law itself," said Joshua Stager, senior counsel at New America's Open Technology Institute. "This merger was plainly illegal from the moment it was announced, which is why the Trump Administration twisted itself into knots devising one of the most convoluted antitrust remedies in living memory.

“Markets don’t recover from mergers like this one—they turn into oligopolies marked by high prices, collusion, and inequality," Stager said. "Unfortunately, the court fundamentally misunderstood how the wireless market operates, and consumers will quite literally pay the price for its misguided ruling." 

“Throughout this process, regulators who are supposed to be protecting the public interest have ignored clear evidence that this merger would result in significant job loss for wireless workers,” said Communications Workers of America President Chris Shelton in a statement. “We are grateful to the attorneys general who stepped in to try to protect workers and customers after President Trump’s appointees at the FCC and Department of Justice ignored their concerns. This decision does not mean that we will stop fighting to protect jobs and raise standards for workers across the industry.

“We are deeply disappointed in the Court’s decision to approve the T-Mobile-Sprint merger, which will have significant consequences for consumers and competition," said Michael Copps, special advisor to Common Cause and former Democratic FCC chairman. "All of the evidence in this proceeding shows that this merger is inherently illegal under antitrust law. Even evidence presented at the trial revealed the companies’ executives acknowledged prices for wireless service would rise if the merger was approved. The Court’s decision will reduce the wireless market from four to three national carriers, undoubtedly raising prices on wireless customers."

After receiving a favorable decision in federal court that dismissed attempts by several states to block their merger, T-Mobile and Sprint said they are moving toward closing the deal that will create a stronger No. 3 wireless carrier.

U.S. District Court Judge for the Southern District of New York Victor Marrero ruled Tuesday that the merger, first proposed more than a year ago, would be in the public interest.

Several states attorneys general sued to block the deal last year, claiming that a combined T-Mobile and Sprint would lead to higher wireless prices and lessened competition. In his ruling, Judge Marrero wrote that the deal would likely “enhance competition in the relevant markets to the benefit of all consumers.”

The Federal Communications Commission approved the deal in November, and Tuesday FCC chairman Ajit Pai praised the merger, adding in a statement that it would help close the digital divide.

“This is a big win for American consumers,” Pai said in a statement.

[embed]https://twitter.com/AjitPaiFCC/status/1227227915655372800[/embed]

With those approvals in hand, T-Mobile and Sprint have the green light to go through with their $26 billion union.

Investors were pleased that the deal is closer to the finish line, driving T-Mobile stock up 11%(9.27 each) to $93.80 per share, and Sprint stock up 71% ($3.39 each) to $8.19 per share in early trading Feb. 11.

“Today was a huge victory for this merger … and now we are FINALLY able to focus on the last steps to get this merger done!” T-Mobile CEO John Legere said in a press release. “We want to thank the Court for its thorough review of the facts we presented in our case. We’ve said it all along: the New T-Mobile will be a supercharged Un-carrier that is great for consumers and great for competition. The broad and deep 5G network that only our combined companies will be able to bring to life is going to change wireless … and beyond. Look out Dumb and Dumber and Big Cable – we are coming for you … and you haven’t seen anything yet!”

The deal is still subject to merger conditions, but is expected to be closed by April 1. Also as part of the merger, Dish Network has agreed to purchase Sprint’s prepaid wireless businesses (Boost Mobile and Virgin Mobile) for $1.4 billion and pony up about $3.6 billion for 800 Megahertz of wireless spectrum from the combined T-Mobile-Sprint over three years. The Dish deals would take effect after the T-Mobile-Sprint closing.

The state's have the right to appeal, but that probably won't be in time to prevent the merger. Nevertheless, that hasn't stopped some state officials from voicing their displeasure with the ruling.  

"...We disagree with this decision wholeheartedly, and will continue to fight the kind of consumer-harming megamergers our antitrust laws were designed to prevent," New York State Attorney General Letitia James said in a statement. "As we review our options, including a possible appeal, Americans should continue to hold the companies to account for their promises."

California State Attorney General Xavier Becerra also is evaluating whether to file an appeal, according to reports. 

Still, that wasn't enough to damper the Sprint's enthusiasm.

“Judge Marrero’s decision validates our view that this merger is in the best interests of the U.S. economy and American consumers,” Sprint executive chairman Marcelo Claure said in a press release. “Today brings us a big step closer to creating a combined company that will provide nationwide 5G, lower costs, and a high-performing network that will invigorate competition to the benefit of all mobile wireless and in-home broadband consumers. With the support of federal regulators and now this Court, we will focus on quickly completing the few remaining necessary steps to close this transaction. I am proud of my Sprint team’s dedication, passion and resilience throughout the merger review process, and we are ready to make the vision of a New T-Mobile a reality.”

Earlier, Legere said he would step down as CEO of T-Mobile at the end of April after the deal is complete, handing over the reins of the combined company to chief operating officer Mike Sievert. 

Nevada and Texas have dropped out of the multistate lawsuit seeking to block the T-Mobile-Sprint merger, now pending before the Southern District of New York (Judge Victor Marrero).

Nevada attorney general Aaron Ford said the commitments the state has gotten from T-Mobile and Sprint include a "philanthropic contribution" of $30 million in three installments "to enhance service to our Native American Tribal communities, contribute to programs that enhance opportunities for minorities, women and small businesses." That is in addition to commitments on 5G network buildouts, low-priced mobile plans for six years, job commitments and a broadband access education effort.

Related: Arkansas Drops Out of T-Mobile-Sprint Suit

Texas attorney general Ken Paxton said the settlement "ensures that the New T-Mobile is not in a position to overcharge Texans for wireless service, and at the same time, obligates the New T-Mobile to invest in a high-quality 5G network that will serve the needs of Texas’ growing economy, or face stiff financial penalties.”

According to Paxton's office, the agreement will:

"Give all Texas customers access to the same or better unlimited talk, text, and data rate plans as those offered by T-Mobile as of the date of the agreement for the next five years;

"Give all Texas customers access to T-Mobile limited data rate plans at a cost far below what is currently offered in the industry;

"Commit to provide 5G wireless broadband coverage to areas where most Texans live, including most Texans living in rural portions of the state within the next three years and to expand that 5G coverage dramatically within the next six years; and

"Offer Texas residents that are currently employed by Sprint and T-Mobile substantially similar employment with the New T-Mobile."

T-Mobile and Sprint have pledged not to close their deal until the state AG suit is resolved. The deal has been approved by the FCC and passed antitrust muster--with conditions--at the Justice Department.

What is the status of the FCC's T-Mobile-Sprint 180-day merger review shot clock?  

Deal watchers could be forgiven for being confused. According to the FCC website, the clock on the FCC's review continues to run, currently on day 332 of the FCC's merger review, but looks can be deceiving. 

Actually, the review has been completed and the merger approved by a vote of 3-2 Oct. 16. The Republicans voted early and the Democrats eventually weighed in with their dissents. So while Oct. 16 was the official approval, the deal even then already had garnered the three votes it needed to pass.

Related: Petition Filed to Delay T-Mobile-Sprint Decision 

But in regulation, as in sports, it ain't over 'til its over. 

The FCC has yet to release the item, to which the merger review clock is tied. Some redactions were needed (to protect competitively sensitive info, for example) and commissioners are given some time after a vote to craft their official statements. Then the chairman gets some time to craft a response, if he chooses, before the vote is official. 

A source said the item should be released soon, while an FCC official said that when that happens, the clock will be "retroactively stopped to the day the vote was final [Oct. 16]." Which the official said is consistent with past practice.  

The deal, which was filed with regulators almost a year ago, still won't close, even though the Justice Department has already reached an agreement that resolves its antitrust issues with the merger. A bunch of states have challenged the Justice Department's settlement with the companies and T-Mobile has pledged not to close the deal until "six days" after that court case is resolved.  

So, although the FCC has completed its review of the merger, the merger review clock continues to tick on. And, although both the FCC and Justice have said they are OK with the deal closing, it won't be closing anytime soon. The trial in the state challenge does not even begin until Dec. 9.

Federal Communications Commission chair Ajit Pai today distributed a draft Order to approve the proposed $26.5 billion merger between T-Mobile and Sprint. Pai had signaled his support of the alliance after the Department of Justice endorsed the plan in late July. He first indicated support for the merger in May.

There is no target date for an FCC vote on the merger approval. Meanwhile, attorneys general in 16 states have voiced opposition to the merger, which would create the third-largest U.S. wireless carrier. Analysts expect that legal challenges at the state level may take until at least October to resolve.

Related: FCC: Dish Has Incentive, Ability to be Wireless Competitor

FCC commissioner Jessica Rosenworcel promptly tweeted, "I believe we need more competition, not less. I am not convinced that removing a competitor will lead to better outcomes for consumers." Her comments augur a likely partisan split when the FCC eventually votes on the merger.

Pai called the merger a transaction that "will bring fast 5G wireless service to many more Americans and help close the digital divide in rural areas." He also lauded the deal for promoting "robust competition in mobile broadband, put critical mid-band spectrum to use and bring new competition to the fixed broadband market.”

Pai said the merger survived "one of the most exhaustive merger reviews in Commission history."

The draft order reviews concerns raised about the competitive effects of the transaction, which would make Deutsche Telekom AG (T-Mobile's parent company) the single largest shareholder and controlling partner in the new company. The plan calls for several conditions, such as the divestiture of Boost Mobile, to address the potential for competitive harm.

The draft contends that the transaction would increase competition and network quality in many respects. But it says that the Boost Mobile divestiture is necessary to ensure that price-sensitive customers in densely-populated areas are not harmed.

The initial draft analyzes the proposed merger in light of DISH’s planned acquisition of Boost Mobile, including extensions, commitments and modifications to DISH’s spectrum holdings to support its deployment of a nationwide 5G network. The Order finds that DISH’s planned 5G deployment, in connection with its acquisition of Boost, would also be in the public interest.

After several years and at least three attempts to enter the wireless communications business through the front door, Dish Network found a side entrance into the elusive and highly competitive market, agreeing to buy assets from a newly combined T-Mobile-Sprint to become the nation’s fourth facilities-based wireless carrier.

The details have been available for days, but became official on Friday. Dish will pay about $1.4 billion for Sprint’s prepaid wireless business Boost Mobile and Virgin Mobile, and pony up about $3.6 billion to buy 800 Megahertz wireless spectrum from T-Mobile-Sprint in three years. Dish also will have access to the T-Mobile-Sprint network for seven years.

“These developments are the fulfillment of more than two decades’ worth of work and more than $21 billion in spectrum investments intended to transform Dish into a connectivity company,” Dish chairman Charlie Ergen said in a press release. “Taken together, these opportunities will set the stage for our entry as the nation’s fourth facilities-based wireless competitor and accelerate our work to launch the country’s first standalone 5G broadband network.”

Related: $10B Price Estimate for Dish 5G Buildout is “Just Silly,” Analyst Says 

Dish, which began hoarding wireless spectrum almost a decade ago,  has tried to buy into the wireless business before, including an aborted attempt to purchase WiMax pioneer ClearWire in 2012, and two tries to purchase Sprint in 2013. 

The irony was not lost on Ergen, who in a press release said “We’ve been here before.” But the satellite TV pioneer pushed back on skepticism that he will be able to succeed in the cutthroat wireless market, saying he faced the same attitude when he launched his satellite TV business in 1995.

“[C]ustomers loved the disruption we brought to the marketplace with innovations such as a 100-percent digital experience, local-into-local broadcast, the DVR and ad-skipping,” Ergen said in the release. “...As we enter the wireless business, we will again serve customers by disrupting incumbents and their legacy networks, this time with the nation’s first standalone 5G broadband network.”

Ergen will have a head start. With the purchase of Boost Mobile and Virgin Mobile, Dish will have about 9.3 million customers in 50 states and Puerto Rico. At close, expected within three months of the completion of the T-Mobile-Sprint merger, Sprint’s prepaid businesses and customers will immediately move to Dish, as will the more than 400 employees and nationwide independent retail network that supports more than 7,500 retail outlets.

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 also has committed to new buildout schedules associated with the company’s 600 MHz, AWS-4, 700 MHz E Block and AWS H Block licenses. In addition, Dish has committed to deploy 5G Broadband Service utilizing those licenses.

As a result, Dish has agreed to deploy a nationwide 5G broadband network covering at least 70% of the country by June 14, 2023. If it fails to meet the deadline, Dish will make voluntary contributions to the U.S. Treasury of up to $2.2 billion.

Sullivan & Cromwell LLP acted as lead legal counsel to Dish.

WASHINGTON — The Justice Department, five state attorneys general and T-Mobile-Sprint have reached an agreement on the proposed merger of the No. 3 and 4 wireless carriers, conditioned on, among other things, the spinoff of Boost Mobile and some spectrum assets to Dish Network.

According to the settlement, “T-Mobile and Sprint must divest Sprint’s prepaid business, including Boost Mobile, Virgin Mobile and Sprint prepaid, to Dish Network Corp., a Colorado-based satellite television provider. The proposed settlement also provides for the divestiture of certain spectrum assets to Dish. Additionally, T-Mobile and Sprint must make available to Dish 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.”

“With this merger and accompanying divestiture, we are expanding output significantly by ensuring that large amounts of currently unused or underused spectrum are made available to American consumers in the form of high quality 5G networks,” U.S. Justice Department antitrust chief Makan Delrahim said of the settlement. “Today’s settlement will provide Dish with the assets and transitional services required to become a facilities-based mobile network operator that can provide a full range of mobile wireless services nationwide. … In crafting this remedy, we are also mindful of the significant commitments T-Mobile, Sprint, and Dish have made to the Federal Communications Commission.”

But due to an extant court challenge by other attorneys general, the deal won't close for months, and then only if the AGs don't win, according to a spokesperson from the California Justice Department.

Delrahim has long said he favors spinoffs to bring deals inside the antitrust ropes, rather than behavioral conditions that must be continuously monitored, though there will be some of the latter as well.

The Federal Communications Commission‘s Republican majority has already signaled it can approve a deal with the Boost spinoff and other conditions the companies have volunteered.

The DOJ announced the deal, essentially filing suit and announcing the settlement at the same time, on Friday (July 26) after reports it could come earlier in the week, but had been delayed.

Still to be resolved is a lawsuit involving more than a dozen state attorneys general (including New York and California), who have sued in a U.S. District Court in New York to block the deal (a status conference is set for Aug. 1).

That will push the deal‘s closing into late in the year or early 2020.

According to a copy of the case scheduling order supplied by an official of California's Justice Department, T-Mobile and Sprint submitted a letter to the court saying: “Defendants agree not to consummate or otherwise complete the challenged transaction until 12:01 a.m. PT on the sixth day following entry of a final and appeal-able judgment, and only if the Court enters judgment in favor of Defendants or otherwise permits consummation of the challenged transaction.”

The trial isn't even scheduled to start until Oct. 7, and the states have asked for that date to be pushed back.

New York State Attorney General Letitia James signaled the states in that suit, which also include California, Colorado, Connecticut, the District of Columbia, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, Virginia, and Wisconsin, aren't ready to throw in the legal towel.

“Here in California and across our coalition of states, our concerns with this merger have been, are, and continue to be about the harms posed by over-consolidation and diminished market competition," said California AG Xavier Becerra, who didn't sound like he favored withdrawing the suit, either (California was a lead plaintiff), though he did add "intend" and "prepared" to his assertion they were still headed to court. "A marketplace with fewer active competitors drives up costs, reduces consumer choice and thwarts innovation. We intend to be prepared to go to trial to fight for a fair, competitive, and equitable marketplace for consumers nationwide.” 

"Based on the information available to date, the states continue to have serious concerns with the merger and whether the deal with Dish will create a fourth independent competitor that addresses the loss to competition otherwise caused by this megamerger," James said.

And FCC chairman Ajit Pai must still circulate his order and given August vacations, it will be tough to get a final vote until September. Calling it a ”new deal,” Democratic commissioner Jessica Rosenworcel has already called for the chairman to let the public comment on that ”new deal’ before a vote, which the chairman is highly unlikely to do. 

And even when the FCC does approve, opponents could challenge that decision in the D.C. federal appeals court, asking it to stay the FCC's decision until the state case is resolved.

Pai has said that approving the deal is key to winning the race to 5G. One of the companies’ arguments for letting them get together was that they could do 5G faster than if they were apart.

The Trump administration has made winning that race a national priority.

One deal critic didn't see the deal as creating a wireless competitor — Dish Network — to keep the U.S. market at four major players.

"This deal creates a faux competitor, not a real one, which is why I would bet on the states in their forthcoming court challenge," Benton Foundation senior counselor Andrew Schwartzman said. "Dish is buying Boost, a brand which sells prepaid service to low-end consumers. Dish will start with none of the lucrative postpaid customers, no brand name and no retail network. Even if Dish successfully builds out its own network, that could not happen for several years, during which time the three big wireless companies will be able to lock in their customers and introduce their 5G technologies.”

In other words, rather than having Sprint as a weak fourth competitor, the combined companies will now face an extremely weak fourth competitor.

"One other thing frequently overlooked is that T-Mobile will actually benefit from having Dish as a wholesale customer,” Schwartzman said. “That means that it will be selling otherwise unused capacity for the next several years. Just as airlines are better off filling empty seats with discounted sales, so too, will T-Mobile will be able to operate its network more efficiently as a result."

The ongoing T-Mobile U.S.-Sprint merger received yet another twist over the weekend with reports that Dish Network was among three companies vying for wireless assets that would be divested in order for the larger deal to pass regulatory muster. But many analysts, who agree that a purchase of Sprint’s Boost Mobile prepaid wireless service could solve some pressing regulatory issues for the satellite giant itself, are hoping that Dish takes a hard pass.

According to the Wall Street Journal, Dish is taking the lead among possible bidders for Boost--Charter Communications and Altice USA are the other possible suitors. The paper said that Dish chairman Charlie Ergen, who has in the past been a staunch opponent of a T-Mobile-Sprint hookup, met with Federal Communications Commission chairman Ajit Pai and U.S. Dept. of Justice antitrust chief Makam Delrahim last week to discuss the need for a fourth national wireless service provider. The union of T-Mobile and Sprint would reduce the number of national providers to three, long a roadblock to a potential deal.

FCC chairman Pai has come out in favor of the merger,  and Delrahim, according to reports, could sign off on the deal if Sprint agreed to divest some assets to help create a fourth carrier. That’s where the sale of Boost would come in--the prepaid service could by some estimates satisfy the need for additional competition, especially if it had a partner that was from outside the wireless industry.

None of those companies would comment, but it appears that Dish would be the logical buyer in what some believe is an illogical deal.

But then again, we live in immensely illogical times. Dish Network stock rose nearly 4% Monday on the hope it would buy Boost. In a year where Dish has continued to watch its satellite TV business disappear--it lost 266,000 satellite subscribers in Q1--its OTT business stagnate--Sling TV gained just 7,000 customers in the same period--and the outlook for Q2 not much better, Dish stock has risen a staggering 57%. And all of that has been on deal speculation. Boost is just the latest target, earlier last month speculation was that Dish and DirecTV would finally merge, despite the fact that such a deal probably wouldn’t solve their problems either. 

Related: AT&T Needs to Kill DirecTV to Save It

Dish already owns a large swath of spectrum it has accumulated over the years, and is facing a federal deadline to have service available to 70% of its licensed area by March 2020. While those deadlines could probably be extended if Dish at least shows it is making progress--last year it said it would spend $1 billion initially to build a wireless Internet of Things network--buying Boost could possibly satisfy that requirement in one swoop.

But according to some analysts, that’s where the benefit of a deal ends for Dish.

In a blog post June 15, MoffettNathanson principal and senior analyst Craig Moffett wrote that a Boost deal would likely satisfy the FCC buildout issue. But it would also create more problems, the biggest of which would be driving “a stake through the heart of the only credible bull case for Dish Network shareholders, which is that Dish sells its spectrum. For obvious reasons, one couldn’t prop up Dish as the fourth competitor in the market without safeguards that would prevent Dish from then exiting by selling to one of the remaining three players shortly thereafter.”

BTIG telecom analyst Walt Piecyk wondered what benefit creating a viable fourth competitor would have for T-Mobile.

“If Delrahim’s goal is to ‘satisfy the concerns of his staff,’ which the press believes are to create a viable fourth competitor, we believe it will be challenging to extract enough concessions out of T-Mobile to actually attract someone meaningful,” Piecyk wrote in a blog post. “At some point T-Mobile’s owner, Deutsche Telekom, might simply prefer to continue to compete against a weakened Sprint than create something stronger that is centered around Dish or a cable operator.”

Piecyk also doubted whether Dish would be satisfied with some additional wireless licenses -- reports are that the satellite carrier would get some additional 2.5 GHz spectrum in addition to Boost.

“Network and spectrum assets could sweeten the opportunity for Dish, but more importantly, Dish would likely prefer clarity on several outstanding issues with the FCC,” Piecyk wrote. “Finally, we don’t believe Dish would agree to terms that restrict its ability to bring in Amazon or [Japanese e-commerce company] Rakuten as a strategic partner at a later date.”

Add to that the precariousness inherent in the prepaid wireless business. Moffett noted that Boost has relied on mega-retailer Walmart for a large chunk of sales, but that distribution channel is no more. And though Boost and Dish both cater to price-conscious customers, the former mainly competes in urban markets far from Dish’s increasingly rural base.

“We’re not sure why that deal is sensible for anyone involved,” Moffett wrote. “Dish, remember, already has more spectrum than they know what to do with; what they lack is money and ground facilities, and the deal described on Friday [June 14] wouldn’t deliver either one. Instead, it would make both problems worse.”

But all that doesn’t mean that Charlie Ergen won’t do a deal, and that investors won’t applaud him for it. The main driver of Dish stock for the past few years has been the wireless business, or more accurately, what Charlie will do with the wireless business. Early on, Dish rose because most investors thought he would sell his wireless licenses at an absurd profit. When that didn’t happen, the stock rose on whether he would partner or merge with a larger company that would help him build it out. Now it’s rising on the possibility that Ergen will acquire Boost at a bargain basement price, and use its prepaid wireless revenue to fuel whatever ultimate vision it has for the spectrum.

In an e-mail message, FBN Securities analyst Robert Routh, a long-time Ergen watcher, said of Dish getting into the prepaid wireless business: “Ergen is very smart and will do whatever he has to to ensure he can keep all the spectrum he has so if buying that and entering that business will do it, it would be viewed as a safe and smart move regardless of how Boost independently is perceived.”

And that may be how it all works out. Someone told me a long, long time ago that there is no money to be made by underestimating Charlie Ergen, and the Dish founder has proven that out time and time again. The story of Ergen’s past life as a professional gambler has been played to death but again, he has more often than not known when to hold ‘em, fold ‘em and when to double down. Maybe this is another one of those times.

Boost has some other problems though. According to Moffett, its churn rate is exceedingly high, and then there is the distribution question -- even if the government requires Sprint to continue selling the service through its Sprint retail stores as a condition of T-Mobile approval, there would be little incentive for an Sprint store employee to steer a customer towards the cheaper Boost service.

“That would leave Dish with a brand that has a churn rate as high as 5% per month to be spun off with an inadequate distribution front end, and with no realistic path to replace that front end before the subscriber base was, well, gone,” Moffett wrote.

The T-Mobile-Sprint deal could be announced as early as this week according to some reports, so the answers will likely be coming soon. In the meantime, Dish investors will wait anxiously for Charlie to show his cards.

T-Mobile CEO John Legere told the House Judiciary Committee that his network does not now include technology from Chinese Telecom Huawei, that a new T-Mobile-Sprint 5G network would not contain such tech—something that concerns many on Capitol Hill—and that he would even help others try to clear their networks of the technology.

That came in a sometimes contentious oversight hearing on the proposed merger.

Carri Bennet, general counsel of the Rural Wireless Association, conceded that about a quarter of her members have Huawei tech in their networks primarily because they bought the equipment in 2010 and 2011—before the potential security threat of the company became clear—and because they were using government broadband subsidies and were looking for low-cost equipment. 

Related: Sens. Seek Report on China's Impact on 5G Standards

She said those members were willing to do whatever the government asked them to do in terms of removing that equipment, but would be looking for government subsidies to do that. 

Legere said T-Mobile would be willing to use its purchasing power to help them replace that equipment.

That was just one of many pledges he was making. Others included job gains rather than losses and lower prices rather than high.

Witness Gigi Sohn, a distinguished fellow at Georgetown University Law Center and former top counselor to then FCC Chairman Tom Wheeler, said she kept hearing those promises but there was no mechanism to enforce them. She also said that while T-Mobile might lower per-unit pricing, which means less for more speed or bandwidth, it would still be raising actual prices. 

Legere received a lot of pushback from Democrats on the panel for having spent almost $200,000 at the Trump D.C. hotel in the days following filing the merger with regulators there, but Legere pointed out that was less than 10% of the company's D.C. hotel spend over that time.

It was the third oversight hearing on the deal in the past couple of months, proof of Democrats promise to exercise muscular oversight of mergers, something the Republicans did not do, pointing out that vetting such mergers was the primary province of the FCC and Department of Justice and Federal Trade Commission and that Hill hearings could be read as an attempt to put a political thumb on that process.

Huawei President Ren Zhengfei has said his company is not a security risk and does not spy or provide technological back doors to its products.

Veteran consolidation critic Anna Eshoo (D-Calif.) has joined with Republican Billy Long (R-Mo.) and almost a dozen other House members in support of the merger of T-Mobile and Sprint.

In a letter to FCC chair Ajit Pai and Department of Justice antitrust chief Makan Delrahim, they echoed the two companies talking points on why the deal is pro-competitive, pro-jobs and pro-5G, saying that they believed the merger would "transform the wireless industry, drive innovation, help close the digital divide, and provide consumers with more choices at lower costs."

At a House Communications Subcommittee hearing on the deal Wednesday (Feb. 13), Eshoo asked no questions, instead using her time to make those points, essentially signaling she agreed with T-Mobile CEO John Legere that what the deal would do was provide a stronger competitor to the duopoly of AT&T and Verizon, which together have the majority of wireless subs.

Eshoo, Long and others also point to the combination of spectrum assets of the two companies to deliver a more robust 5G network than either could do alone, another major argument offered up by both companies.

Most Democrats at the hearing expressed concerns that the merger would reduce the major competitors in the space from four to three. pointing to calculations that the deal would exceed guidelines for market concentration that triggers red flags.

Republicans countered that the marketplace had changed and that the government needed to take a holistic view rather than simply intervene to keep four carriers by imposing artificial market constraints.

"[5G technology] stands to improve the lives of everyone, from farmers who will be able to remotely monitor crops, to city dwellers who will benefit from the interconnected infrastructure of smart cities." —Michael Dunn, Cell Nation

A wireless revolution is coming. Next-generation 5G wireless networks will deliver higher speeds, lower lag time, and an incredible increase in capacity. Not only will these new 5G networks power advancements in fields like artificial intelligence and streaming video, but they will also fuel a revolution in other connected devices.

This stands to improve the lives of everyone, from farmers who will be able to remotely monitor crops, to city dwellers who will benefit from the interconnected infrastructure of smart cities. 

To fulfill the potential of this technology, customers will need access to a competitive 5G network that doesn’t leave some people behind.

To make this 5G future a reality, carriers will have to make an unprecedented investment in our nation’s wireless infrastructure. Right now, only the largest carriers, AT&T and Verizon, currently have the resources to make this incredible investment. Sprint and T-Mobile, on their own, lack the resources to create a strong and competitive third national 5G network. Together, however, the New T-Mobile will have the resources to build a 5G network that will not only compete with AT&T and Verizon’s, but also force the big two to compete back.

I can’t think of a better company than T-Mobile to take up this challenge. My company, Cell Nation, has worked with T-Mobile, through its subsidiary MetroPCS, since 2008. When T-Mobile merged with MetroPCS in 2012, it made sure that prepaid customers would not be left behind as they rolled out its advanced 4G LTE network. In that time, T-Mobile grew MetroPCS from a smaller regional player into a national brand powering more than 15 million devices, many in rural areas far beyond the cities that MetroPCS was once limited to. “Metro” doesn’t really do it justice. 

As T-Mobile took the MetroPCS brand national with access to a nationwide 4G LTE network, my company grew to more than 250 independent stores that sell MetroPCS devices in 9 markets across the country. They retained the leadership and the expertise of MetroPCS, meaning that they understand the dynamics of the prepaid market and the customers I serve. They also pushed MetroPCS to disrupt the prepaid market, and while it is no longer business as usual, they’ve continued to connect with prepaid customers through creative advertising, and have retained the local feel of the brand. 

T-Mobile has put 4G devices in the hands of millions of customers, fueling innovations by companies like Google, Salesforce, and Uber, and it can do the same with the 5G technology of tomorrow. If customers were left behind from this revolution, as might have happened to prepaid customers in a less competitive market, then these innovations may not have been possible.  

I have no doubt that the New T-Mobile will make sure that prepaid customers are included in the 5G revolution. With nearly $40 billion of network and business investment for 5G planned for the first three years, MetroPCS customers will have access to a stronger 5G network earlier, and the market for 5G prepaid services will start out with a fierce competitor with the combined resources of two mavericks. 

With the New T-Mobile, we can look forward to providing our customers access to advanced 5G devices on terms and at prices that they can afford, and on a strong nationwide network that can compete with the biggest out there.

The FCC's voluntary merger review shot clock hasn't been getting much action lately.

The Sinclair-Tribune shot clock stopped in January and probably won't start until at least July 12, the deadline for comment on Sinclair's latest version of the deal, though the FCC is not making it particularly easy to figure out just how that fifth version differs from the others.

Related: Groups Petition FCC to Delay Sinclair-Tribune Decision

The shot clock on the T-Mobile-Sprint merger proposal had not started at press time. The FCC opened the comment docket June 15 but has yet to put the application out for comment.

An FCC spokesperson said that clock won't start until the FCC has determined that the application has been correctly and completely filed.

In making its case for a proposed merger with Sprint, T-Mobile argues that the retail and customer scale achieved via that deal will help T-Mobile develop and launch a truly competitive and disruptive national pay TV service.

RELATED: T-Mobile, Sprint File With FCC

T-Mobile acquired Layer3 TV in late January, setting the stage for a national OTT TV service that will compete against other virtual MVPDs as well as incumbent pay TV providers. T-Mobile has not outlined specific plans for how that national offering will be priced and packaged, but has stressed that it will disrupt the pay TV market and take advantage of speedy, next-gen 5G-based mobile networks.

RELATED: T-Mobile Paid $325 Million for Layer3 TV

Prior to the acquisition, Denver-based Layer3 TV has focused on a full-freight, in-home, in-market managed IPTV service featuring 4K-capable boxes and a lineup of more than 275 HD channels starting at about $89 per month. Layer3 TV currently offers service in a handful of markets -- including Los Angeles; Chicago; Washington D.C.; Dallas/Ft. Worth; and Longmont, Colo. -- and had plans underway to extend service to New York, San Francisco and Philadelphia.

In the redacted public interest statement (PDF), T-Mobile noted that the acquisition of Layer3 TV gave it a “foothold” in the pay TV market, but also pointed to a challenge faced by Layer3 TV in the early going -- it is paying a sizable premium for its programming deals.

Per T-Mobile’s estimates, Layer3 TV’s content acquisition costs are between 20% to 30% higher than its larger MVPD rivals for the same programming. That challenge isn't Layer3 TV's alone, as it's also faced by other new pay TV entrants that don’t have large subscriber bases and, therefore, possess limited bargaining power with programmers.

Because of those higher licensing costs, T-Mobile held that further expansion of that business “will be limited for T-Mobile on a standalone basis” as Layer3 TV’s smaller customer base “does not provide the scale needed to leverage volume discounts.”

While that challenge will continue as Layer3 TV tries to beef up its sub base before the next round of programming renewals (T-Mobile added 5,000 “branded prepaid customers” to its reported sub base as of January 22 following the Layer3 TV acquisition), T-Mobile said a combination with Sprint will go a long way in creating scale for a mobile distribution network that can deliver a new pay TV service on a national basis.

T-Mobile also held Layer3 TV’s business, on a standalone basis, is presently hindered by consumer dependence on in-home broadband service from incumbent cable operators.

“Without these offerings, which are expensive and often contain monthly usage caps, Layer3 customers cannot access the company’s services,” T-Mobile said.

RELATED: Comcast Deploys 1-Terabyte Data Plan

However, T-Mobile believes that by matching up with Sprint, they can drive scale into 5G deployments that can expand the reach of Layer3 TV’s service. T-Mobile held that its current standalone network won’t have the capacity to handle projected future consumer demand for mobile video, absent the Sprint transaction.

RELATED: T-Mobile’s Jeff Binder: 5G Is ‘Perfect Delivery Mechanism for Video’

“In the near term, the customer and retail scale created by the transaction [with Sprint] will enable T-Mobile to more rapidly expand the current Layer3 model than possible without the transaction,” T-Mobile said. “This scale should allow the company to acquire content at lower rates and on better terms than T-Mobile and Layer3 can do on their own.”

T-Mobile’s estimate on how much lower those rates would be were redacted in the public version of the document, but believes that it would allow it to create a more affordable pay TV options for consumers. “The competitive imperative will demand that Layer3 pass these cost savings on to consumers through lower prices and more flexible rate offerings,” the company said.

T-Mobile: 5G Poised to be Viable In-Home Broadband Alternative

T-Mobile also used the filing to characterize 5G as a “bona fide alternative” to traditional in-home broadband service providers rather than just a more limited complement.

“The new 5G network’s speeds, capacity, and low prices will allow consumers to ‘cut the cord’ and use their mobile wireless service as their broadband service both inside and outside the home and pocket the savings from eliminating an unnecessary and costly wired broadband bill month after month,” T-Mobile claimed.

By combining with Sprint, the merged company is positioned to create a national 5G network that will close the speed gap between mobile and wired broadband and enable the company to compete in the in-home broadband services market against conventional ISPs and drive down prices.

By way of example, T-Mobile said a consumer might pay $80 per month for wired in-home broadband and $60 for mobile wireless service. Using 5G, T-Mobile argued that the same customer could take the wired broadband portion out of the picture and pay $60 for an equivalent combo of mobile service and in-home broadband.  

Washington — Proposed media mergers are beginning to stack up in a Republican-controlled Washington, D.C., which might be a surprise were it not for the peripatetic course set by a pro-business president who has opposed mergers involving media companies he dislikes.

At press time the Sinclair Broadcast Group-Tribune Media deal was still in Department of Justice and Federal Communications Commission limbo, with the former yet to weigh in and the latter yet to restart its shot clock on vetting the latest, and fourth, iteration of the transaction in Sinclair’s attempt to woo regulators and sweeten the deal with more or different station spinoffs.

Even if Justice signs off, the FCC will need to take most of six weeks more before it renders a decision, since it has signaled it will put out whatever proves to be Sinclair’s last, best offer for comment and replies.

The Justice Department’s lawsuit against an AT&T-Time Warner merger that many had expected to have trouble getting approval just wrapped up the argument phase, with the judge now mulling whether the combination is a sufficient threat to competition to justify blocking it, as the Trump administration has attempted to do.

Now joining the queue will be Sprint-T-Mobile. Key to that deal is whether regulators see the combination of the third- and fourth-largest U.S. wireless companies as reducing competition to the detriment of consumers, or as creating a stronger No. 3 “un-carrier” to the dominant ex-Bells, Verizon and AT&T.

The pending merger of T-Mobile and Sprint, the third- and fourth-largest wireless carriers in the nation, answers many of the scale questions that have dogged the two companies over the past several years. But in creating a carrier with about 100 million customers and valued at a combined $146 billion, the deal bypasses what many had considered to be T-Mobile’s more perfect match: Dish Network.

With a large swath of wireless spectrum, 11 million satellite TV subscribers and 2.2 million customers for its over-the-top video service Sling TV, Dish was seen by many to be a logical target for T-Mobile. Combining the No. 3 wireless carrier, which has obvious video aspirations through its January purchase of Layer3 TV, with Dish would in many minds have created a strong competitor in the ongoing wireless-OTT-traditional video wars.

Investors apparently believed so too. Shares in Dish fell 3% ($1.19 each) to $33.55 per share on April 30, the first trading day after T-Mobile and Sprint announced their deal. The stock has continued to slip in subsequent trading, closing at $33.09 on May 3.

Video Plans ‘Ratchet Up’

On a conference call to discuss first-quarter results shortly after the Sprint deal was announced, T-Mobile chief financial officer Braxton Carter said the transaction “ratchets up” the wireless provider’s video plans by allowing the combined company to provide customers with an IPTV service via wireline and wireless broadband.

“So T-Mobile’s in the position as a new T-Mobile to be able to offer a quad play, if that’s what the market wants,” Carter said on the call.

The combined company will be controlled by T-Mobile management: CEO John Legere will continue that role in the new entity, as will T-Mobile chief operating officer Mike Sievert. T-Mobile parent Deutsche Telekom will own 42% of the combined company, with Sprint parent Softbank owning 27% and the remaining 31% held by the public. The deal is expected to close in the first half of next year.

This is the two companies’ third time on the merger dance floor together. They scrapped talks in 2014 over regulatory concerns and in 2017 over control issues. While the two have managed to work out their control issues, some analysts are skeptical that the current deal will sail easily through the regulatory process.

BTIG telecom analyst Walt Piecyk gave the merger a less than 40% chance of passing regulatory muster, primarily because he didn’t believe the deal, which will reduce the number of wireless competitors to three from four, will pass the antitrust smell test.

“It doesn’t look like a competitive market right now, and that’s what the regulator may focus on,” Piecyk told CNBC.

Columbia Law professor Tim Wu wrote an op-ed piece for The New York Times urging regulators to block the deal, adding that having four separate competitors has been most beneficial to wireless customers, leading to free unlimited data plans and lower prices. Transforming the wireless business into a “triopoly” like the airline business will only serve to raise prices and lower service.

“Competition has actually worked the way economists say it is supposed to, forcing firms to improve quality or face elimination,” Wu wrote in the Times. “But it takes competitors to compete, which is where blocking mergers comes in.”

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak has said in research notes over the past year that pairing Dish and T-Mobile would “immediately vault the most disruptive U.S. wireless player into the leading U.S. spectrum position,” and at worst would force rival wireless company Verizon Communications to pay more for the satellite asset.

For now, though, it looks like Dish will remain on its own.

Other scenarios see the satellite company being acquired either by another wireless service provider, like Verizon, or even by the new T-Mobile. The latter scenario wouldn’t take place for at least another year.

Dish has struggled over the past several quarters as the satellite business has dwindled. In the fourth quarter the company lost more than 100,000 satellite-TV subscribers and added 160,000 Sling TV customers.

Dish Misses Out on Buildout Relief

For Dish, a purchase by a wireless carrier would mean relief from its obligation to build its own wireless network. As a result of its success in bidding on spectrum in several of the government’s wireless auctions, Dish faces a March 2020 deadline to build out wireless service in 70% of the market territories it won.

Dish chair Charlie Ergen has said the company will spend about $1 billion on that initial phase, which will be more geared toward IoT services.

For T-Mobile, a Dish purchase would give it an instant video base through the satellite-TV offering, programming contracts with cable networks and the largest OTT service in the country, Sling TV.

But not all analysts believe that a T-Mobile-Dish deal is more palpable. In a research note in November, after T-Mobile and Sprint ended merger talks, MoffettNathanson principal and senior analyst Craig Moffett wrote that he never saw any synergies in combining those companies, other than as a source of additional spectrum.

The argument that the dissolution of the merger was bad news for Dish is equally compelling in that, if Dish does build its wireless network, it would become the fifth player in an already-crowded market, he added.

“However bad one might have imagined the ROI on network building, it has to be worse if the industry is more fragmented than expected,” Moffett wrote in November.

Pictured: T-Mobile CEO John Legere (l.) and Sprint CEO Marcelo Claure on the floor of the New York Stock Exchange after the wireless carriers agreed to merge.

Sprint Corp. announced an exec shuffle Wednesday as CFO Michel Combes was elevated to CEO, with former CEO Marcelo Claure was named executive chairman.

Read more about the proposed T-Mobile-Sprint merger

The moves by the Sprint board arrives as Sprint moves ahead on its proposed merger with T-Mobile. The transition is expected to occur on or before May 31, the company said.

Claure will also assume the role of COO of SoftBank Group Corp. and CEO of SoftBank Group International, and will oversee SoftBank’s investment in Sprint and its interest in the proposed Sprint/T-Mobile combo. He along with Masayoshi Son, chairman and CEO of SoftBank, are also poised to join the board of the merged company.

Sprint has started a search for a new CFO to succeed Claure, noting that it will consider internal and external candidates.

Combes, a former exec with Altice N.V. and Alcatel Lucent, was named president and CFO of Sprint in January, reporting to Claure.

RELATED: Former Altice Exec Resurfaces at Sprint

Commerce Secretary Wilbur Russ signaled Tuesday that if a Sprint-T-Mobile merger proved a 5G spur to AT&T and Verizon, that could be a good thing.

The CEOs of Sprint and T-Mobile, which have proposed yet again to try and merge -- their third attempt -- pitched the deal as a way to beat China to the next-gen wireless broadband punch.

In an interview on CNBC, Ross was asked whether the companies' CEOs were correct that China was ahead of the U.S.

Ross said it was hard to say who was ahead or behind until the technology was "truly perfected," which he said has not happened yet.

But he described the pitch from Sprint and T-Mobile that their merger "would propel Verizon and AT&T into more active pursuit of 5G" as "an interesting one."

Read More: Complete Coverage of the T-Mobile-Sprint Deal

Commerce does not have a role reviewing the proposed deal, but its National Telecommunications & Information Administration is the White House's top communications policy adviser.

"Whoever pursues it, whoever does it, we're very much in support of 5G," Ross said. "We need it for defense; we need it for commercial purposes; we really need to be a player in 5G."

Former FCC chair Tom Wheeler has been arguing that a shared commercial 5G network with some government participation (given national security implications) was preferable to counting on the merger of the third and fourth largest wireless companies to advance U.S. 5G.

T-Mobile’s pending merger with Sprint and its recent acquisition of Layer3 TV will help to power a new “quad play” that includes speedy wireless broadband and pay TV services, company execs said on Tuesday’s Q1 earnings call.

RELATED: T-Mobile, Sprint to Combine in $146B All-Stock Deal

With an eye toward 450 Mbps via a national 5G network, “of course, we can be a competitor in that [broadband services] space,” Braxton Carter, T-Mobile’s CFO, said, when asked if wireless can be viewed as a wireline replacement. “And this is a market that is incredibly underserved…There’s a huge opportunity here for us to bring real competiveness to that market for the first time.”

T-Mobile’s ambitions for entering the TV business, via the Layer3 TV deal, is also poised to ratchet up with the proposed combination with Sprint, he said.

RELATED: T-Mobile Paid $325 Million for Layer3 TV

“Now you have a network, where you can provide...IPTV service not just through [the] home broadband connection…but through a wireless alternative to their home broadband as well,” Carter added.

T-Mobile’s Q4 release also shed a bit more detail on the Layer3 TV acquisition, which closed on January 22. As a result of that deal, T-Mobile included an adjustment of 5,000 “branded prepaid customers” to its reported subscriber base as of January 22. Customer activity from Layer3 TV post acquisition was included in T-Mobile’s net customer additions for Q1 2018. T-Mobile reported 1.43 million total net adds in Q1, which included 199,000 branded prepaid net adds.

Prior to its acquisition by T-Mobile, Layer3 TV was focused on an in-home, IP-delivered pay TV offering in select markets that include Los Angeles; Chicago; Washington D.C.; Dallas/Ft. Worth; and Longmont, Colo. (in partnership with a municipal provider called NextLight).

Looking ahead, T-Mobile has plans to launch a national OTT TV service later this year. T-Mobile has not announced pricing and packaging for that offering, but it’s expected to compete with traditional MVPDs (cable, telco and satellite) as well as a growing mix of internet-based, virtual MVPDs that today include DirecTV Now, Sling TV, Hulu, YouTube TV, fuboTV and PlayStation Vue. 

Perhaps the third time is the charm.

Sprint and T-Mobile agreed to an all-stock merger that will value the combined company at $146 billion (including debt) and create a more formidable No. 3 wireless carrier with more than 100 million customers.

Several reports said the two were close to a deal on Friday. 

This is the third time that the two companies have tried to join forces. In 2014 the deal was scrapped after federal regulators hinted that they would not approve the deal. In November, the companies again tried to reach a deal, only to pull the plug after they couldn’t agree on control issues. Earlier this month, the two came back to the negotiating table. 

The control issues appear to have been worked out, with T-Mobile executives dominating the top roles in the new company, which will assume the T-Mobile name. T-Mobile CEO John Legere will run the new company with the same title, with his No. 2, T-Mobile president and chief operating officer Mike Sievert keeping the same role in the new entity. Tim Höttges, current T-Mobile US Chairman of the Board, will serve as Chairman of the Board for the new company. Masayoshi Son, chairman and CEO of Sprint’s owner SoftBank Group and Marcelo Claure, current Sprint CEO, will serve on the board of the new company.

“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience – and do it all so much faster than either company could on its own,” Legere said in a statement. “As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf.”

According to the deal, Sprint shareholders will receive exchange 9.75 Sprint shares for every share of new T-Mobile stock. At closing, T-Mobile parent Deutsche Telekom will control about 42% of the company, Softbank will hold 27% and the public will control 31% of shares.

Deutsche Telekom also will control about 69% of the vote of the new company and has the right to elect nine of the 14 members of the board of directors. The companies expect to close the deal in the first half of next year.

On a conference call with analysts, Claure said the catalyst for changing its mind about the control issues was simple.

“The big change of why we were able to do this so fast is a very simple rule of business: both companies need each other,” Claure said. “The reason why this is going to work is that T-Mobile can’t do the 5G strategy without Sprint and Sprint cannot do it without T-Mobile.”

The next biggest hurdle for the merger will be in obtaining regulatory approval. While the government usually frowns on mergers that eliminate a competitor in any industry – T-Mobile is the third largest wireless carrier and Sprint is the fourth largest behind Verizon Communications (No. 1) and AT&T (No. 2) – both companies have said the deal is necessary for their survival in the cutthroat wireless business. And they claim the deal is necessary to fund the creation of new 5G wireless services.

The combined company – headquartered in Bellevue, Wash., and in Overland Park, Kans. – will employ about 200,000 people. The new entity also pledged to invest up to $40 billion in its new network and business in the first three years after the deal is closed.

On a conference call with analysts, Legere said that there are at least seven or eight large wireless competitors in the industry. Aside form Verizon, AT&T, Sprint, and T-Mobile, Comcast introduced wireless service Xfinity Mobile last year and Charter Communications is launching its own service later this year.

“This isn’t a case of going from four to three wireless companies,” he said.

And though the current presidential administration is thought to be more open to big deals, it isn’t a rubber stamp. The U.S. Department of Justice sued to block the AT&T-Time Warner merger, a move that is expected to be decided by the courts soon. 

According to reports, Dish Network also could play a role in the deal’s approval. Dish already has amassed a huge swath of wireless spectrum and has expressed plans to launch its own IoT wireless service. 

Depending on whether Dish’s wireless offering will compete directly with Sprint and T-Mobile, that offering too could be used as an example that competition won’t be affected.

But others see the deal differently.

“No one but T-Mobile and Sprint executives and Wall Street brokers wants to see this merger go through,” Free Press policy director Matt Wood said in a statement. “Greed, and a desire to reach deeper into people’s wallets by taking away their choices, are the only things motivating this deal.”

Wood added that mergers are supposed to enhance competition and serve the public.
“This deal would do just the opposite: It would destroy competition, eliminate jobs, and harm the public in numerous irreversible ways,” Wood said in the statement.

The complicated deal also had a slew of financial and legal advisors, including PJT Partners, which is serving as financial advisor to T-Mobile; and Goldman Sachs, serving as financial advisor to Deutsche Telekom. T-Mobile Deutsche Bank also acted as financial advisor to T-Mobile. Wachtell, Lipton, Rosen & Katz is providing legal counsel to T-Mobile and Deutsche Telekom, with Cleary Gottlieb and DLA Piper serving as regulatory counsel. Evercore is acting as financial advisor to a committee of independent directors of T-Mobile and Latham & Watkins is providing legal counsel to the committee of independent directors. Morgan Stanley served as financial advisor to Deutsche Telekom. Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, and RBC are providing T-Mobile with committed debt financing to support the transaction, and PJT Partners is advising T-Mobile on the debt financing associated with the transaction.

The Raine Group LLC is acting as lead financial advisor to Sprint. J.P. Morgan is also acting as a financial advisor to Sprint. Centerview Partners LLC is acting as financial advisor to the Independent Transaction Committee of the Board of Directors of Sprint. Morrison & Foerster LLP is lead legal counsel to Sprint and for SoftBank Group. Goodwin Procter LLP is legal counsel to the Independent Transaction Committee of the Board of Directors of Sprint. Skadden, Arps, Slate, Meagher & Flom LLP is regulatory co-counsel and Potter Anderson Corroon LLP is Delaware Counsel. Mizuho Securities Co., Ltd. and SMBC Nikko Securities Inc. are acting as financial advisors to SoftBank Group.