What Does T-Mobile and Sprint Have To Do For the DOJ To Approve the Merger?

The United States Department of Justice is inching closer to approving the proposed $26 billion merger of T-Mobile and Sprint, but regulators are tightening their grip on the deal.  If the #3 and #4 US mobile service providers want to create a new wireless carrier, they have been instructed to sell off multiple assets in order to ensure sufficient competition within the wireless market. 

Now, T-Mobile and Sprint have already entered into a deal with the Federal Communications Commission. This deal requires that Sprint sell off its prepaid mobile brand, Boost Mobile; but the DOJ must also approve the deal.  Of course, FCC Chairman Ajit Pai is already in support of the merger—but that is also contingent on Sprint selling Boost, as well as committing to a few other changes. And then, on top of this, the Department of Justice has requested T-Mobile and Sprint to divest the wireless spectrum. 

These new demands could certainly weaken the case for each of the states that are suing to stop the merger.  Actually, there are ten states whose attorneys general involved with this suit, led by New York Attorney General Letitia James and California Attorney General Xavier Becerra.  The suit alleges that the merged company will “deprive consumers of the benefits of competition and drive up prices for cellphone services.”

This lawsuit aimed at blocking the merger has already been scheduled for a pretrial hearing, in New York City federal court, next week. 

All of this leads to a place where we have to question why any of this is important.  Again, T-Mobile and Sprint are the third and fourth largest carriers, respectively, in the United States.  It is not yet known who will manage this new fourth carrier but there have been mention of Dish Network or Charter taking over; or perhaps Altice would acquire Boost Mobile and some of Sprint’s wireless spectrum.

To scrutinize, T-Mobile and Sprint’s combined customer base would finally be large enough to compete with the likes of Verizon and AT&T.  But perhaps more important, the tiny offshoot of Sprint that is Boost Mobile would be managed by a different telecom agency and would be so small that they probably would not be able to compete in this new market at all.