The long-awaited merger between T-Mobile and Sprint could finally be approved by the Department of Justice this week. The deal requires the agreement of the DoJ in order to proceed.
Provided that it goes through, the merger will create a company valued at $160 billion. The merged companies will also have to help establish a new fourth wireless competitor to replace the one being taken away.
A deal could be announced “as soon as Wednesday,” claim sources familiar with the matter.
However, this would not necessarily mark the finalization of a deal. There’s also a lawsuit from 13 state attorney generals and the District of Columbia. They are trying to block the deal on the grounds that it is anticompetitive.
A new fourth player
As part of the deal, a new fourth wireless competitor will be established. This will be Dish Network, currently one of the largest video providers in the U.S. Dish has reportedly wanted to become a wireless provider for about a decade. It could also turn out to be a fearsome opponent quite quickly. As CNBC writes:
“In recent days, several telecommunications analysts … have questioned if a merger that strengthens Dish as a disruptive fourth wireless player is worth it for T-Mobile. Dish could wind up being a far more frightening competitor than Sprint, which would face massive capital constraints and rapidly fleeing customers without a deal with T-Mobile.”
The report notes that DOJ “limitations on Dish will be minimal, if anything.” This means that Dish could be free to sell equity stakes in its wireless business to anyone it wants. Names suggested include the likes of Amazon, Google to cable operators such as Comcast or Charter. A cash influx would let Dish eventually build out a 5G wireless network.
Analyst Craig Moffett at MoffettNathanson says that Dish will be, “immediately incentivized to offer cheaper services than T-Mobile (as well as AT&T and Verizon) to gain subscribers.”
I’m no mergers and acquisitions expert. It sounds like this is going to bring a whole lot of complexity to the wireless industry. At least some of this complexity will likely benefit customers, however. What happens next? We’ll have to wait and see. But Sprint and T-Mobile clearly really, really want their deal to go ahead.
