Sprint offloads $5bn worth of spectrum and prepay business so T-Mobile deal can go ahead

Sprint offloads $5bn worth of spectrum and prepay business so T-Mobile deal can go ahead


Sprint is to sell Virgin Mobile USA as well as Boost Mobile to Dish Networks as part of its deal to merge with T-Mobile US.

The US Department of Justice (DoJ) extracted this extra condition from Sprint before it gave approval for the $26 billion merger late on Friday.

John Legere (pictured), CEO of Deutsche Telekom-owned T-Mobile US and future CEO of the combined operation, declared himself pleased. “Our goal was to ensure that the DoJ’s concerns were addressed while enabling us to deliver on every aspect of the synergies we promised to unlock… and we did it.”

Satellite TV company Dish Network will take over Boost, Virgin and other prepaid mobile virtual network operator (MVNO) businesses from Sprint, plus Sprint’s spectrum in the 800MHz band for a total of $5 billion.

The DoJ agreement, after many months of wrangling, is almost the last hurdle for T-Mobile US and Sprint – majority owned by SoftBank, though a number of state attorneys general are still opposing the merger.

SoftBank now says that it expects completion in the three-month period ending 30 September – of which the first four weeks have already elapsed. The companies have set a deadline of 1 November for completion.

The Federal Communications Commission (FCC) has indicated approval but has yet to deliver a formal verdict.

The companies have not yet said what will happen to Sprint’s international wholesale business.

The merged company, which will retain the T-Mobile brand according to an agreement last year, will work with Dish for up to seven years, providing the satellite TV company’s new mobile customers with access to the merged network.

“Dish will also have an option to take on leases for certain cell sites and retail locations that are decommissioned by the New T-Mobile, subject to any assignment restrictions,” said T-Mobile and Sprint in a joint statement.

Legere said: “The T-Mobile and Sprint merger we announced last April [2018] will create a bigger and bolder competitor than ever before – one that will deliver the most transformative 5G network in the country, lower prices, better quality, unmatched value and thousands of jobs, while unlocking an unprecedented $43 billion net present value in synergies.”

A combined T-Mobile and Sprint will be able to offer stronger competition to AT&T and Verizon, the two market leaders in the US mobile business, even with the loss of Sprint’s prepaid customers to Dish.

Tammy Parker, technology analyst at GlobalData, said that this “unlikely rescue from Dish Network” will create “a fourth national wireless operator” and allow it to “retain spectrum that it was likely going to have to hand back” to the FCC.

However, Parker added: “The entry of Dish as a fourth national operator is not a significant threat. Dish has no track record in building out a nationwide wireless network or conducting business as a wireless MVNO or network operator. Furthermore, it has the distraction of dealing with the ongoing decline of its core satellite pay-TV business as customers shift to over-the-top streaming services.”

Marcelo Claure, executive chairman of Sprint, said: “We plan to build one of the world’s most advanced 5G networks, which will massively revolutionise the way consumers and businesses use their connected devices to enhance their daily lives. The powerful combination of 5G, artificial intelligence and the internet of things will unleash endless possibilities.”