Last week Friday the Department of justice signed off a $26.5 billion landmark deal that will see T-Mobile Inc. (NASDAQ:TMUS) merge with Sprint Corp (NYSE:S) and Dish Network Corp (NASDAQ:DISH) become the fourth telecommunications company in the US.
Maintaining four carriers
Dish will be granted access to T-Mobile’s network which is part of the settlement between the carriers and will also acquire the sprint’s spectrum as well as its prepaid businesses. The T-Mobile Sprint merger was announced over a year ago but there were concerns that the merger will create a monopoly in the telecom industry as Verizon Communications Inc. (NYSE:VZ) and AT&T (NYSE:T) will have remained as the only competitors. With Dish acquiring the Sprint business and getting access to T-Mobile’s network, consumers will get an alternative to the existing service providers.
Dish has promised that by 2023 it will cover 70% of the United States with 5G network. If Dish fails to actualize the dream of 5G by 2023 it will owe treasury around $2.2 billion. On the side of T-Mobile and Sprint the merger will provide the impetus required through their combined assets to explore their 5G ambitions which will further ensure that the US moves closer to the next generation technology. Dish will also inherit all the nine million prepaid customers of Sprint as well as licensing rights in rural areas and also utilize T-Mobile’s network for up to seven years as they build theirs.
A call changed fortunes for T-Mobile
Charlie Ergen the CEO of Dish has been the mastermind behind the acquisition of T-Mobile and although he was cynical about the mega deal he changed mind in May when he received a call from T-Mobile’s CEO John Legere. In an interview Ergen indicated that Legere had informed him in May that the Justice Department was holding for a fourth carrier and if he was interested they should talk. Throughout the month of June negotiations went on with Legere and Sprint’s chairman Marcelo Claure before agreeing better terms as per the Justice department.