After years of speculation, legal battles and shifting plans, T-Mobile and Sprint’s long-discussed merger has cleared a major obstacle with a favorable federal court ruling in New York.
Southern District of New York Judge Victor Marrero dismissed a lawsuit brought by several state attorneys general who had argued the merger would harm competition.
In his decision, Judge Marrero wrote that after weighing the trial evidence and using accepted judicial tools to forecast market outcomes, the court concluded the proposed merger is not reasonably likely to substantially lessen competition in the affected markets.
Marrero observed that T-Mobile has redefined itself over the past decade as a disruptive force that pushed the industry’s largest players to adopt changes benefiting consumers. He concluded the merger would enable the combined company to continue executing T-Mobile’s successful strategy.
By contrast, Marrero found that Sprint had struggled to stay competitive in a fast-moving, capital-intensive market. He noted that both inside Sprint and across the industry there was a prevailing view that Sprint was missing targets needed to remain a significant competitor.
The Federal Communications Commission had previously supported the merger. FCC Chairman Ajit Pai publicly backed the deal in May, and after the court ruling he said the transaction would help close the digital divide and help the United States lead in 5G. Pai called the ruling “a big win for American consumers.”
T-Mobile and Sprint reacted enthusiastically. T-Mobile CEO John Legere said the combined company would be a “supercharged un‑carrier” that benefits consumers and competition, and that the broader 5G network the merger enables will transform wireless services and related industries. Sprint CEO Marcelo Claure said the ruling moves the companies closer to creating a nationwide 5G network, lowering costs and bolstering performance in ways that will invigorate competition for mobile and in‑home broadband customers.
The merger’s path to this point included many starts and stops. As far back as 2014, Sprint and its parent SoftBank abandoned a bid to acquire T-Mobile amid regulatory resistance; at that time Sprint announced a leadership change with Marcelo Claure replacing Dan Hesse. Rumors resurfaced in 2017 after T‑Mobile began adding more subscribers than Sprint, and industry estimates briefly valued a potential deal at roughly $88 billion before talks again broke down and SoftBank increased its stake in Sprint.
In April 2018 the companies announced a renewed agreement to merge, this time valued at around $24.6 billion. Over 2018 and into 2019, analysts and regulators monitored the process closely. In May 2019 the FCC signaled approval in principle. By July that year the Department of Justice reached an agreement addressing competition concerns involving cable provider Dish, and the DoJ finalized terms later that month. The FCC gave formal approval in October in a 3‑2 vote, and conditional regulatory approvals followed.
As part of the remedy, Dish Network is positioned to become the fourth nationwide U.S. wireless carrier. Judge Marrero noted Dish’s statements at trial and its spectrum holdings persuaded the court that Dish intends to compete vigorously, which could benefit price‑sensitive consumers and put previously idle spectrum to use.
Financial markets reacted quickly: Sprint’s shares jumped more than 70% in early trading following the ruling, while T‑Mobile’s stock rose about 12%. The transaction is not yet fully completed, however; the California Public Utilities Commission still must rule on the deal before it can be closed.
Interested in hearing industry leaders discuss topics like this and share their use cases? Consider attending industry events that bring together leaders on IoT, blockchain, AI and big data, cybersecurity and cloud, and 5G to explore the future of enterprise technology.