T-Mobile and Sprint Merger: The Regulatory Journey and Final Approval

The merger between T-Mobile and Sprint represented one of the most significant shifts in the American telecommunications landscape. Aimed at accelerating the rollout of 5G technology, the deal faced years of intense scrutiny from federal regulators, state attorneys general, and industry competitors. The process was a complex balancing act between the goal of expanding high-speed connectivity and the need to maintain market competition.

Key Facts

• Total Deal Value: T-Mobile's merger with Sprint was valued at $26 billion.
• Dish Network Deal: To gain approval, T-Mobile sold Boost Mobile, Virgin Mobile, and Sprint's prepaid business to Dish Network for $1.4 billion, plus $3.6 billion in 800 MHz spectrum.
• 5G Commitments: The FCC required 5G deployment to 97% of Americans within three years, with 90% having speeds of 100 Mbit/s or greater.
• Final Approval Date: The merger officially closed on April 1, 2020.
• Ownership Structure: Post-merger, Deutsche Telekom held approximately 43%, SoftBank 24%, and public shareholders 33% of the new entity.

Industry Support and the 5G Vision

Supporters of the merger argued that combining the two carriers was essential for the rapid deployment of a nationwide 5G network. 5G, the fifth generation of wireless technology, offers broader coverage, greater capacity, higher throughput, and lower latency than its predecessors.

Tracfone Wireless supported the move, suggesting that a three-competitor market would actually increase competition for Mobile Virtual Network Operators (MVNOs)—companies that provide wireless service without owning their own network infrastructure—particularly in rural areas. FCC Chairman Ajit Pai also voiced strong support, noting that while Sprint possessed significant mid-band spectrum, it lacked the independent capacity to deploy 5G across rural America. He emphasized that the merger was a critical step in closing the digital divide.

Opposition and Antitrust Concerns

The merger was not without fierce opposition. The Communications Workers of America (CWA) warned that the consolidation could lead to the loss of over 28,000 jobs based on their analysis of retail location data. They, along with other groups, argued that both companies should have been required to build out 5G independently to preserve competition.

Dish Network initially opposed the merger, citing international data suggesting that reducing the number of carriers often leads to price increases rather than decreases. This opposition eventually coalesced into the "4Competition Coalition," a broad group including the AFL-CIO, Common Cause, and the Rural Wireless Association, all of whom voiced concerns over national security and market competition.

The Regulatory Approval Process

The path to approval involved multiple federal agencies and legal hurdles. The process began in June 2018 when the companies filed documents with the FCC under docket 18-197. While the U.S. Department of Justice (DOJ) initially delayed the timeline, it eventually approved the $26 billion deal on July 26, 2019, contingent on the sale of assets to Dish Network.

The FCC formally approved the merger on October 18, 2019, with a 3–2 vote, later adding specific conditions regarding 5G coverage and speed. The final federal hurdle was cleared on April 1, 2020, when Judge Timothy Kelly completed a Tunney Act review, finding no antitrust concerns.

Summary of Major Regulatory Milestones

Date	Entity	Action/Outcome
June 18, 2018	FCC	Official filing and opening of public commentary
July 26, 2019	DOJ	Approval contingent on Dish Network asset sale
October 18, 2019	FCC	Formal approval via 3–2 vote
February 11, 2020	SDNY Court	Judge Marrero rejects State AGs' lawsuit
April 1, 2020	Federal Court	Tunney Act review completed; merger closes
April 16, 2020	CPUC	Unanimous formal approval for California operations

Legal Challenges from State Attorneys General

A coalition of attorneys general from nine states and Washington, D.C., initially filed suit to block the merger, claiming it would increase consumer costs by $4.5 billion annually. Eventually, 14 states joined the lawsuit. However, in February 2020, Judge Victor Marrero ruled in favor of T-Mobile and Sprint, stating that the merger was unlikely to substantially lessen competition and that Sprint lacked a sustainable long-term independent strategy.

Following this ruling, key leaders of the lawsuit, including New York Attorney General Letitia James and California Attorney General Xavier Becerra, chose not to appeal. Becerra reached a settlement that included the "Project 10 Million" initiative, providing free hotspot devices and 100 GB of annual broadband to 10 million low-income households, and the creation of 1,000 new jobs in Kingsburg, California.

Final Adjustments and California Approval

As the closing date approached, the financial terms were renegotiated. Due to Sprint's rising churn (the rate at which customers leave a provider) and falling average revenue per user, the exchange ratio was adjusted to 11.00 Sprint shares for each T-Mobile share for most shareholders.

The final remaining hurdle was the California Public Utilities Commission (CPUC). Although the merger closed on April 1, 2020, the CPUC had not yet issued a formal vote. T-Mobile CEO Mike Sievert initially questioned the CPUC's jurisdiction, but the commission eventually voted unanimously on April 16, 2020, to approve the merger. This approval required T-Mobile to provide 5G speeds of at least 100 Mbit/s to 99% of California's population by the end of 2026 and maintain price freezes for three years.

Frequently Asked Questions

Why was Dish Network involved in the T-Mobile and Sprint merger?

Dish Network acted as a remedy to address antitrust concerns. To allow the merger to proceed, T-Mobile and Sprint sold Boost Mobile, Virgin Mobile, and a significant portion of 800 MHz spectrum to Dish Network to ensure a viable third competitor remained in the market.

What were the FCC's conditions for approving the merger?

The FCC required the combined company to deploy 5G services to 97% of the U.S. population within three years of closing, with at least 90% of Americans having access to speeds of 100 Mbit/s or higher.

How did the merger affect employment in California?

As part of a settlement with the California Attorney General, T-Mobile committed to ensuring the number of employees in California remained equal to or greater than the combined total of T-Mobile and Sprint employees, including the creation of a new support center in Kingsburg with approximately 1,000 jobs.

Why were the financial terms of the deal renegotiated in 2020?

The terms were renegotiated because Sprint's stock price had fallen, its customer churn had increased, and its average revenue per user had decreased since the original agreement was signed.

What was the result of the lawsuit filed by the State Attorneys General?

The lawsuit was unsuccessful. A federal judge ruled that the merger would not substantially lessen competition, and the leading attorneys general from New York and California eventually declined to appeal the decision.