Events and timeline
Sprint Corporation and T-Mobile US merged in 2020 in an all shares deal for $26 billion. The deal was announced on April 29, 2018. After a two-year-long approval process the merger was closed on April 1, 2020, with T-Mobile emerging as the surviving brand. The Sprint brand was discontinued by T-Mobile on August 2, 2020.
Preliminary discussions and announcement.
Sprint targeting T-Mobile US.
In December 2013, multiple reports indicated that Sprint Corporation and its parent company, SoftBank, were working towards a deal to acquire a majority stake in T-Mobile US for at least US$20 billion. The proposed merger would have further bolstered T-Mobile's position in the overall market and resulted in the country's major national carriers being controlled by only three companies. Members of the government were skeptical that such an acquisition would be approved by regulators, citing antitrust concerns and an explicit goal by FCC chairman Tom Wheeler to maintain four national carriers in the United States. On April 30, 2014, Bloomberg reported that Sprint was in talks with its lenders to ensure that the company would be financially prepared for the bid, then valued at $24 billion and planned for "summer 2014". It was also reported that due to his success within the company, then T-Mobile CEO John Legere was the top contender to be named CEO of a merged Sprint/T-Mobile and that Sprint had insisted on a low termination fee to prevent regulators from being given an incentive to block the deal, as had occurred with AT&amp;T's failed attempt to purchase T-Mobile.
On August 1, 2014, Xavier Niel's Iliad SA publicly announced a $16 billion all-cash counter-bid to acquire a 56% stake in T-Mobile US and to be funded using equity and debt. Iliad is the parent company of French carrier Free Mobile, which had, like T-Mobile, undertaken disruptive business moves to undercut its competitors, triggering a "price war" among them upon its launch in 2012. Credit Suisse analysts felt that the bid would not be attractive to the company's current shareholders due to its lower value in comparison to Sprint's bid, but could "put pressure on Sprint to move sooner rather [than] later."
On August 4, 2014, Bloomberg reported that Sprint had abandoned its bid to acquire T-Mobile, considering the unlikelihood that such a deal would be approved by the U.S. government and its regulators.
T-Mobile targeting Sprint.
On February 17, 2017, Reuters reported that Softbank was considering selling its majority stake in Sprint to Deutsche Telekom (an effective reversal of the original deal), citing struggling growth in the U.S. market, and a higher likelihood that the deal would be approved by the Trump administration. However, after months of speculation and rumors about a potential deal being reached, both T-Mobile and Sprint announced on November 4, 2017, that while they have had discussions about a possible merger, the two parties had decided to end merger talks due to not being able to agree on the terms of the deal, due to Softbank's board of directors reported vote on October 27 where they decided not to give up control of Sprint.
Announcement.
Sprint and T-Mobile once again resumed talks of a merger in April 2018 and announced a merger agreement on April 29.
Approval process.
Reception.
Support.
On September 21, 2018, Tracfone Wireless voiced its support for the merger. They stated "With the merger of T-Mobile and Sprint, and the resulting more rapid deployment of a nationwide 5G network with broader coverage, greater capacity, higher throughput and lower latency, the wholesale market place will be more competitive with three full service competitors, rather than two. The increase in competition should have the greatest effect in rural areas. The resulting excess capacity would be available for MVNOs in these areas as a third option that has not been available in the current marketplace.”
On June 28, 2019, FCC Chairman Ajit Pai voiced his support for the merger. He discussed 5G and how the FCC is working to accelerate its deployment in the U.S. One of the pillars of T-Mobile and Sprint's merger is how they plan to use their combined spectrum to deploy a nationwide 5G network, and he said during his remarks that “one of the most critical steps that the FCC can take is to approve the T-Mobile/Sprint transaction." He went on to say that Sprint has much mid-band spectrum, but that “the company standing alone does not have the capacity to deploy 5G in this spectrum throughout large parts of rural America.” The combined T-Mobile-Sprint will have the capacity to do that, he claimed, pointing to a T-Mobile and Sprint commitment to deploy mid-band 5G to 88 percent of the U.S. population, including two-thirds of rural consumers. “We should seize the opportunity to provide 5G to rural America and close the digital divide,” he said.
Opposition.
On August 28, 2018, the Communications Workers of America (CWA) said that it opposed the merger between T-Mobile and Sprint in the proposed set up. The CWA, a union that represents 700,000 workers, claimed that the merger would result in more than 28,000 jobs being lost, a number that it said it came to by performing an analysis based on location data for all of the retail locations involved in the proposed merger. They stated that the merger which raised competitive and national security concerns, would lead to loss of jobs, and that both companies would be liable to build out nationwide 5G on their own.
Dish Network initially opposed the merger prior to its deal to buy Boost Mobile and Spectrum when the deal was closed. They voiced their opposition multiple times, stating that data from other countries that experienced four-to-three times reductions in the number of carriers to saying that the T-Mobile-Sprint merger could lead to an increase in prices, not a decrease like T-Mobile has claimed.
On December 13, 2018, an opposition group was formed called "4Competition Coalition" which was used to voice a combined voice of opposition between many companies and organizations. In addition to the CWA and Dish Network, these included the AFL-CIO, Common Cause, C Spire, Fight for the Future, New America's Open Technology Institute, NTCA - The Rural Broadband Association, Open Markets Institute, Public Knowledge, Rural Wireless Association, the Greenlining Institute, and Writers Guild of America West.
Regulatory approval.
On June 18, 2018, Sprint and T-Mobile filed documents with the FCC, which opened the transaction for public commentary and set the stage for the agency to either issue a red light or a green light on the merger. FCC docket 18-197 would be the official home for documents relating to the proposed merger. FCC granted their request to withhold "competitively sensitive information" from the proceeding, which was filed in a separate filing.
On April 29, 2019, completion of the merger was extended from April 29, 2019, to July 29, due to the U.S. Department of Justice Antitrust Division's chief saying that he had not decided whether to approve the merger or not.
On July 26, 2019, the U.S. Department of Justice approved T-Mobile's $26 billion merger with Sprint after the two carriers reached an agreement to sell Boost Mobile, Virgin Mobile (both owned by Sprint), and Sprint's branded prepaid business for $1.4 billion to Dish Network. They would also sell to Dish $3.6 billion of 800 MHz spectrum, Sprint's entire 800 MHz portfolio. Both deals were contingent on final regulatory approval of the merger from the FCC, California Public Utilities Commission, and state AGs (or loss of lawsuit); the Spectrum sale would be completed 3 years after the closure of the merger to allow time for Sprint legacy network customers to switch to the new T-Mobile network.
On October 18, 2019, the merger received formal approval by the FCC in a 3–2 vote.
On November 5, 2019, the FCC officially approved the merger on specific conditions. These conditions include 5G being deployed to 97% of Americans within 3 years of the merger closing, and 90% of Americans having access to speeds of 100 Mbit/s or greater. The merger was not yet closed, as they still needed to win or bypass the lawsuit from the state AGs and get approval from the California PUC. John Legere (T-Mobile's CEO) expected the merger to be completed in early 2020.
On April 1, 2020, Judge Timothy Kelly completed his Tunney Act review of the merger and DOJ settlement, finding no antitrust concerns and approving the merger. This was the final federal regulatory proceeding they needed completed before closing.
Lawsuit from State AGs.
On June 11, 2019, several news outlets reported that the proposed merger between Sprint and T-Mobile was facing a major legal challenge as ten attorneys general from nine states (New York, California, Connecticut, Colorado, Maryland, Michigan, Mississippi, Virginia, and Wisconsin) and Washington, D.C., filed suit to block the merger, alleging it would result in higher prices for consumers to the extent of $4.5 billion annually. It was then reported on June 13, 2019, that Judge Victor Marrero of the United States District Court for the Southern District of New York (SDNY) had set a pre-trial hearing for the week of June 17, 2019, for the merger.
On June 21, 2019, it was reported that four more states — Hawaii, Massachusetts, Minnesota, and Nevada — had joined the lawsuit seeking to block the merger.
On February 11, 2020, SDNY Judge Victor Marrero officially announced his decision in the aforementioned state AG lawsuit siding with Sprint and T-Mobile, officially giving federal district court approval to the merger. He stated that "the merger is not likely to substantially lessen competition like the suing state AGs had claimed it would" and also that Sprint "does not have a sustainable long-term competitive strategy [to remain a viable competitor]."
Settlements, agreements, and final changes.
On October 18, 2019, T-Mobile signed diversity agreements with various civil rights groups as part of the merger.
On February 13, 2020, it was reported that Deutsche Telekom wanted to renegotiate the price of the deal as Sprint's share have been trading below what they were when the deal was first agreed upon, discussions are expected to start soon.
On February 16, 2020, New York Attorney General Letitia James announced that she would not appeal the court's decision in favor of the merger. Rather than appeal, James says she would like to work with the carriers to help consumers get the best service and prices. She stated, “After a thorough analysis, New York has decided not to move forward with an appeal in this case. Instead, we hope to work with all the parties to ensure that consumers get the best pricing and service possible, that networks are built out throughout our state, and that good-paying jobs are created here in New York.” This is significant because she was one of the two leaders in the lawsuit, the other being California Attorney General Xavier Becerra.
On February 20, 2020, T-Mobile and Sprint announced a new Business Combination Agreement, renegotiated due to the fact that Sprint's churn has risen and average revenue per user has fallen since the merger was first announced. The new BCA gives an exchange ratio of 11.00 Sprint shares for each T-Mobile share, up from the original agreement of 9.75 Sprint shares. SoftBank, Sprint's owner, has agreed to surrender 48.8 million T-Mobile shares acquired in the merger to the New T-Mobile, making SoftBank's effective ratio of 11.31 shares per T-Mobile share. Sprint shareholders other than SoftBank will continue to get the original fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share, or the equivalent of 9.75 Sprint shares for each T-Mobile share. Following the closing of the merger, T-Mobile parent company Deutsche Telekom will hold approximately 43% of New T-Mobile's shares while SoftBank will hold 24% and the remaining 33% will be held by public shareholders. The previous deal saw DT getting 42%, SoftBank getting 27%, and public shareholders getting 31%. The new agreement had an outside/long stop date of July 1, 2020, which is when either and/or both parties can walk away from the deal if it has not closed yet.
On March 11, 2020, California Attorney General Xavier Becerra announced he will not appeal the judge's decision made during the previous month to reject the state AGs’ lawsuit against the T-Mobile-Sprint merger. He, instead, struck a settlement with the defending parties. The terms of the settlement include making its low-cost T-Mobile Connect plans available in California for at least 5 years, that T-Mobile customers can keep their T-Mobile plans held in February 2019