A judge yesterday finally decided in favour of the merger, after rejecting a case from the attorneys general from 13 states and the District of Columbia that the merger was against the public interest.
T-Mobile US and Sprint immediately showed their pleasure at the decision and named 1 April as the target completion date.
“Today was a huge victory for this merger … and now we are finally able to focus on the last steps to get this merger done,” said T-Mobile US CEO John Legere.
Mike Sievert, COO and president of T-Mobile US, who will become CEO of the combined company on 1 May, said: “Now we’re laser-focused on finishing the few open items that remain but our eye is on the prize: finally bringing this long-awaited merger and all the goodness it will deliver.”
The merged company, which will be called T-Mobile, has been a long time in the making. This deal was announced in April 2018, when the combination was valued at $148 billion. But the aspiration goes back a long way: Dan Hesse, then CEO of Sprint, was actively negotiating a merger with T-Mobile in mid-2014, until the regulator, the Federal Communications Commission (FCC), blocked it after lobbying by AT&T and Verizon. SoftBank, the controlling shareholder of Sprint, promptly removed Hesse and replaced him with one of its up-and-coming executives, Marcelo Claure.
The attraction, to Hesse in 2014 and to Legere and Claure over the past two years, is that it will create a strong competitor to AT&T and Verizon. All mobile operators in the US are investing heavily in 5G, and a merger will mean Sprint and T-Mobile can combine their spectrum and their network plans to compete more effectively.
Claure, now executive chairman of Sprint, said yesterday that the deal “brings us a big step closer to creating a combined company that will provide nationwide 5G, lower costs, and a high-performing network that will invigorate competition to the benefit of all mobile wireless and in-home broadband consumers”.
The decision, by judge Victor Moreno of the US District Court in Manhattan, was the last barrier to the merger. The FCC and other US government departments approved the deal last year.
Moreno said in his decision: “T-Mobile has redefined itself over the past decade as a maverick that has spurred the two largest players in its industry to make numerous pro-consumer changes. The proposed merger would allow the merged company to continue T-Mobile’s undeniably successful business strategy for the foreseeable future.”
Incidentally, Moreno’s biggest case until the Sprint/T-Mobile merger decision concerned President Donald Trump’s tax returns; in October 2019 he ordered Trump to hand them over, though the decision has been stayed pending appeal.
The merger will effectively put the combined company under the control of T-Mobile US’s major shareholder, Deutsche Telekom. As announced in April 2018, Deutsche Telekom will own 41.7% of the new T-Mobile US and SoftBank will own 27.4% – but the Japanese group will grant DT a proxy for its shares, giving DT an effective 69.1% vote, putting it in control of the operator. Public shareholders will own the other 30.9% of the combined company.
It’s remained unclear while the companies have been seeking legal approval what will happen to Sprint’s small – but important to the industry – wholesale division. Sprint Wholesale Solutions, which is taking part this week in Capacity’s Metro Connect conference in Florida, has over 200 MPLS nodes, 25 carrier hotel locations and a wireline presence in 155 countries.
The unit remained within Sprint when the group separated out its fixed-line operations under the name Embarq in 2006.
Meanwhile more than a year ago Deutsche Telekom rebranded its own international wholesale division as Deutsche Telekom Global Carrier, making the announcement at Capacity Europe in October 2018.
Rolf Nafziger, head of the unit, told Capacity at the time: “With Deutsche Telekom as the most valuable European telecommunications brand behind us, we now have a name that reflects that strength: Deutsche Telekom Global Carrier.” That implies a European focus for the Bonn-based unit, with a market in the fixed voice and data business.
Capacity’s sources imply that Sprint Wholesale will become T-Mobile Wholesale on completion of the merger, with a distinct focus on mobile operators and mobile virtual network operators (MVNOs). But there’s clearly scope for integration or at least reorganisation after Sprint moves under the control of Deutsche Telekom.
The Sprint name will disappear – the last relic of what was the Southern Pacific Railroad’s telecoms unit, a fibre network which the FCC allowed to compete with AT&T’s long-distance voice services from 1978. That brought about one of the big changes in the industry four decades ago.
Legere said yesterday: “The broad and deep 5G network that only our combined companies will be able to bring to life is going to change wireless … and beyond.”
