Justice OKS merger of Sprint, T-mobile

The Justice Department on Friday approved the merger of T-mobile and Sprint, the third- and fourth-largest wireless companies in the United States, saying its antitrust concerns had been addressed and giving its blessing to a deal that would reshape the nation’s wireless industry.

Critics of the merger have said it would reduce competition by lowering the number of wireless carriers from four to three, resulting in higher cellphone bills. On Friday, those critics, a group that includes attorneys general from several states and Democratic presidential candidates, continued to voice their objections to the deal, saying the combination would harm consumers.

Until recently, the Justice Department shared those concerns. In a news briefing on Friday, Makan Delrahim, the Trump administration’s

top antitrust regulator, said the agency had only decided to approve the deal after T-mobile and Sprint agreed last week to sell off significant portions of their businesses to the pay-television operator Dish Network as part of a plan to create a potential new major wireless company. Under the agreement’s terms, Delrahim said, “Dish is in a unique position to succeed.”

The merger deal’s terms call for T-mobile, the larger of the two companies, to effectively buy Sprint in an all-stock transaction valued at $26.5 billion. The combined company, to be called T-mobile and led by T-mobile’s chief

executive, John Legere, would be a formidable rival to AT&T, the largest wireless carrier in the country, and Verizon, the second-largest.

Before getting the Justice Department’s approval, T-mobile and Sprint took steps to win over the Federal Communications Commission, which oversees the telecommunications industry. In May, Ajit Pai, the commission’s chairman, signaled his support after the companies committed to investing heavily in rural broadband service and the fifth-generation cellular networks known as 5G, which brings faster-than-broadband speeds through the air.

In addition to extending reliable internet access to rural areas, 5G is expected to fuel the development of autonomous cars and other so-called moon-shot projects. President

Donald Trump has argued that the technology is critical to national security, citing its importance in his administration’s crackdown on the Chinese telecommunications giant Huawei. T-mobile and Sprint have said they would have a more difficult time making progress with 5G as separate businesses than they would as one entity.

Although the Justice Department’s approval was a crucial step forward for the merger, it is not a done deal. In a rare move last month, the attorneys general of 13 states and the District of Columbia threw a significant obstacle in its path when they sued to block the transaction.

On a conference call Friday, Letitia James, the New York attorney general, said the plan to transform Dish into a fourth major wireless carrier was not

realistic.

“Dish has never owned any kind of mobile wireless business,” she said. “Dish has no experience building or operating a nationwide mobile wireless network.” James added that the agreement brokered by the Justice Department would hurt consumers and “violates antitrust laws.”

T-mobile and Sprint have reached a $5 billion agreement to give Dish Sprint’s prepaid wireless businesses, including Boost Mobile, which is popular with lower-income customers, and some of its airwaves, known as spectrum.

Critics have contended that Dish would not be a legitimate competitor to the merged companies because it would only have about 9 million customers and its wireless service would have to operate

on T-mobile’s network, generating more revenue for T-mobile.

Dish plans to create a fully owned network, but building the infrastructure for it would be expensive, and Dish has been losing subscribers steadily to cheaper streaming services.

The Justice Department’s approval of the merger relies on the future actions of Dish, a company with a history of violations that is controlled by billionaire Charles Ergen, an expert poker player and tough negotiator. Dish would face millions of dollars in fines if it failed to build out its cellular service, Delrahim said.

In a statement on Friday, Dish said it would voluntarily pay a fine of up to $2.2 billion if it failed to deploy a 5G network covering at least 70% of the country’s population in the next four years.