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Merger
T-Mobile (TMUS) and Sprint (S) have decided to merge to expand their 5G network and expand their customer base in the face of declining postpaid phone subscribers and increasing competition from key players in the telecommunications sector and giants of online broadcasting. The merger would also increase cost synergies.
Since the companies received support from the Federal Communications Commission (or FCC), they are now awaiting approval from the US Department of Justice, which is expected to make its decision in about a month. The deal also received support from the Pennsylvania Public Utilities Commission yesterday and is also awaiting approval from two other state commissions for California and Hawaii.
FCC President Supports Merger
On Monday, FCC President Ajit Pai agreed to the long-awaited merger of T-Mobile and Sprint. To obtain FCC approval, T-Mobile and Sprint have committed to deploying a large 5G network covering 97% of the country's population within three years of approval of the merger and 99% within six years. 5G coverage should also include 85% of Americans living in rural areas in three years and 90% in six years.
The companies also indicated that the amalgamated company would not raise prices but would offer its customers identical or discounted plans for three years following the transaction. Wireless carriers would also deploy a new home Internet service, as a result of the agreement. In addition, Sprint plans to sell its brand of prepaid phones called Boost Mobile.
The president of the FCC also informed companies that they would have to spend billions of dollars if they did not meet the FCC requirements. Sprint and T-Mobile told regulators that they would pay "voluntary contributions" if companies did not meet deadlines.
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