T-Mobile US has reportedly reached a deal with Dish Network to divest assets that could be the thing that pushes the proposed merger with Sprint over the top — but approval from the Department of Justice’s Antitrust Division is still needed, according to published reports.
CNBC reported that anonymous sources had said that a deal has been reached between T-Mo and Dish on a purchase of assets, but that “there are still issues the Department of Justice is actively focused on before it would allow a deal.”
Dish Network CEO Charlie Ergen has been an opponent of the merger, and Dish has been rumored as a potential buyer of assets which T-Mo would have to divest, in order to form a fourth wireless player. Ergen met on June 11 with U.S. Federal Communications Commission Chairman Ajit Pai and Makan Delrahim and Andrew Finch of the U.S. Department of Justice’s Antitrust Division. According to a notice of ex parte presentation, Dish “discussed its opposition to the proposed merger of Sprint and T-Mobile as currently constructed…Dish explained the need for a minimum of four nationwide mobile network operators (MNOs). Dish also discussed the impact of the proposed merger on DISH’s market entry and its wireless buildout plans.”
Dish has accumulated significant spectrum holdings, which the FCC has warned it needs to either put to work by March 2020 or lose. The satellite TV provider, moving to enter the wireless market, has announced it will spend $10 billion on a nationwide 5G network, preceded by building an NB-IoT network.
The reported deal would restrict Dish to 12.5% of the New T-Mobile’s spectrum capacity; parent company Deutsche Telekom also wants to limit any strategic Dish investor to 5%, CNBC reported.
T-Mobile US has made public commitments to a number of concessions, in hopes of winning DOJ approval of the merger. According to an FCC filing by T-Mobile US and Sprint, the merged’s company’s commitments include:
-Divestiture of Boost Mobile. “While [Sprint and T-Mobile US] had planned that Boost would continue to be an effective and meaningful competitor as part of the New T-Mobile portfolio of brands, [the companies]now commit to divest and sell the Boost business to remove any remaining doubts regarding the impact of the merger on prepaid wireless customers and competition,” according to an filing, with a six-year MVNO agreement “that will include wholesale rates that will meaningfully improve upon the commercial terms reflected in the most favorable of T-Mobile’s and Sprint’s three largest MVNO agreements.”
-Within three years of the closing of the merger, deploying a 5G network that covers 97% of the population, rising to 99% of the U.S. population within six years. The two carriers said that within three years, they’ll cover three-fourths of the country’s population with mid-band spectrum and 97% of the population with low-band spectrum. Nearly two-thirds of Americas will receive speeds “in excess of 100 Mbps” within three years of closing, they promised, and their build-out will, within six years, deliver download speeds of 50 Mbps or more to 99% of the population, with 90% of the population having download speeds of at least 100 Mbps.
-The companies claimed that they will “go further than any company has before to help bridge the rural Digital Divide,” with promises to expand outdoor 5G coverage to 59.4 million rural Americans and indoor 5G coverage to 31 million rural residents. Within six years, the carriers said, they will deploy a 5G network that covers 90% of rural populations with low-band coverage and mid-band coverage of at least 66.7% of the rural population. “No other company has rural 5G deployment plans even remotely as aggressive as New T-Mobile,” they added.
-The companies said that the merged entity will, within three years, market its in-home broadband service to 9.6 million eligible households, of which at least 2.6 million are rural households; those numbers ride to 28 million eligible households and 5.6 million rural households within six years.
-Offering rate plans that are the same or better as existing ones, for a period of three years following the merger. “This commitment not only ensures that prices cannot go up, but that 5G comes at no extra cost,” the companies said.
-The combined company will work with Altice’s existing MVNO agreement. “New T-Mobile will not exercise any termination rights under Altice’s MVNO agreement with Sprint that might be triggered by the merger,” Sprint and T-Mobile US said. “In addition, New T-Mobile commits to engage in good faith negotiations to expand the existing Sprint/Altice agreement to the New T-Mobile 5G network.”
To ensure that it lives up to those commitments, the carriers said that they agreed to a verification and enforcement process that “will trigger severe, increasing and continuing” — but still voluntary — “contributions that will make failure prohibitively expensive and incentivize New T-Mobile to meet its commitments.”
Those commitments, however, have not been sufficient for a number of state attorneys general, which recently joined in a lawsuit seeking to block the merger on the grounds that it harms wireless competition and consumers. That lawsuit is not expected to begin until October.