T-Mobile, Sprint Merger: DOJ Nod Likely Soon As Divestiture Plan Gets Ready

In the latest Sprint T-Mobile merger news, the proposed $26 billion merger deal is closer to the green light by the Department of Justice (DOJ) as merging companies are reportedly ready with the asset divestiture plan to create a fourth wireless player.

According to reports, T-Mobile and Sprint will announce a deal on divesting some assets to be bought by Dish Networks owned by billionaire Charlie Ergen, in a couple of days.

The deal will also include a spectrum-hosting agreement to support Dish in launching a national wireless service within a year of the sale’s closure, sources said.

Divestiture deal after contentious demand dropped

The deal is almost ready after T-Mobile and parent company Deutsche Telekom agreed to drop a contentious demand that Dish owned by billionaire Charlie Ergen, should not sell more than a 5 percent stake in his company to other wireless partners such as Google.

T-Mobile and Sprint would require selling some assets including Sprint subsidiary Boost Mobile and some spectrum to win the DOJ approval.

The way discussions are progressing the “settlement announcement” may happen Wednesday or Thursday, according to sources.

The indication of an imminent announcement from DOJ became clear from the cancelation of antitrust chief Makan Delrahim's scheduled testimony for Tuesday before the Senate’s antitrust subcommittee.

Insiders say it is a signal that a deal is on the way. Optimism is growing that the DOJ’s approval will come any day now.

DOJ’s announcement may also outline how the final deal will benefit consumers and the flow of significant economic benefits for the nation, according to people working with the companies.

How Delrahim will balance competing interests?

For Delharim accommodating the stand of the White House on the matter is important. The Trump administration favors the merger as it would add more muscle for the U.S. industry to stay competitive in the wireless business, particularly in developing 5G technology.

The Trump administration also sees the deal’s potential in adding to national security as it will check espionage.

Reports suggest Ergen has agreed to the broad outlines of purchase of spectrum and other assets that T Mobile CEO John Legere and Sprint Executive Chairman Marcelo Claure, can agree with.

T-Mobile and Sprint have convinced the Federal Communications Commission (FCC) that the merger will not escalate prices for consumers.

They argue that by aligning with T-Mobile, Sprint as a financially weak player would make it possible to compete with others at fair prices.

Delrahim's gamble is to leverage Ergen’s ambition to transform Dish into a wireless service provider. The latter is under compulsion to use the idle spectrum in hand as the regulator FCC has been exerting pressure on him.

Avoiding a collision with the FCC is important for Dish and it would not miss the opportunity to grab the divested assets from T-Mobile and Sprint to start the fourth carrier as a hosting deal will also become a part of the deal.

The Sprint stock was up 0.43 percent on last Friday’s last close while and T-Mobile stock was 0.69 percent on the last close.