T-Mobile-Sprint Merger Update: Federal Judge OKs $26 Billion Deal, Creating 3rd Largest Carrier

U.S. District Judge Victor Marrero ruled in favor of a $26 billion merger between T-Mobile (TMUS) and Sprint (S) on Tuesday. T-Mobile is the third-largest carrier in the United States while Sprint is the fourth-largest.

“The court concludes that the proposed merger is not reasonably likely to substantially lessen competition in the mobile service market,” Marrero wrote in his decision, adding the deal would likely “enhance competition in the relevant markets to the benefit of all consumers.”

The merger deal between T-Mobile and Sprint gained approval from the Justice Department and the Federal Communications Commission in July, but faced an antitrust lawsuit from a coalition of state attorneys general. The lawsuit alleges the merger would decrease competition and cause higher prices for consumers.

To win approval from the Justice Department, Sprint is obligated to divest its prepaid business to Colorado-based Dish Network Corp. T-Mobile and Sprint would also be forced to provide retail locations and cell sites to Dish as part of negotiations.

Marrero said the new Dish cellular service would be a viable alternative for consumers. Dish would enter the market with fewer customers than Sprint.

The deal will result in Sprint customers being switched over to T-Mobile, with the transition taking several years to complete. At one point, customers will begin receiving monthly bills from the new merged company.

T-Mobile has said that it would not raise prices on its existing customers for at least three years after the merger.

FCC chairman Ajit Pai said that he is “pleased” with Tuesday’s decision and that the “T-Mobile-Sprint merger will help close the digital divide and secure United States leadership in 5G.”

Sprint (S) shares rocketed up 77% in premarket trading and were up 70% in late morning trading. T-Mobile (TMUS), owned by Deutsche Telekom, jumped more than 10%. The $26 billion deal between the two companies was originally struck two years ago.