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Department of Justice signs off on $26 billion Sprint, T-Mobile merger

Posted at 10:34 AM, Jul 26, 2019
and last updated 2019-07-26 18:50:10-04

KANSAS CITY, Mo. — The U.S. Department of Justice on Friday said it reached an agreement on the $26 billion merger between Overland Park-based Sprint and T-Mobile.

Under the agreement, the two companies must divest Sprint's prepaid business, which includes Boost Mobile, Virgin Mobile and Sprint prepaid, to Dish Network. T-Mobile also must provide Dish Network with access to its network for seven years while the satellite television provider builds its own 5G network, according to a news release from the Justice Department.

The Justice Department said that without the divestiture, the proposed merger would further eliminate competition between the four major wireless carriers, which also include AT&T and Verizon. The conditions would essentially set up Dish Network as the fourth wireless communications company.

“With this merger and accompanying divestiture, we are expanding output significantly by ensuring that large amounts of currently unused or underused spectrum are made available to American consumers in the form of high quality 5G networks,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said in the release. “Today’s settlement will provide Dish with the assets and transitional services required to become a facilities-based mobile network operator that can provide a full range of mobile wireless services nationwide."

State attorneys general from Nebraska, Kansas, Ohio, Oklahoma and South Dakota also signed off on the agreement, according to the Justice Department.

Kansas Attorney General Derek Schmidt said Friday that his office worked with the Justice Department to review and ultimately approve the merger on certain conditions.

"I am convinced it will benefit Kansas consumers by increasing competition in our state, expanding quality coverage in many rural areas of Kansas, expediting the deployment of 5G technology for Kansans, and protecting and expanding Kansas jobs," Schmidt said in a news release. "I am comfortable with assurances from T-Mobile, Sprint and Softbank leadership of the merged company’s commitment to Kansas and to investing in our state to improve services and expand competition that will benefit Kansas consumers."

READ MORE: Sprint's history in Overland Park; What led to proposed merger with T-Mobile

Sprint and T-Mobile leaders also touted the Justice Department's approval, noting that it clears a major hurdle to the proposed merger.

"This is an important day for our country and, most important, American consumers and businesses,” Sprint Executive Chairman Marcelo Claure said in a news release. "Today’s clearance from the DOJ, along with our anticipated approval from the FCC, will allow the U.S. to fiercely compete for 5G leadership. We plan to build one of the world’s most advanced 5G networks, which will massively revolutionize the way consumers and businesses use their connected devices to enhance their daily lives. The powerful combination of 5G, artificial intelligence and the Internet of Things will unleash endless possibilities."

However, the proposal still faces opposition from attorneys general from 13 states and the District of Columbia, who filed a federal lawsuit in June to block the merger, arguing that it would ultimately hike up prices and harm consumers.

CNBC reported Friday that the merger cannot be finalized until that case is resolved. A trial is set for Oct. 7 but could be pushed back to Dec. 9, according to the report.

In May, the companies won a key endorsement from FCC Chairman Ajit Pat, who said he backed the deal because T-Mobile and Sprint promised to expand mobile internet access in rural areas.

That idea was one of the main reasons behind the merger, with additional goals of cutting costs for consumers and developing a 5G network.

The merger could have a big impact in the Kansas City metro. The two companies have said that Sprint's campus in Overland Park would become a secondary headquarters if the merger is approved.

T-Mobile is based in Bellevue, Washington.

Sprint recently sold its campus to a Wichita, Kansas-based real estate development company for well-below market value, with plans to lease the space back at a reduced rate.

Rumors and on-again, off-again talks with T-Mobile finally culminated in the announcement of a $26 billion deal in April 2018.