We've got a new "Big 3" in wireless: T-Mobile + Sprint gets approved
I approve this relationship... Judge Victor Marrero to T-Mobile and Sprint. Approval of the biggest merger in the wireless industry powered Sprint stock up 77% (investors we're expecting this outcome). If the opinion remains unchallenged, we're left with 3 major carrier choices: Verizon, AT&T, and the new T-Mobile (that ate Sprint). Here's the history of this complex courtship:
- June 2018: T-Mobile's CEO announces that his company has agreed to merge with Sprint. The combo company – valued at $146B – would be split between 3 owners: Deutsche Telekom (T-Mobile's parent), SoftBank (which owns most of Sprint), and retail investors like you and us who own remaining shares.
- November 2019: The Department of Justice and the Federal Communications Commission approve the merger under certain conditions... But 13 states plus DC sued to block the deal, saying it would hurt competition and lead to pricier phone bills.
Sprint has been lagging rivals for a while... so the judge doesn't think this deal will substantially hurt competition. Plus, regulators will make sure that Dish Network enters the game as a viable new service provider. Sprint will have to sell Dish 9M customers, but that'll still be a distant competitor to the Big 3.
We have a three-opoly on our hands... Here's the pecking order now: Verizon #1, New T-Mobile #2, and AT&T #3. And a three-opoly could affect your bill:
- Interpretation A: Competition has been reduced, now that we've gone from 4 major players to 3. When there's less competition, companies tend to charge higher prices.
- Interpretation B: Actually, this merger increases competition, because Sprint was never a real player and T-Mobile wasn't big enough to compete over future 5G networks. Now T-Mobile + Sprint can effectively challenge AT&T and Verizon.