The Justice Department confirmed on Friday that it has agreed to allow the mega-merger to proceed based on the concessions ironed out between the two companies, which includes selling assets to Dish Network (DISH - Get Report) to even out the competitive playing field.
Staff at the Justice Department's antitrust division had initially recommended in May that the agency sue to block the proposed deal, citing anti-competitive practices. In an unusual move, a group led by the attorneys general of New York and California in June also sued to block the merger -- before the Justice department had issued its final decision.
Justice Department Settles with T-Mobile and Sprint in Their Proposed Merger by Requiring a Package of Divestitures to Dish https://t.co/8ZILnowoao— Justice Department (@TheJusticeDept) July 26, 2019
However, the Justice Department earlier this month said it had tentatively agreed to a series of concessions from T-Mobile and Sprint designed to create a new wireless carrier by handing assets to satellite TV provider Dish, which has long planned to enter the wireless market.
Coined as a proposed settlement, T-Mobile and Sprint must divest Sprint's prepaid business, including Boost Mobile, Virgin Mobile, and Sprint prepaid, to Dish Network, the Justice Department said. The proposed settlement also provides for the divestiture of certain spectrum assets to Dish.
T-Mobile and Sprint must also make available to Dish at least 20,000 cell sites and hundreds of retail locations. T-Mobile must also provide Dish with robust access to the T-Mobile network for a period of seven years while Dish builds out its own 5G network.
We'll be talking about this great news AND our record-setting Q2 earnings today at 1:00pm ET / 10:00am PT today. https://t.co/9Lr0Dxv8Mj— John Legere (@JohnLegere) July 26, 2019
"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," said Assistant Attorney General Makan Delrahim of the Justice Department's Antitrust Division.
"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."
"We are one step closer to bringing New T-Mobile to American consumers!," tweeted T-Mobile CEO John Legere within minutes of the announcement. "Now, we can't wait to get to work for bringing this pro-consumer, pro-competition, REAL nationwide 5G network to American consumers!"
BIG NEWS! After diligent review, the @TheJusticeDept & @JusticeATR has given clearance to our proposed merger with @Sprint! We are one step closer to bringing New T-Mobile to American consumers! https://t.co/jEoO85NeeT Key info: https://t.co/Ioa23FUBQe— John Legere (@JohnLegere) July 26, 2019
The Justice Department reportedly coordinated with the attorneys general this week to drop their suits in light of the concessions and their decision to allow the merger to proceed.
Shares of T-Mobile jumped more than 5.4% to $84.25 on the New York Stock Exchange following the announcement. Shares of Sprint jumped 7.4% to $7.99 while shares of Dish Network gained 0.9% to $39.51.
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