The U.S. Department of Justice approved the $26 billion between Sprint Corp. and T-Mobile U.S., the department said Friday.

The approval clears a major hurdle for the proposed deal between the two telecom giants.

“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.

As part of its Justice Department agreement, both carriers will be required to sell assets including prepaid brand Boost Mobile to satellite TV provider Dish Network Corp.

Dish will also get the first crack to purchase telephone towers that T-Mobile declares redundant, the Justice Department said.

Those conditions would make Dish a new, fourth wireless competitor taking Sprint’s place in the marketplace.

“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,” Mr. Delrahim said.

The Justice Department also announced that the attorneys general for five states opposing the deal reached a settlement. In June, the officials filed a lawsuit in a New York federal court to block the merger. They argued the deal will cost consumers more than $4.5 billion annually. </s> The Justice Department on Friday approved the merger of T-Mobile and Sprint, the third- and fourth-largest wireless companies in the United States, saying its antitrust concerns had been addressed and giving its blessing to a deal that would reshape the nation’s wireless industry.

Critics of the merger have said it would reduce competition by lowering the number of wireless carriers from four to three, resulting in higher cellphone bills. On Friday, those critics, a group that includes attorneys general from several states and Democratic presidential candidates, continued to voice their objections to the deal, saying the combination would harm consumers.

Until recently, the Justice Department shared those concerns. In a news briefing on Friday, Makan Delrahim, the Trump administration’s top antitrust regulator, said the agency had only decided to approve the deal after T-Mobile and Sprint agreed last week to sell off significant portions of their businesses to the pay-television operator Dish Network as part of a plan to create a potential new major wireless company. Under the agreement’s terms, Delrahim said, “Dish is in a unique position to succeed.”

The merger deal’s terms call for T-Mobile, the larger of the two companies, to effectively buy Sprint in an all-stock transaction valued at $26.5 billion. The combined company, to be called T-Mobile and led by T-Mobile’s chief executive, John Legere, would be a formidable rival to AT&T, the largest wireless carrier in the country, and Verizon, the second-largest.

Before getting the Justice Department’s approval, T-Mobile and Sprint took steps to win over the Federal Communications Commission, which oversees the telecommunications industry. In May, Ajit Pai, the commission’s chairman, signaled his support after the companies committed to investing heavily in rural broadband service and the fifth-generation cellular networks known as 5G, which brings faster-than-broadband speeds through the air.

In addition to extending reliable internet access to rural areas, 5G is expected to fuel the development of autonomous cars and other so-called moonshot projects. President Donald Trump has argued that the technology is critical to national security, citing its importance in his administration’s crackdown on the Chinese telecommunications giant Huawei. T-Mobile and Sprint have said they would have a more difficult time making progress with 5G as separate businesses than they would as one entity.

Although the Justice Department’s approval was a crucial step forward for the merger, it is not a done deal. In a rare move last month, the attorneys general of 13 states and the District of Columbia threw a significant obstacle in its path when they sued to block the transaction.

On a conference call Friday, Letitia James, the New York attorney general, said the plan to transform Dish into a fourth major wireless carrier was not realistic.

“Dish has never owned any kind of mobile wireless business,” she said. “Dish has no experience building or operating a nationwide mobile wireless network.” James added that the agreement brokered by the Justice Department would hurt consumers and “violates antitrust laws.”

T-Mobile and Sprint have reached a $5 billion agreement to give Dish Sprint’s prepaid wireless businesses, including Boost Mobile, which is popular with lower-income customers, and some of its airwaves, known as spectrum.

Critics have contended that Dish would not be a legitimate competitor to the merged companies because it would only have about 9 million customers and its wireless service would have to operate on T-Mobile’s network, generating more revenue for T-Mobile.

Dish plans to create a fully owned network, but building the infrastructure for it would be expensive, and Dish has been losing subscribers steadily to cheaper streaming services.

The Justice Department’s approval of the merger relies on the future actions of Dish, a company with a history of violations that is controlled by billionaire Charles Ergen, an expert poker player and tough negotiator. Dish would face millions of dollars in fines if it failed to build out its cellular service, Delrahim said.

In a statement on Friday, Dish said it would voluntarily pay a fine of up to $2.2 billion if it failed to deploy a 5G network covering at least 70 percent of the country’s population in the next four years. </s> T-Mobile and Sprint are forming a $146 billion new company John Legere, T-Mobile's CEO, is expected to serve in that role for the merged entity, which would retain the T-Mobile name. It's official: T-Mobile and Sprint have announced plans to merge, with a combined company valued at $146 billion.John Legere, T-Mobile's CEO, is expected to serve in that role for the merged entity, which would retain the T-Mobile name. The deal is likely to draw scrutiny from antitrust regulators, considering the Trump administration's treatment of AT&T and Time Warner's attempted merger. The boards of T-Mobile and Sprint have put the finishing touches on a massive merger agreement that values a combined company at $146 billion. T-Mobile's CEO, John Legere, made the announcement on Sunday by Deutsche Telekom, which owns two-thirds of T-Mobile, would control the newly formed company. I’m excited to announce that @TMobile & @Sprint

have reached an agreement to come together to form a new company – a larger, stronger competitor that will be a force for positive change for all US consumers and businesses! Watch this & click through for details. — John Legere (@JohnLegere) April 29, 2018 Legere is expected to be the CEO of the combined entity, which would keep the T-Mobile name and have headquarters in Bellevue, Washington, and Overland Park, Kansas. The deal, which would combine the third- and fourth-largest US wireless carriers, is expected to come under serious scrutiny from antitrust regulators, as the Trump administration has The agreement marks the culmination of four years of on-again, off-again discussions between T-Mobile and Sprint; this is the third time the two rivals have tried to merge. With a combined 127 million customers, the two firms are expected to compete directly with "This isn't a case of going from four to three wireless companies — there are now at least seven or eight big competitors in this converging market," Legere said on Sunday. The agreement involves T-Mobile exchanging 9.75 Sprint shares per unit of T-Mobile. Deutsche Telekom would own 42% of the combined company, while SoftBank, which controls 85% of Sprint, would own 27%. The public would hold the remaining 31%. Sprint and T-Mobile discussed a deal in November, but talks broke down amid disagreement over who would control the new company. "This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience — and do it all so much faster than either company could on its own," Legere said in an Sprint's CEO, Marcelo Claure, added: "We intend to bring this same competitive disruption as we look to build the world's best 5G network that will make the US a hotbed for innovation and will redefine the way consumers live and work across the US, including in rural America." The all-stock transaction values Sprint at 0.10256 per T-Mobile share, or $6.62 a share, based on T-Mobile's latest closing price, for a total of about $26 billion. T-Mobile had a market value of $55 billion as of Friday's close, and the two companies have roughly $60 billion of combined debt. Sprint's stock has surged 26% since This article was originally published on [url= The agreement marks the culmination of four years of on-again, off-again discussions.The deal is likely to draw scrutiny from antitrust regulators, considering the Trump administration's treatment of AT&T and Time Warner's attempted merger. Sprint dropped by 13% in premarket trading on Monday, while T-Mobile slid 2.4%. Follow live trading on Markets Insider The boards of T-Mobile and Sprint have put the finishing touches on a massive merger agreement that values a combined company at $146 billion.T-Mobile's CEO, John Legere, made the announcement on Sunday by tweeting a seven-minute video breaking down the merger and linking to a website that further explains the combination.Deutsche Telekom, which owns two-thirds of T-Mobile, would control the newly formed company.Legere is expected to be the CEO of the combined entity, which would keep the T-Mobile name and have headquarters in Bellevue, Washington, and Overland Park, Kansas.The deal, which would combine the third- and fourth-largest US wireless carriers, is expected to come under serious scrutiny from antitrust regulators, as the Trump administration has fervently opposed AT&T's proposed mega-acquisition of Time Warner The agreement marks the culmination of four years of on-again, off-again discussions between T-Mobile and Sprint; this is the third time the two rivals have tried to merge.With a combined 127 million customers, the two firms are expected to compete directly with Verizon , the US's largest carrier, and AT&T "This isn't a case of going from four to three wireless companies — there are now at least seven or eight big competitors in this converging market," Legere said on Sunday.The agreement involves T-Mobile exchanging 9.75 Sprint shares per unit of T-Mobile. Deutsche Telekom would own 42% of the combined company, while SoftBank, which controls 85% of Sprint, would own 27%. The public would hold the remaining 31%.Sprint and T-Mobile discussed a deal in November, but talks broke down amid disagreement over who would control the new company. A Wall Street Journal report suggests that SoftBank's founder, Masayoshi Son, may have since become more willing to give up control amid mounting pressure on Sprint to roll out 5G technology."This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience — and do it all so much faster than either company could on its own," Legere said in an official statement Sprint's CEO, Marcelo Claure, added: "We intend to bring this same competitive disruption as we look to build the world's best 5G network that will make the US a hotbed for innovation and will redefine the way consumers live and work across the US, including in rural America."The all-stock transaction values Sprint at 0.10256 per T-Mobile share, or $6.62 a share, based on T-Mobile's latest closing price, for a total of about $26 billion.T-Mobile had a market value of $55 billion as of Friday's close, and the two companies have roughly $60 billion of combined debt.Sprint's stock has surged 26% since The Journal reported on April 10 that the two companies had rekindled merger talks, while T-Mobile's has risen 8% over the same period.This article was originally published on [url= LINK ]Business Insider. Copyright 2018. </s> T-Mobile’s mega-merger with Sprint can move forward, the Justice Department said Friday, paving the way for an unprecedented combination of America’s third- and fourth-largest wireless providers.

The DOJ’s blessing marks a critical breakthrough for T-Mobile and Sprint as they seek to join forces against Verizon and AT&T, which owns CNN. The smaller carriers argue they must merge in order to compete more effectively, especially as the industry moves toward next-generation 5G technology. But critics argue the tie-up will lead to higher prices and less innovation, and the merger may not close until a multi-state lawsuit to block the deal is resolved.

The DOJ’s settlement was joined by five states that are not part of the lawsuit.

For weeks, Sprint and T-Mobile have been negotiating an agreement with the DOJ to address concerns that the merger may harm competition. The resulting settlement Friday requires the combined company to spin off customers and assets to create a fresh replacement for Sprint in the cutthroat wireless business.

Picking up the pieces will be satellite provider Dish Network. Under the deal with DOJ, Dish will take over Boost Mobile, Virgin Mobile and Sprint’s prepaid wireless business, totaling about 9 million subscribers. Dish will also purchase a chunk of valuable wireless airwaves from Sprint. Those airwaves could help rural Americans gain access to mobile Internet, according to the Justice Department.

The settlement also gives the new Dish-owned carrier the right to use T-Mobile’s network for seven years, a condition meant to create breathing room for the new provider.

The new carrier will likely be tiny compared to its prospective rivals. Verizon currently leads with 118 million prepaid and postpaid customers, according to financial filings, followed by AT&T with 94 million. Following the sale of Boost, the new T-Mobile will have about 92 million phone subscribers. (By comparison, Sprint had about 42 million prepaid and postpaid users at the end of March.)

The merger is not yet final. It must still be cleared by the Federal Communications Commission. And while a majority of that commission has signaled support for the deal, 13 states and the District of Columbia have also sued to block it from taking effect within their respective borders.

The fate of the transaction had hung in the balance for months as Justice Department antitrust chief Makan Delrahim deliberated on whether to block it. Briefing reporters on Friday, a Justice Department official said the proposed merger could have been anti-competitive but that the concessions by T-Mobile and Sprint had lessened the risks.

“Without the remedies, combined T-Mobile and Sprint would have reduced competition for wireless services,” the official said. The Justice official said the department had been prepared to sue to block the deal had the companies failed to reach an agreement on the conditions.

In a Justice Department release, Delrahim said, “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.”

T-Mobile has proven to be an aggressive competitor in the wireless industry — slashing rates, ending consumer annoyances such as long-term contracts and early termination fees, and reintroducing unlimited data plans. In many cases, those initiatives attracted customers and forced the larger providers to respond in kind.

Sprint had a role to play in reshaping the industry, too — deeply undercutting rivals on price and using big promotions to lure subscribers.

Opponents of the merger say some of that vibrancy could soon be lost from the wireless sector, and that Dish’s fourth competitor will hardly compare.

“A new mobile wireless entrant that starts with zero postpaid subscribers and that must rely on its much bigger rival, the new T-Mobile, just to operate is not a competitor. It’s a mobile Frankenstein,” said Gigi Sohn, a distinguished fellow at Georgetown University’s Institute for Technology Law and Policy.

Sohn served as an FCC adviser during the Obama administration, when the US government repeatedly indicated that the country is better off with at least four competing national wireless carriers. That unofficial policy drove the FCC and DOJ to oppose AT&T’s attempted purchase of T-Mobile in 2011. The agencies were similarly critical when Sprint unsuccessfully sought to acquire T-Mobile in 2015.

While Friday’s settlement preserves the existence of a four-carrier industry, today’s regulators have expressed openness to alternatives. For example, at DOJ, Delrahim has argued there is no “magical number” of competitors that guarantees a healthy wireless sector.

Meanwhile, a majority of the FCC, led by Chairman Ajit Pai, came out publicly in May to voice support for the T-Mobile and Sprint deal even before an agreement involving Dish had been reached.

In a statement at the time, Pai said his support for the merger rested on two key principles: The US taking leadership in 5G technology and improving internet access in rural and underserved areas. The Sprint and T-Mobile merger would help fulfill those goals, he said.

“I believe that this transaction is in the public interest and intend to recommend to my colleagues that the FCC approve it,” Pai said in the statement, indicating he would soon move for the FCC to complete the merger review. (He has not yet done so, but with DOJ’s announcement on Friday, Pai is now likely to move forward swiftly.)

Pai’s remarks in May took industry analysts by surprise. Normally DOJ and the FCC coordinate their merger announcements, market research firm New Street Research noted in an investor memo at the time. But in this case, it said, the FCC appeared to show its hand well before DOJ was ready. It is not clear why the FCC did so, but it could have been calculated to pressure Delrahim into approving the deal, New Street added.

Even if the FCC blesses the merger, the ongoing state lawsuit could still complicate matters.

California, New York, Wisconsin and a handful of other states have alleged that the merger is anti-competitive because it could eventually allow T-Mobile, Verizon and AT&T to raise prices in lockstep. T-Mobile has promised not to raise prices for at least three years after the close of the deal, but the states have said those and other pledges are not enough to limit the potential harm to competition. The states, Sprint and T-Mobile have agreed to a trial date of Oct. 7 in federal court in New York.

The states involved in the case are home to so many of T-Mobile and Sprint’s customers that the lawsuit poses a significant challenge to the carriers’ plans, said Gene Kimmelman, a former Justice Department antitrust official who led the advocacy group Public Knowledge, which opposes the deal, until earlier this month.

“If the states win the suit, I have to believe the deal falls apart,” he said. “The deal would be effectively dead.” </s> NEW YORK (CNN) – T-Mobile and Sprint have finally agreed to a massive telecom merger after years of negotiations punctuated by two breakups.

The agreement would leave just three major wireless carriers in the United States and must clear antitrust regulators. The combined company, which will take on the name T-Mobile, would be positioned as a fierce competitor to Verizon and AT&T.

T-Mobile CEO John Legere, who will head the merged company, said on a conference call Sunday that the firm plans to deliver “the highest capacity network in US history.”

He said the company will hire thousands of people in a bid to create a nationwide network that will position the United States as the leader in providing 5G connectivity.

A recent report from research firm Analysys Mason suggests it’s China and South Korea, not the United States, that are currently leading 5G development.

The move combines the third and fourth largest wireless service providers in the nation. Sprint was valued at $26 billion based on its last closing price, and T-Mobile was last valued at $55 billion. The deal values Sprint near its latest closing share price of $6.50.

Andrew Schwartzman, an attorney who specializes in telecommunications and a professor at Georgetown Law, said he expects it will be “difficult” to get regulators to sign off on the merger.

Sprint and T-Mobile first discussed a merger in 2014 but scrapped it because of concerns about regulatory challenges from the Obama administration.

Schwartzman noted the deal was blocked because regulators determined that the wireless market could support four major players, and having them compete benefited consumers.

“It will be difficult to convince the Justice Department that circumstances have changed so much that it’s necessary to go down to three providers,” he said. “That’s the major hurdle that has to be confronted.”

The companies expected to have a better shot at the merger under the Trump administration.

Sprint stock tanks as T-Mobile merger said to collapse

SoftBank CEO Masayoshi Son met with President Donald Trump the month before he took office to talk up an investment in US businesses.

A few weeks later, T-Mobile’s Legere said he was open to “various forms of consolidation” when asked about a potential merger with Sprint and SoftBank under the Trump administration.

But last November, after much speculation, the two companies issued a statement saying they had “ceased talks.”

“While we couldn’t reach an agreement to combine our companies, we certainly recognize the benefits of scale through a potential combination. However, we have agreed that it is best to move forward on our own,” Marcelo Claure, the Sprint CEO, said at the time.

Sprint and T-Mobile’s announcement is just the latest step in an ongoing movement towards telecom consolidation. AT&T is in talks to acquire Time Warner, which owns CNN. The outcome of that $85 billion merger-in-the-making depends on a case in federal court, which is pending the decision of the judge. </s> The Justice Department approved T-Mobile US Inc.’s merger with Sprint Corp. after the companies agreed to create a new wireless carrier by selling assets to satellite-TV provider Dish Network Corp. The landmark antitrust agreement seeks to address concerns that the combination of T-Mobile, the nation’s No. 3 carrier by subscribers, and No. 4 Sprint will drive up prices for consumers. It would leave more than 95% of American cellphone customers with the top three U.S. operators.

A deal brokered by the Justice Department will require Dish, which has been sitting on valuable airwaves, to build a 5G network for cellphone customers. To help it get started, T-Mobile will sell Sprint’s prepaid brands to Dish and give access to the combined carrier’s network for seven years. “The remedies set up Dish as a disruptive force in wireless” with the pieces needed for the company to have a cellphone service that is ready to go, Makan Delrahim, the Justice Department’s antitrust chief, said in a news conference. Critics of the arrangement include a group of state attorneys general that broke with the Justice Department and have filed an antitrust lawsuit seeking to block the more than $26 billion merger. Five states that weren’t part of the lawsuit joined the federal government in the settlement announced Friday.

“Why scramble so much to create a fourth competitor when you already have one?” said Samuel Weinstein, an assistant law professor at the Cardozo School of Law at Yeshiva University who worked previously in the Justice Department’s antitrust unit. The deal gives Dish, a satellite-TV provider, about 9 million Sprint prepaid cellphone customers and additional wireless spectrum. Those subscribers, which mostly come from its Boost Mobile business, represent about one-fifth of Sprint’s customer base. Dish’s service, which could keep the Boost brand or take on a new name, would also be able to move from pay-as-you-go plans to postpaid service, which tends to be more profitable. T-Mobile and Sprint must also give Dish access to at least 20,000 cell sites and hundreds of retail locations. The new T-Mobile must provide “robust access” to its network, the Justice Department said. The union of T-Mobile and Sprint, years in the making, would create a wireless company surpassing 90 million U.S. customers, closing the gap with Verizon Communications Inc. and AT&T Inc., which each have roughly 100 million wireless customers. It also would fulfill a long-held goal of Japan’s SoftBank Group Corp., which owns most of Sprint, and Deutsche Telekom AG, which controls T-Mobile. Shares of T-Mobile rose on the news and are trading near all-time highs. Sprint shares also were higher. Dish, whose stock price has slumped this week on news of the arrangement, were up Friday.

Federal Communications Commission Chairman Ajit Pai, who had previously backed the deal, said Friday the Justice Department settlement, coupled with T-Mobile and Sprint’s earlier commitments to deploy a nationwide 5G network, will preserve competition and advance U.S. leadership in rolling out next-generation networks. U.S. carriers have been battling for customers in the $180 billion voice-and-data market, where growth has slowed now that the companies have rolled out unlimited data plans and most Americans have upgraded to smartphones.

The federal approval for T-Mobile and Sprint caps a more than yearlong review of a combination that fell apart twice in the past five years over terms of the deal or fears that the Justice Department would object. The Justice Department, under the Obama administration, told the companies that shrinking from four to three national providers was anticompetitive. The companies tried again under Trump appointees to push the deal through, ultimately agreeing to divest assets to Dish to win approval. In its agreement with the government, T-Mobile promised not to raise prices for three years and cover 97% of the U.S. population with 5G service in three years. T-Mobile has been adding millions of customers at the expense of its rivals, pushing unlimited data plans and lower prices than the incumbents. Sprint, despite owning valuable airwaves, has been shedding millions of subscribers and has struggled to be profitable. T-Mobile surpassed Sprint to become the No. 3 player by subscribers and argued the acquisition of the smaller carrier’s airwaves would help speed its deployment of a 5G network so that it could better compete with Verizon and AT&T. Dish, which generated $13.6 billion in annual revenue last year, had about $13 billion of net debt before the deal. It will need to shell out billions of dollars in the coming years to absorb the wireless carriers’ castoff assets, build its own network and vie for customers. A group of states led by the attorneys general of New York and California are pressing ahead with an antitrust lawsuit seeking to block the combination, saying it would harm consumers. All the officials who joined the suit are Democrats; those who decided to support the Justice Department on Friday are Republicans. Letitia James, the New York attorney general, said the coalition of state officials seeking to block the deal oppose the Justice Department’s settlement. “We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger’s harm to consumers, workers and innovation,” she said.

Mr. Delrahim said his office will share its settlement with the federal judge overseeing the states’ lawsuit. “Sometimes independent sovereigns do make independent determinations,” he said. The trial is scheduled to start in October. On Friday, T-Mobile and Sprint extended the deadline to close their deal, from July 29 to Nov. 1. T-Mobile said it expects to close its Sprint purchase in the second half of this year despite the states’ lawsuit. The Justice Department stopped sharing information with the Democratic attorneys general after they decided to file their lawsuit in June without notifying their federal counterparts, Mr. Delrahim said. “That was their choice, not ours,” he said. Under the deal, Dish will pay $1.4 billion for the Sprint customer accounts, most of which come from its Boost prepaid brand, and $3.6 billion three years later to buy Sprint spectrum licenses in the 800-megahertz range, which can travel long distances and cover rural areas. The new T-Mobile will have the option to lease back part of that spectrum for an additional two years after the airwaves sale closes. The companies have also agreed to negotiate for T-Mobile to lease Dish spectrum in the 600-megahertz range. Dish is set to start its wireless life with a base of Sprint’s pay-as-you-go customers, though carriers often struggle to keep those so-called prepaid subscribers. More than 4% of Sprint’s prepaid customers choose to drop their service or are disconnected for nonpayment each month, according to company filings. The deal creates a fake competitor, said Andrew Jay Schwartzman, a lecturer at Georgetown Law, adding that even if Dish builds out its own network it will take years. During that time, the three large carriers will be able to introduce 5G and lock in their subscriber bases, he said. “Rather than having Sprint as a weak fourth competitor, the combined companies will now face an extremely weak fourth competitor,” Mr. Schwartzman said. Sprint ended March with nearly $33 billion of net debt on its balance sheet. Even though it had more than 40 million customers, Sprint said during deal negotiations that it was in poor health and wouldn’t be able to launch nationwide 5G service without the merger. Dish has argued it can build a better network by starting from scratch. Even before he pursued a deal with the Justice Department, Dish Chairman Charlie Ergen said his business could invest capital more efficiently without the burden of old equipment and software holding back its ambitions. Dish hasn’t made public the prices or structure of the wireless plans it will sell. Senior FCC officials said on a call with reporters that they are confident the new carrier under Dish will be viable because the wholesale deal it has struck with the new T-Mobile is more aggressive than any other such arrangement the carrier and Sprint currently have. Its terms give Dish the financial ability to compete in the prepaid market against T-Mobile’s Metro brand, they said. The settlement also included provisions designed to make sure Dish actually builds the promised infrastructure. Among other penalties, the satellite company agreed to pay the government up to $2.2 billion if it fails to meet its network expansion requirements. Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Sarah Krouse at sarah.krouse@wsj.com </s> WASHINGTON, July 26 (Reuters) - The U.S. Justice Department said on Friday it is approving T-Mobile US Inc's$26 billion takeover of rival Sprint Corp , clearing a major hurdle to a deal that would merge the nation's third and fourth largest wireless carriers.

The companies have agreed to divest Sprint's prepaid businesses including Boost Mobile to Dish Network Corp in order to move ahead with the merger, which was announced in April 2018.

T-Mobile Chief Executive Officer John Legere, who will be the CEO of the combined company, said it would deliver a 5G network with lower prices, better quality and thousands of jobs, while unlocking $43 billion in synergies.

"We are pleased that our previously announced target synergies, profitability and long-term cash generation have not changed," Legere said.

On Friday, the Justice Department and five state attorneys general said they were filing suit to enforce the settlement conditions that also include selling Virgin Mobile and Sprint prepaid and providing Dish with access to 20,000 cell sites and hundreds of retail locations.

Dish has agreed to acquire spectrum in a deal valued at $3.6 billion from the merged firm and pay $1.4 billion for Sprint's prepaid business that serves about 9.3 million customers. Dish will get access to the combined firm's network for seven years while it builds out its own 5G network.

Shares of T-Mobile, which is about 63 percent owned by Deutsche Telekom AG , were up 3.7% at $82.90. Shares of Sprint, which is about 84 percent owned by Softbank Group Corp , were up 6.5% at $7.92.

Prepaid wireless phones are generally sought by lower-income people who cannot pass a credit check.

T-Mobile, the third largest U.S. wireless carrier with about 80 million customers, pursued the deal in order to seek scale to compete with bigger rivals Verizon Communications Inc and AT&T Inc . Sprint has about 55 million customers.

T-Mobile US on Thursday beat analysts' estimates for second-quarter net new phone subscribers who pay a monthly bill, boosted by the U.S. mobile carrier's wireless plans aimed at fending off its bigger rivals. The mobile carrier said it added a net 710,000 phone subscribers in the three months ended June 30.

Federal Communications Commission Chairman Ajit Pai has given his blessing to the merger in principle and said in a statement on Friday he would soon circulate a formal order.

The FCC is expected to give Dish more time to use spectrum it previously acquired but also impose strict penalties if it fails to create a consumer wireless network within a set timeframe. </s> • T-Mobile will acquire Sprint in a deal that values the combined company at $146 billion.
• Current T-Mobile US CEO John Legere retain his role at the combined company, which will keep the T-Mobile name.
• Sprint tanked 12% as investors worried that the deal might not pass anti-trust scrutiny on the news, while T-Mobile US is down slightly.

Shares of Sprint fell as much as 12% in early trading Monday amid growing concern the wireless carrier's proposed its merger with T-Mobile in a deal that values the combined company at $146 billion may not pass regulatory scrutiny.

T-Mobile USA CEO John Legere made the announcement by tweeting a seven-minute video breaking down the merger, while also including a link to a website further explaining the combination. Germany's Deutsche Telekom owns two-thirds of T-Mobile, and will control the newly formed entity.

The announcement on Sunday marks the culmination of four years of on-again, off-again discussions between T-Mobile and Sprint — and was the third time the two rivals had tried to merge.

With 127 million customers between them, the two newly teamed companies are expected to compete directly with Verizon— the nation's number one carrier — and second-place AT&T. That's where the concern comes in.

For evidence that the deal which will combine the third- and fourth-largest US wireless carriers, is expected to come under serious scrutiny from antitrust regulators that, one need not look further than how fervently the Trump administration has opposed AT&T's proposed mega-acquisition of Time Warner.

In November, the US Department of Justice sued to block AT&T's proposed $84.5 billion takeover of the cable giant. President Trump himself said on the campaign trail in October 2016 that such deals would result in "too much concentration in the hands of too few," and "deals like this destroy democracy."

However, Sprint and T-Mobile face a different challenge. While AT&T's proposed merger was a so-called "vertical" deal, in that the two firms aren't direct competitors and the new company would be vertically integrated to combined film/TV production with distribution, T-Mobile and Sprint are direct competitors and consumers will have one less competitive choice if the deal goes through.

"I think it's very hard to imagine DOJ just giving this deal a pass, given how much it would increase concentration in key segments of the wireless market," Gene Kimmelman, former DOJ official and CEO of Public Knowledge, told Axios.

T-Mobile and Sprint's proposed deal involves T-Mobile exchanging 9.75 Sprint shares per unit of T-Mobile. Deutsche Telekom will own 42% of the combined company, while SoftBank — which controls 85% of Sprint — will own 27%. The remaining 31% will be held by the public.

Sprint's stock has surged 26% since the Wall Street Journal reported on April 10 that the two companies had rekindled merger talks. T-Mobile's stock has risen 8% over the same period.

The all-stock transaction values Sprint at 0.10256 per T-Mobile share, or $6.62 a share, based on T-Mobile's last closing price. That valued Sprint at around $26 billion. T-Mobile had a market value of $55 billion as of Friday's close, and the two companies have roughly $60 billion of combined debt.

Shares of Sprint are up 9% since the beginning of 2018, while T-Mobile is flat year-to-date. </s> WASHINGTON (Reuters) - T-Mobile US Inc won U.S. antitrust approval for its $26 billion takeover of rival Sprint Corp, the Justice Department said Friday, clearing a major hurdle to a deal that merges the nation’s third and fourth largest wireless carriers.

The companies have agreed to divest Sprint’s prepaid businesses, including Boost Mobile, to satellite television firm Dish Network Corp to create a fourth U.S. wireless carrier.

The Justice Department indicated the deal would improve competition and the rollout of faster 5G networks by combining weaker players and creating a strong, new No. 4, in Dish, that has unused spectrum, which can be activated. Critics, including some state attorneys general, say competition won’t increase and prices for mobile phone plans will rise.

The deal is a clear success for T-Mobile Chief Executive Officer John Legere, who will be the CEO of the combined company and who pushed back at critics arguing a more concentrated market would lead to higher prices.

“It’s a bit dumbfounding to think that we’ve decided to go and build this network and go through this merger so that we can become the basic, lazy, fat, dumb and arrogant players that we were born to teach how to behave,” he told analysts in a conference call.

Assistant Attorney General Makan Delrahim, head of the Justice Department’s antitrust division, said the deal would hasten the development of 5G, the next generation of wireless.

Shares of T-Mobile, which is about 63 percent owned by Deutsche Telekom AG, were up 5.3% at $84.17. Shares of Sprint, which is about 84 percent owned by Softbank Group Corp, rose 7.1% to $7.97. Dish was up 0.7% at $39.44.

But the deal still faces a significant challenge: A group of U.S. state attorneys general, including from New York and California, have sued to block the merger on antitrust grounds, arguing the proposed deal would cost consumers more than $4.5 billion annually.

New York State Attorney General Letitia James indicated the lawsuit would continue, at least in part because of what critics see as Dish’s failure to live up to pledges it had made.

“We have serious concerns that cobbling together this new fourth mobile player, with the government picking winners and losers, will not address the merger’s harm to consumers, workers, and innovation,” she said.

The Justice Department, backed by five state attorneys general, said the deal required the merging companies to sell Virgin Mobile and Sprint’s prepaid business and provide Dish with access to 20,000 cell sites and hundreds of retail locations.

Prepaid wireless phones are generally sought by lower-income people who cannot pass a credit check.

Dish has agreed to acquire spectrum, or airwaves that carry data, in a deal valued at $3.6 billion from the merged firm and pay $1.4 billion for Sprint’s prepaid business that serves about 9.3 million customers. Dish will get access to the new T-Mobile’s network for seven years while it builds its own 5G network.

T-Mobile and Dish are also required to work out a deal where T-Mobile can use Dish’s unused 600 MHz spectrum and the companies are required to use eSIM, which allows consumers to switch easily between carriers, a Justice Department official said.

SKEPTICAL LAWMAKERS

T-Mobile competes with Verizon Communications Inc and AT&T; Inc (T.N).

U.S. consumers tend to stick with one mobile carrier for years, giving companies a steady stream of cash. As more people rely on cell phones for social media, banking or news and entertainment, the lines have blurred between telecom, content and cable companies, just as so-called 5G technology promises to make mobile phones even more powerful.

Federal Communications Commission Chairman Ajit Pai said in a statement on Friday he would soon circulate a formal order supporting the deal. The FCC could vote on final approval in August or September, officials said.

The FCC agreed to give Dish more time to use spectrum it previously acquired. The company could face up to $2.2 billion in penalties and lose its spectrum licenses if it fails to meet its commitments to build its network, according to a letter filed Friday with the FCC. Dish must have a 5G network covering at least 70% of the U.S. population no later than June 14, 2023.

Dish has spent years stockpiling wireless spectrum and faced a looming March 2020 deadline to build a product using the spectrum in order to fulfill its license requirements.

A smartphones with Sprint logo are seen in front of a screen projection of T-mobile logo, in this picture illustration taken April 30, 2018. REUTERS/Dado Ruvic/Illustration

Some senior lawmakers remained skeptical about the merger, including Senators Mike Lee, a Republican, and Amy Klobuchar, a Democrat, the top lawmakers on the Senate Judiciary Committee’s antitrust subcommittee.

Lee said he was hopeful the divestiture would succeed but uneasy about Dish’s dual role as a critic of the transaction and a buyer of divested assets.

Klobuchar, who is running for president, reiterated that she had wanted the deal stopped. “It looked like a bad deal then, and it looks like a bad deal today, despite the parties’ promises and this proposed consent decree,” she said.
The U.S. Department of Justice approves a $26 billion merger between T-Mobile and Sprint. If finalized, they will become the third-largest mobile network operator in the nation.