DoJ wants to maintain fourth national operator if Sprint, T-Mobile merge

30 May 2019

Senior Department of Justice (DoJ) officials want T-Mobile US and Sprint to prepare the groundwork for a new nationwide wireless operator as a condition for approving their long-running USD26.5 billion merger, a person familiar with matter has informed Bloomberg. Earlier this month Federal Communications Commission (FCC) chairman Ajit Pai approved the deal on the proviso that the enlarged operator spins off Sprint’s pre-paid unit, Boost Mobile. However, this gesture is considered insufficient by DoJ antitrust chief Makan Delrahim, who would like to preserve a competitive landscape comprising four nationwide mobile players. It seems likely that the companies will now come under pressure to agree to spin off their other self-contained brands, namely: Metro by T-Mobile (formerly MetroPCS) and Virgin Mobile.

According to Reuters, Boost Mobile has been valued at USD3 billion, and the asset has already attracted industry interest. Issa Asad, CEO of MVNO Q Link Wireless – a major provider of federally-subsidised Lifeline services – told the news agency that he would be prepared to pay between USD1.8 billion and USD3 billion for the business, depending on ‘the quality of Boost’s customers, such as their level of churn, the devices they are using, and what type of phone plan they are on’. Elsewhere, Stephen Stokols, CEO of fellow MVNO FreedomPop, said that he is advising a private equity firm on a rival bid for Boost, which could potentially be merged with his company if the transaction comes to fruition.

United States, FreedomPop, Q Link Wireless, Sprint Corporation (now part of T-Mobile US), T-Mobile US, Virgin Mobile USA