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DoJ approves T-Mobile-Sprint merger after USD5bn DISH deal sealed

29 Jul 2019

T-Mobile US and Sprint have entered into a ‘consent decree’ with the US Department of Justice (DoJ) regarding their planned merger, bringing the deal one step closer to completion. Running in parallel, the cellcos have sealed a wide-ranging deal with satellite TV giant DISH Network, which will see them divest Sprint’s pre-paid businesses and 800MHz spectrum assets (see below) for a total of USD5 billion. The transactions with DISH are contingent on the successful closing of T-Mobile’s merger with Sprint, the parties have noted. The USD43 billion target in previously announced synergies from T-Mobile/Sprint merger remains unchanged, despite the divestment, T-Mobile has stated.

The DISH deal includes the following agreements:

· Effective upon the successful completion of T-Mobile’s merger with Sprint, the ‘New T-Mobile’ will be committed to divest Sprint’s pre-paid businesses, including Boost Mobile, Virgin Mobile and Sprint-branded pre-paid customers (but excluding the Assurance-branded ‘Lifeline’ customers and the pre-paid wireless customers of Shenandoah Telecommunications Company and Swiftel Communications) for approximately USD1.4 billion. These brands serve approximately 9.3 million customers in total.

· Upon closing the pre-paid divestiture, Boost Mobile, Virgin Mobile, and Sprint-branded pre-paid customers, as well as new DISH wireless customers, will have full access to the legacy Sprint network and the New T-Mobile network in a phased approach. Access to the New T-Mobile network will be through an MVNO arrangement, as well as through an infrastructure MNO arrangement enabling roaming in certain areas until DISH’s 5G network is built out.

· The New T-Mobile will offer standard transition services arrangements to DISH for up to three years following the close of the divestiture transaction. The transition services provided by the New T-Mobile will result in the orderly transfer of pre-paid customers to DISH and will also ensure the continued and seamless operation of Boost Mobile, Virgin Mobile and Sprint-branded pre-paid businesses following transition to DISH’s ownership.

· DISH has agreed to acquire Sprint’s portfolio of nationwide 800MHz spectrum for a total value of approximately USD3.6 billion in a transaction to be completed, subject to certain additional closing conditions, following an application for Federal Communications Commission (FCC) approval to be filed three years following the closing of T-Mobile’s merger with Sprint. This will permit the New T-Mobile to continue to serve legacy Sprint customers during network integration, pending later FCC approval of the license transfer. The companies have also entered into an agreement providing the New T-Mobile the option to lease back a portion of the spectrum sold to DISH for an additional two years following closing of the spectrum sale.

·Following the closing of T-Mobile’s merger with Sprint – and subsequent integration into the New T-Mobile – DISH will have the option to take on leases for certain cell sites and retail locations that are decommissioned by the New T-Mobile for five years following the closing of the divestiture transaction, subject to any assignment restrictions.

· Finally, the companies have also committed to engage in good faith negotiations regarding the leasing of some or all of DISH’s 600MHz spectrum to T-Mobile.

The completion of the T-Mobile and Sprint combination remains subject to remaining regulatory approvals and certain other customary closing conditions. T-Mobile and Sprint expect to receive final federal regulatory approval in 3Q19 and currently anticipate that the merger will be permitted to close in the second half of 2019.

United States, (DISH Wireless) Boost Mobile, Deutsche Telekom (DT), DISH Network (incl. DISH Wireless), SoftBank Group Corp, Sprint Corporation (became part of T-Mobile US), T-Mobile US, Virgin Mobile USA

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