T-Mobile and Sprint agreed to a divestiture plan with the U.S. Justice Department, the Wall Street Journal reported Wednesday. Dish will acquire prepaid subscribers, wireless-spectrum licenses and temporary access to T-Mobile and Sprint’s network. Bloomberg reports that Dish paid $5 billion for the assets — $1.5 billion for prepaid mobile businesses and about $3.5 billion for spectrum licenses.
T-Mobile agreed last year that it would buy Sprint for $26 billion in a merger that combines the third and fourth largest U.S. wireless providers.
The Justice Department has committed to helping Dish in order to meet antitrust officials’ “longstanding demand” for a fourth national wireless company, according to the Journal.
Dish has purchased large amounts of wireless spectrum in recent years and drawn complaints from carriers. T-Mobile complained to the Federal Communications Commission (FCC) that Dish was hoarding spectrum without concrete plans to utilize it. The satellite provider had promised to create a 5G-enabled narrowband IoT (NB-IoT) network by 2020, but T-Mobile complained in a scathing rebuke that such a network would leave large swaths of unused spectrum.
“Dish is turning spectrum utilization on its head by making what is effectively ancillary use of spectrum the main use — a wasteful and inefficient choice that leaves the vast majority of the spectrum fallow,” T-Mobile wrote last October.
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CNBC explored the consternation T-Mobile executives feel about Dish’s official arrival into the wireless market. Some analysts have questioned if T-Mobile is better off leaving Sprint where it is than risk the creation of a new rival.
“If Dish enters the market with a large amount of capacity and no meaningful subscriber base of [average revenue per user] to defend, they would have every incentive in the world to be a disruptive discounter,” analyst Craig Moffett wrote. “One need not believe in a follow-on Dish deal with Amazon, Google or a cable operator to see this as bad for the market, and indeed, worse than the ‘no deal’ scenario for T-Mobile.”
Wednesday’s news is an ironic throwback to 2014, when T-Mobile suggested that it would merge with Dish after Sprint abandoned plans to buy T-Mobile for $32 billion. The potential deal, however, fell through the cracks.
The T-Mobile-Sprint merger is expected to close this week.