It’s the end of the era for Sprint as T-Mobile US announced it officially completed its merger with Sprint to create the new T-Mobile, an effort that was about two years in the making. The combined company will operate under the name T-Mobile.
The close of the merger triggered the transition of the CEO position a month ahead of schedule, with John Legere turning the reins over to President and COO Mike Sievert, a former Clearwire executive who was the first person Legere hired at T-Mobile. Legere gets credit for building a culture around the “un-carrier” that resulted in a complete turnaround for the company and paved the way for disruption throughout the wireless industry. “During this extraordinary time, it has become abundantly clear how vital a strong and reliable network is to the world we live in," Sievert said in a press release. "The New T-Mobile’s commitment to delivering a transformative broad and deep nationwide 5G network is more important and more needed than ever, and what we are building is mission-critical for consumers.”
Sievert said on CNBC that they’ve had eight straight quarters of blockbuster results and it’s about bringing together the unique assets of the two companies and investing at massive scale to create the best 5G network.
Asked about the impact of the coronavirus crisis, he said: “The service we bring to the American public is essential” as people practice social distancing.
The new “normal” that people experience after the crisis will be different, and if that normal means more Americans are tightening their budgets, “we’re going to be here to serve them,” he said, suggesting T-Mobile will be in the best position from a network and affordability standpoint.
Under Legere’s stewardship, T-Mobile eliminated annual service contracts, overages and roaming fees and introduced a campaign against rivals he called “dumb and “dumber,” ratcheting up the rhetoric against Verizon and AT&T.
T-Mobile’s executives, including President of Technology Neville Ray, have been clear on their intention to leapfrog the competition with 5G.
Within six years, it promises to provide 5G to 99% of the U.S. population and average 5G speeds of more than 100 Mbps to 90% of the U.S. population. Its plans also call for covering 90% of rural Americans with average 5G speeds of 50 Mbps, or up to two times faster than broadband on average.
The new company also is on a trajectory to offer an alternative to cable, with an in-home broadband service to be delivered to “millions of the country’s households” in the next six years.
U.S. District Judge Victor Marrero ruled in February that T-Mobile and Sprint’s $26 billion merger should be allowed after a coalition of 14 state attorneys general (AGs) sued to block the deal. The Federal Communications Commission (FCC) and Department of Justice (DoJ) last year cleared the deal with conditions, including that Sprint divest its prepaid Boost business to Dish Network, which is taxed with building a new 5G network mostly from scratch.
Today's closure means the companies opted not to wait for the California PUC (CPUC) to make a final decision. They also didn’t wait for Judge Timothy Kelly to issue a judgement under the Tunney Act review.
In a note for investors Tuesday, New Street Research analyst Jonathan Chaplin said Kelly had promised a resolution by the end of the month, which was March 31. But the companies had entered into a stipulation and order back in July in which they agreed to abide by the provisions of the final judgement, when it is filed, meaning there was nothing to prevent the companies from closing now if they so chose.
“We are keen to see the integration process get under way,” New Street wrote. “While we are all sitting at home waiting for the world to return to normal, this is one thing we won’t have to wait for any longer. An earlier closing will also help with the information flow; T-Mobile management will be in a much better position to assess the impact of converting Sprint to their own accounting and of the initial impact of the integration… The sooner the company resets the base, the sooner investors can focus on the pace of growth and the synergy realization that will follow.”
It’s up to Dish
“With the close of T-Mobile and Sprint, Dish is one step closer to becoming the nation’s fourth facilities-based wireless carrier,” said Jeff Blum, Dish SVP of government affairs and public policy, in a statement today. “We are committed to bringing full, standalone 5G to America, built upon a secure, Open Radio Access Network (Open RAN) architecture, delivering unparalleled innovation that will benefit U.S. consumers and enterprises."
Once the Consent Decree is entered, T-Mobile has 90 days to divest Boost to Dish. “We are eager to welcome Boost customers, employees and dealers, and look forward to delivering lower prices and increased competition in the prepaid market,” Blum added. The big question is whether Dish will request more time to complete the build of its 5G network. New Street Research policy analyst Blair Levin, in a March 29 report for investors, said if Dish requires an adjustment, “we think the governing document will be its agreement with the FCC in which there is an Act of God provision allowing for extension ‘due to unanticipated circumstances beyond the company’s control,’ which we think applies.”