Tag: Merger

Google Fi After The T-Mobile & Sprint Merger

Christian 18 Comments

Google Fi brought a lot of innovations and customer-friendly features to the wireless market. I’d argue that Fi’s biggest innovations have been in network switching. Subscribers using “Designed for Fi” phones can automatically switch between coverage from T-Mobile, Sprint, and U.S. Cellular’s networks.

Losing Sprint

Fi’s network switching is about to become a lot less interesting. Sprint’s network will disappear. U.S. Cellular doesn’t have a nationwide network.

The darker shade in the map below shows where U.S. Cellular’s network is available:1

Map of licensed U.S. Cellular markets

U.S. Cellular’s network does not cover the majority of the U.S. Once Sprint’s network is gone, Google Fi will be a T-Mobile-based carrier in many places.2

T-Mobile’s network will get better as it integrates Sprint’s assets, so I don’t expect Fi to decrease substantially in quality. However, Fi may become a much less competitive option in comparison to other carriers. There are a lot of carriers that run over T-Mobile’s network. These carriers will also offer better performance as T-Mobile improves its network. Some carriers using T-Mobile’s network are priced much better than Fi. For example, Mint Mobile sells a plan with 8GB of data, unlimited minutes, and unlimited texts for as low as $20 per month. Fi would charge at least $70 per month for the same level of usage.3

I don’t mean to imply Fi will be left in the dust. The carrier offers high priority data, amazing international roaming options, and a user-friendly experience. Many low-cost, T-Mobile-based carriers don’t have those elements. Can Fi convince subscribers that Fi’s premium features justify the service’s price tag?

Will MVNOs get squeezed?

Low-cost carriers may get squeezed by T-Mobile. When Sprint goes offline, MVNOs will have fewer networks they can offer service over. The reduction in options may allow T-Mobile to increase the rates it charges carriers that use T-Mobile’s network.4 While low-cost carriers may have no option but to raise the prices charged to consumers, Fi may be better positioned. Fi is fairly expensive. It’s unlikely T-Mobile would charge Fi so much that Google would struggle to stay in the market.

T-Mobile & Sprint Merger Officially Closes

Christian

To no one’s surprise, the merger between T-Mobile and Sprint finally closed this morning.1

With the closure of the merger, John Legere is stepping down from his position as T-Mobile’s CEO. Legere will be replaced by Michael Sievert, who was until now the COO of T-Mobile.

I continue to think the merger is going to be bad for consumers over the long term. However, we should see some things that are good for consumers in the short term, like the recently released T-Mobile Connect plans.

T-Mobile & Sprint Merger Rumored To Be Headed For Approval

Christian

Several state attorneys general have been suing to stop a merger between T-Mobile and Sprint. Rumors came out earlier this evening that the judge presiding over the case is planning to rule in favor of the merger. Here’s a bit from a Wall Street Journal article:

A federal judge is expected to approve T-Mobile US Inc.’s merger with Sprint Corp., according to people familiar with the matter, clearing the way for the two wireless rivals to combine and overcoming a state antitrust challenge.

The rumors are almost certainly correct. Sprint’s stock soared in after-hours trading. The market closed with Sprint trading at close to $4.80. Since then, the stock has been trading for almost 70% more at over $8 per share:1

Sprint Stock Price After Merger

T-Mobile’s stock experienced a more modest after-hours rise from about $85 per share to slightly over $90 per share:

T-Mobile stock price graph after merger with Sprint

I’m planning to write something more detailed once the news is made official and the companies involved release statements.

DOJ Clears T-Mobile’s Merger With Sprint

Christian

As expected, the Department of Justice made an announcement today approving a merger between Sprint and T-Mobile. While the merger isn’t officially closed, DOJ approval was the largest hurdle T-Mobile and Sprint needed to jump before making their merger a reality.

As far as I can tell, the terms of the merger were consistent with what most commentators were expecting:

  • Most of Sprint’s prepaid business will be divested to DISH1
  • DISH will get Sprint’s 800 MHz spectrum
  • DISH will receive access to the New T-Mobile’s network for at least 7 years2
  • DISH will have the option to take over leases on some retail stores and cell sites

I don’t think mergers between telecom companies have a good track record of benefiting consumers. I hope this merger will be different, but I’m not betting on it. As many others have pointed out, something is odd about the whole arrangement. The divestitures to DISH are ostensibly intended to allow DISH to create a viable, facilities-based carrier (i.e., a carrier that has its own hardware and doesn’t just piggyback off other companies’ networks). If DISH is likely to succeed, it’s hard to explain why Sprint couldn’t remain a viable force. Maybe I’m misunderstanding something important.

I expect the merger-related transitions to take a few years, and I plan to write about new developments as they occur. Should be interesting.

For those interested, here are a few excerpts from T-Mobile’s announcement:

The proposed New T-Mobile, will divest Sprint’s prepaid businesses and Sprint’s 800 MHz spectrum assets to DISH. Additionally, upon the closing of the divestiture transaction, the companies will provide DISH wireless customers access to the New T-Mobile network for seven years and offer standard transition services arrangements to DISH during a transition period of up to three years. DISH will also have an option to take on leases for certain cell sites and retail locations that are decommissioned by the New T-Mobile, subject to any assignment restrictions.
The New T-Mobile will be committed to divest Sprint’s entire prepaid businesses including Boost Mobile, Virgin Mobile and Sprint-branded prepaid customers (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Telecommunications Company and Swiftel Communications, Inc.), to DISH for approximately $1.4 billion. These brands serve approximately 9.3 million customers in total.
With this agreement, Boost Mobile, Virgin Mobile, and Sprint-branded prepaid 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 companies have also committed to engage in good faith negotiations regarding the leasing of some or all of DISH’s 600 MHz spectrum to T-Mobile.