The Econ-versation: T-Mobile and Sprint merger receives approval

Silvia Buonocore, Senior Writer

On Feb. 11, U.S. Judge Victor Marrero approved a merger between T-Mobile and Sprint. This decision will alter the wireless industry as four wireless giants will now reduce to three (Verizon, AT&T, and T-Mobile).

Talks of a deal between T-Mobile and Sprint began in 2013 and rose up again in 2017, but were to no avail. In 2018, the two companies reached an agreement for a deal worth $26.5 billion that would allow T-Mobile to increase to a size closer to Verizon and AT&T by merging with Sprint.

While the U.S. Justice Department and Federal Communications Commission approved the deal last year, 13 states and the District of Columbia were against the merger, citing that it would stifle competition. As a result, the merger went to trial in December.

Sprint had been falling behind the other three wireless giants and was making its best effort to keep up with the competition, providing support for the merge. Additionally, the merger would allow a new wireless company, Dish Network Corp., to join the industry and create more competition. These reasons incited Judge Marrero to approve the merger, which includes that Sprint must give around nine million of its customers to Dish Network.

T-Mobile’s merger with Sprint will allow the merged company to attain Sprint’s resources such as radio licenses, so customers can have higher speed and better quality internet service. Additionally, T-Mobile will acquire Sprint’s range of coverage, so it can help more rural areas attain better cell service.

While some agree with Judge Marrero’s decision, others view the merger as harmful since control of an industry by fewer companies may reduce competition and innovation as well as make it easier for the companies to take advantage of consumers and workers. The states against the deal maintain that mergers happen far too easily, and therefore may appeal the ruling.

The overall effects of T-Mobile’s new merger on the industry and on competition are to be discovered in the future. In the meantime, Dish Network remains far behind the three wireless giants.

(Information originally appeared in The Wall Street Journal.)

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