After two years of struggle, the T-mobile Sprint Merger has finally gotten approved by a federal court judge who signed the $26 billion deal.
Judge Victor Marrero’s green light on the deal meant that all claims of anti-trust companies i.e. a merger of the 3rd and 4th largest wireless carriers in the country was anticompetitive were rejected.
This allows the two companies to work towards making it official. In fact, they’ve even announced that the new Galaxy S20 phones will be the first to support the 5G network.
T-mobile’s CEO John Legore announced that he will step down in May and the COO, Mike Seivert will take his place.
Why a merger in the first place?
This merger is long-called for as AT&T and Verizon are far ahead of the game than T-Mobile.
Their assets combined will still place them in 3rd place, however, they will be much stronger now:
SoftBank, Sprint’s parent company, proposed the idea back in 2014. However, the two firms struggled for 6 years because of concerns expressed by regulators and the White House itself.
A lot of democrats tried to block the deal because they believed that eliminating a competitor would allow the top companies to raise prices in an industry where consumers are already paying a lot for an essential communication service
Despite these hurdles, the deal almost closed in 2017 but was then dropped because the two parties did not come to an agreement on the amount of control that either company would get.
Luckily for them, the FCC and current government are much more open to a merger which helped it turn into a reality today.
However, this brings us to the million-dollar question – how does the merger affect you as a customer?
The truth is, the infamous T-Mobile Sprint merger won’t change anything for you in the short run.
Payment plans, billing and everything will essentially remain the same for now.
Nevertheless, there will be some noticeable differences, both good and bad:
Upsides of the T-Mobile Sprint Merger
- The name
For now, people are calling the merged firm the ‘‘new T-mobile’’.
This may not seem like a big deal but the company keeping its name the same reduces a lot of the uncertainty faced by customers, especially T-mobile customers.
How? It puts existing T-mobile customers at ease since they won’t have to worry about a transition or change in plans.
Plus, the new logo is a collective version of the two firms’ previous logos and as a marketer, I know how important it is to have a logo that creates recognition.
Changing a logo can create a lot of confusion among customers which eventually impacts profitability and reputation in the long run.
It’s also a smart move on both the firms’ part because it cuts down the cost and resources required to come up with a new logo, printing and other miscellanies.
To speed things up, the two firms have already launched their new website. Check it out for more details.
- 5G Network
If you don’t already know, 5G is pretty much the major reason behind this merger.
The combined resources and assets of the two companies will allow them to build a much better, faster and efficient network for consumers.
The two companies also claim that it will be cheaper; thus, costing customers less – something that anti-trust parties still negate because they believe that the firm will take advantage of monopoly over the network.
Anyhow, this sub-6 5G network can cover millions of users without any high expenditures i.e. providing higher capacity and speed than LTE with the same coverage:
The new T-mobile company plans on expanding the millimetre wave spectrum so that speed remains high even in dense areas with crowded towers.
This isn’t something out of the blue as both T-mobile and Sprint have separately made advancements to improve LTE speeds i.e. T-mobile’s 6000 MHz deployment and Sprint’s 2.5 GHz expansion.
However, this brings up the question of whether T-mobile really needs Sprint for 5G or not.
The thing is, Sprint currently has 5G at the high band of 28 GHz and 32 GHz as well as the low band of 600 MHz:
While the lower band is great for coverage, it’s not able to provide as much speed or capacity as the higher-range bands.
This is why Sprint’s sub-6 (mid-band) 2.5GHz spectrum sits right in the middle with a good balance in coverage and speed.
With a merger, the new T-mobile will be able to provide users with the required coverage and speed that is optimised for a number of different areas that vary in terms of geography and density:
This makes the new T-Mobile one of the only companies to withdraw 3G and 4G which other carriers are also expected to do in the near future.
- Added benefits
A major reason why FCC Chairman Ajit Pai endorsed this merger was that the two companies promised that they would offer development and improvement of services in rural areas.
Apart from that, of course, users will enjoy the 5G network at the same prices.
Currently, T-mobile is offering a free Hulu account with its services while Sprint is offering Netflix.
The merger is likely to affect these deals but neither company has commented on this aspect so existing and new customers can expect to enjoy these added benefits.
One of the biggest concerns of customers was – do I have to pay more? This was a valid concern considering the 5G and other new services that the new T-mobile was offering.
Luckily, the company stated in a press release that it will offer the same or even better payment plan in the coming years.
The company promised not to raise prices for at least 3 years which came as a relief to many and was perhaps one of the reasons that the merger got approved since it was decreasing competition; thus, giving the company a certain amount of monopoly over the pricing.
Plus, if the prices do rise after 3 years, customers will have the option of switching to smaller carriers – but even they will charge a certain extra cost if they provide higher speed and coverage.
Take a look at what the top network providers were offering in 2019 to help you get a better idea of what you’ll be expected to pay:
Downsides of the T-Mobile Sprint Merger
As with everything, there are some expected downsides to the T-Mobile Sprint merger:
The main reason why the anti-trust companies comprising of 13 attorneys from different states proposed to block this merger was simply because it would reduce competition drastically as two of the strongest firms in the industry were joining forces – something that could potentially lead to lower quality and higher pricing.
However, the deal was blocked as the judge believed that the merger was unlikely to lessen competition given the rapid changes in the industry.
Plus, AT&T and Verizon still remain the two largest network providers not only in the US but globally as well; thus, offering the new T-mobile substantial competition.
- Long term pricing
The problem is, while the new T-mobile has gotten the merger approved because of its 3-year pricing guarantee, there’s no knowing what will happen after that.
Democrats voted against the ruling because they noticed a similar trend in other markets.
Jessia Rosenworcel, a Democrat, states:
“We’ve all seen what happens when markets become more concentrated after a merger like this one. In the airline industry, it brought us baggage fees and smaller seats. In the pharmaceutical industry, it led to a handful of drug companies raising the prices of lifesaving medications. There’s no reason to think this time will be different”.
Thus, they believe that if not pricing, then plans will become more stringent for customers.
T-mobile has made it fairly clear that its existing plans will remain the same; however, Sprint has made no such comment, leading to a lot of uncertainty among customers.
Since 5G is still a fairly new concept, it’s one of the reasons why customers won’t see an immediate change and it will take time to make the transition.
However, the main problem which calls for Sprint’s customers to switch to T-mobile supported phones is that Sprint’s network is based on CDMA technology while T-mobile’s older network is based on GSM – and the two are completely incompatible.
The good news is that if you own an iPhone or a high-end Samsung smartphone, you won’t be needing a transition as they support both technologies and 5G networks.
However, people with other phones and older models will eventually have to make the switch in the coming months.
Where does Dish Network come in?
The Department of Justice voted in favour of the merger back in July on one condition – a competitor ranking 4th in the list of top national carriers would be created in order to replace Sprint.
This condition came in response to the pressure put on the court by the anti-trust companies which constantly expressed that a merger would substantially reduce the quality of services and increase prices offered by the new T-mobile.
For this very purpose, a deal with Dish Network was made – one that Dish acquiring Sprint’s prepaid business and spectrum valued at $5 billion along with T-Mobile’s network as part of a settlement with the wireless carriers.
Dish is expected to pay $1.4 billion for the prepaid businesses and $3.6 billion for 800MHz spectrum which is a pretty heavy but justified price to pay because even though it has spectrum holdings in the range of 600 MHz-700 MHz, it does not have great speed.
While this fulfils the government’s condition by placing Dish as the 4th largest provider in the US, there’s no certainty about the range of services Dish Network will provide, although the company claims to provide users with 5G services by 2023.
Dish will lease its unused 600 MHz for its future 5G rollout.
The major reason why it agreed to close a deal with Sprint is that it has a wave spectrum worth billions but not its own wireless network.
The company risked losing its license if it did not utilise these airwaves by March 2020, so its a win-win situation for both companies.
In fact, as part of this deal, Dish received a deadline extension till June 2023 when it plays to introduce its own 5G which will cover the majority of the US.
So that sums up the T-Mobile Sprint Merger and how it affects you as a customer.
If you’re weighing the pros and cons of remaining a T-mobile customer or switching to it, I’d say go for it – because in the short run, you’re getting great pricing plans and a faster network and we can all agree that no internet speed is ever fast enough!
Because of the growing population, higher internet usage and increasing data available, companies are pushed to come up with more efficient networks which was the motivation behind this merger as well as it allows the two companies to beat the competition and come out on top.