T-Mobile, Sprint Spar Over Dish -- WSJ
July 12 2019 - 3:02AM
Dow Jones News
Parties are haggling over satellite-network ownership
restrictions and other conditions
By Drew FitzGerald and Brent Kendall
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 12, 2019).
Negotiations to complete the merger of T-Mobile US Inc. and
Sprint Corp. are dragging on as the parties haggle over ownership
restrictions and other conditions for Dish Network Corp. once it
gets assets from the wireless companies, according to people
familiar with the matter.
Discussions are continuing, and all sides remain optimistic they
can find common ground on the ownership question and other issues
to complete the more than $26 billion merger, the people said.
T-Mobile and Sprint are planning to extend their merger
agreement past its July 29 deadline, one of the people said. It
would be the second such extension to close a deal that was
announced more than a year ago and has run into resistance from
federal and state antitrust officials.
The Justice Department has overseen several weeks of
negotiations designed to ensure the merger of the third- and
fourth-biggest cellphone carriers by subscribers won't lessen
competition. Dish, a satellite-TV provider with an ample stockpile
of spectrum licenses, has emerged as the favorite to acquire
divested assets from the merging companies to develop a new
wireless network.
One issue frustrating negotiators in recent days is potential
limits on who could own or later buy a part of the new Dish
wireless network, which has pushed back on potential ownership caps
and change-in-control restrictions, the people said. The company's
chairman, Charlie Ergen, owns more than 51% of Dish shares and has
a special class of stock that gives him control over 91% of the
vote.
T-Mobile and parent Deutsche Telekom AG are seeking to impose
ownership limits to prevent the satellite-TV company from turning
around and selling parts of the wireless business won through the
divestiture process to a cable or technology company, the people
familiar with the matter said. The parties have also discussed
restrictions on how much traffic Dish can send over the new
T-Mobile's network, one of the people said. CNBC previously
reported on both issues.
Dish and the cellphone carriers have mostly agreed in principle
to a broad deal that would transfer spectrum licenses, prepaid
phone customers and other assets to the satellite company. Dish
would also get a multiyear agreement to use the wireless companies'
network while it builds dedicated infrastructure, some of the
people said.
The Justice Department has made its blessing contingent upon the
companies shedding enough assets to form a fourth competitor strong
enough to vie with giants Verizon Communications Inc., AT&T and
the new T-Mobile. Each of those three would have roughly 100
million subscribers or more after the merger.
The deal would help protect more than $21 billion of wireless
spectrum licenses Mr. Ergen has amassed in recent years by putting
them to work on a customer base. The Federal Communications
Commission could rescind some of the licenses if they aren't put to
use soon.
The arrangement also could save T-Mobile and Sprint's all-stock
merger, which the companies unveiled in April 2018 after several
years of failed attempts to combine. FCC Chairman Ajit Pai in May
said his commission would support the deal, but the Justice
Department's antitrust division hasn't blessed it yet, and the
outcome will likely depend on whether the companies can resolve the
remaining issues to the department's satisfaction.
Several state attorneys general sued last month to block the
merger, arguing that the proposed tie-up would leave cellphone
customers with less competition for their business. T-Mobile plans
to contest the lawsuit in a trial set to start Oct. 7.
--Sarah Krouse contributed to this article.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Brent
Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
July 12, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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